Yesterday, the United States Department of Justice announced that Reza Zarrab, 33, an Iranian-Turkish businessman was arrested in Miami for conspiring to evade U.S. sanctions against Iran, money laundering and bank fraud.
The indictment which was unsealed in the Southern District of New York against Reza Zarrab and other two Iranians claim that the defendants were engaged in hundreds of millions of dollars-worth of transactions on behalf of the government of Iran and other Iranian entities, which were barred by U.S. sanctions, laundering the proceeds of those illegal transactions and defrauding several financial institutions by concealing the true nature of these transactions.
The arrest of Reza Zarrab in the U.S yesterday, may cause very important political consequences in Turkey.
On December 17, Turkish law enforcement officers raided several houses of prominent figures linked to Erdogan's government. Among the detainees, the three sons of Turkish ministers were also included. During the police operation, $4.5 million in cash packed in shoe boxes in the house of the chief executive of a state-run bank, Halkbank, was seized; another $750,000 along with a money-counting machine in the bedroom of a government minister's son. All of the other fifty two people detained during the police operations were in various ways connected with Erdogan and his ruling Justice and Development Party.
The central figure of the corruption case was, Reza Zarrab, who in the indictment, was accused of bribing ministers in the Turkish Government as well.
Erdogan declared that it was a coup attempt to his government.
The very first things the then Prime Minister Erdogan were to dismiss the Istanbul police chief and other prominent police officers and remove all the public prosecutors leading the corruption case. His government fired all the prosecutors and police officers during a witch hunt as a revenge. Some of the prosecutors even fled the country.
Erdogan believed that he himself was the target of the corruption case as well.
What the Turkish prosecutors and police officers discovered were exactly the very same things that FBI and American federal prosecutor has discovered.
The Turkish public prosecutors had discovered that Reza Zarrab was the link between Erdogan government and Iran through the hundreds of millions of dollars of transactions as part of a scheme to evade U.S sanctions. The formula was very simple. In order to bypass sanctions and international banking system, Iran was made an offer to be paid in gold through a gold account in return to Turkey's gas and oil payments instead of foreign currency. While many Turkish banks reluctant to get involved, Erdogan Government utilized a state-run Halkbank for the transactions.
According to the speculations, Iran's some $14 billion were vaporized as bribes and commissions during the gold trade scheme with Turkey.
That's one of the most important reasons that Reza Zarrab's boss, Babek Zencani was sentenced to death for corruption only two weeks ago in Iran. He was accused of withholding billions in oil revenue channelled through his companies.
Reza Zarrab knows highly powerful Turkish names who vaporized this huge of amount of money during this illegal trade.
While Erdogan's son Bilal Erdogan faces some legal cases in Italy, the arrest of Reza Zarrab may also result in some unexpected consequences for Turkish president Erdogan as well.