Settlement Talks for Bank Followed Pressure on Trump by Turkey’s Leader
17 Oct 2019

After repeated appeals to President Trump by Turkey’s president to avoid charges against a state-owned Turkish bank, Attorney General William P. Barr oversaw an effort earlier this year to negotiate a settlement with the bank, two people with knowledge of the matter said.

The settlement push abruptly ended on Tuesday when prosecutors in New York filed bank fraud and money laundering charges against the institution, Halkbank, a move that came as Mr. Trump sought to escalate pressure on Turkey to stop its military operations in northern Syria.

But the criminal charges were filed only after more than a year of interventions by President Recep Tayyip Erdogan of Turkey and other senior officials of his government, as well as lawyers and lobbyists working in New York and Washington on Turkey’s behalf, to try to avoid a criminal prosecution of the bank.

Mr. Erdogan had repeatedly raised the topic of Halkbank with Mr. Trump, including in a November 2018 phone conversation, which was followed up by an appeal by Mr. Erdogan’s son-in-law, who serves as Turkey’s finance minister, with Treasury Secretary Steven Mnuchin. Bloomberg News reported on Wednesday that Mr. Trump told Mr. Erdogan in April that Mr. Barr and Mr. Mnuchin would handle the matter.

“We had a positive meeting with our U.S. counterpart,” Berat Albayrak, Turkey’s finance minister, told reporters in Turkey late last year, referring to Mr. Mnuchin. “He said he would follow the process closely.”

The Turkish officials, and their lawyers and lobbyists, argued that criminal charges against Halkbank, the second-largest state owned bank in Turkey, would threaten the stability of the Turkish economy, as other international banks might move to stop doing certain kinds of business with Halkbank.

A multibillion-dollar penalty, like the one imposed on the French bank BNP Paribas in 2015 after Iran sanctions violations, also could threaten the viability of the bank, Halkbank’s representatives argued.

In 2017, the Justice Department accused Halkbank’s top executives, as well as senior officials in the Turkish government, of violating United States sanctions against Iran by delivering billions of dollars worth of gold and cash to Iran in exchange for Iranian oil and gas.

In 2018, prosecutors in New York had secured the conviction of a senior Halkbank executive, but at the time of his sentencing, a federal court judge said that the executive was “somewhat of a cog in the wheel” and not “a mastermind,” implying the possibility of further charges in the case.

The Justice Department had discussed the possibility of a so-called deferred prosecution agreement with Halkbank, in which it would admit some wrongdoing, perhaps pay a fine, but not face criminal trial, according to two individuals with direct knowledge of the matter, but who spoke on the condition of anonymity to disclose such details.

“The negotiations began to take on a real character over the last several months,” one participant in the matter said last week.

On Tuesday, the Justice Department filed sanctions evasion charges against Halkbank, noting that the “bank’s audacious conduct was supported and protected by high-ranking Turkish government officials,” including some who took “millions of dollars in bribes to promote and protect the scheme.”

By Eric Lipton, The New York Times, 16 October 2019

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