Turkish state backs Halkbank as senior lender executive arrested in US over ‘Zarrab links’

ISTANBUL

REUTERS photo

The Turkish government will keep backing the state lender Halkbank, a top Turkish official has said, as U.S. prosecutors on March 28 charged a senior lender executive with participating in a multi-year scheme to violate U.S. sanctions against Iran.

Mehmet Hakan Atilla, a deputy general manager of Halkbank, is accused of conspiring with wealthy Iranian-Turkish gold trader Reza Zarrab to conduct hundreds of millions of dollars of illegal transactions through U.S. banks on behalf of Iran’s government and other entities in that country.

In response to a question on how the arrest will affect the lender’s eurobond issuance and foreign borrowing, Deputy Prime Minister Mehmet Şimşek said the government was backing the lender. 

“Halkbank is a state-run bank and as the Turkish state, we back our lender. We will do whatever is necessary to maintain the lender’s capabilities to support the real sector and tradespeople,” he said in a Q&A session following a press meeting in Istanbul on April 11. 

“We will follow how this case will affect the investors’ demand and risk appetite. This is the point. The bank’s own studies, the reports by independent auditors and the probes by the Justice Ministry have all showed that there was not any violation of international norms in any transactions of Halkbank. We back our bank, which is a key value of our country,” he added. 

Days after Atilla’s arrest, Şimşek made a similar statement to the media, noting there was a disagreement between Turkish and U.S. officials over the transactions of Halkbank.

“This is an effort to expand a case left over from a previous term. When we discussed those issues with Halkbank thoroughly a long time ago, we saw it was very clear that the bank had conducted brokerage with a neighboring country in a scope allowed by the United Nations Security Council,” Şimşek said on March 30, as quoted by state-run Anadolu Agency. 

“We have repeatedly said this to U.S. officials but it appears they think otherwise,” he added.

Atilla, a 47-year-old Turkish citizen, looked somber as he appeared at a brief hearing before U.S. Magistrate Judge James Francis in Manhattan, a day after being arrested at John F. Kennedy International Airport. 

Atilla had been in New York for the latest in a series of investor meetings ahead of a planned Halkbank dollar-denominated subordinated bond issue.

He is expected to go on trial on April 24, according to several reports.