(CNSNews.com) – The arrest in Florida of a prominent Iranian-Turkish businessman accused of conspiring to conduct hundreds of millions of dollars in financial transactions to help Iran evade U.S. sanctions may have major political implications in Turkey, where the same man was linked to a corruption scandal reaching into the upper ranks of the ruling party.
A senior opposition leader expressed the hope that the arrest of Reza Zarrab, an Iranian-born Turkish businessman, may lift the lid on a scandal which many critics suspect was covered up by President Recep Tayyip Erdogan’s Islamist Justice and Development Party (AKP).
The Hurriyet daily quoted Republican People’s Party (CHP) chairman Kemal Kilicdaroglu as saying in parliament Tuesday that as a result of Zarrab’s arrest, “I am sure many will not get a wink of sleep tonight; they won’t be able to sleep in comfort in their beds.”
“Reza Zarrab will speak there, you will see,” he said, adding that “dirty relations will be exposed” and the facts will emerge about four AKP cabinet ministers who were the subject of massive fraud and corruption allegations three years ago.
The Department of Justice announced Monday the unsealing of an indictment in the in the Southern District of New York against dual Turkish-Iranian citizen Zarrab, 33, who was arrested in Florida on Saturday; and two Iranian nationals who remain at large, Camelia Jamshidy, 29, and Hossein Najafzadeh, 65.
John Carlin, assistant attorney-general for national security, said that according to the charges the three had “circumvented U.S. sanctions by conducting millions of dollars-worth of transactions on behalf of the Iranian government and Iranian businesses.”
“These alleged violations, as well as the subsequent efforts taken to cover up these illicit actions, undermined U.S. laws designed to protect national security interests,” he said.
According to the indictment, between 2010 and 2015 the three allegedly conspired to thwart U.S. and international economic sanctions against Iran by concealing financial transactions that were on behalf of the Iranian government or government-controlled banks and other entities.
They used a network of companies located in Iran, Turkey and elsewhere to conceal from U.S. banks, the Treasury Department’s Office of Foreign Assets Control (OFAC) and others the fact that the transactions were benefiting and on behalf of Iranian entities.
The indictment quotes from a Dec. 2011 letter from Zarrab, addressed to the general manager of the Central Bank of Iran saying in part, “[i]t is not secret that the trend is moving towards intensifying and increasing the sanctions, and since the wise leader of the Islamic Revolution of Iran has announced this to be the year of the Economic Jihad, the Zarrab family, which has had a half a century of experience in foreign exchange, … considers it to be our national and moral duty to declare our willingness to participate in any kind of cooperation in order to implement monetary and foreign exchange anti-sanction policies …”
‘Gas for gold’
Zarrab, who was reportedly arrested while on a family vacation in the U.S. with his wife and child, featured prominently in a scandal that erupted in Turkey in December 2013, also relating to allegedly illicit dealings with Iran.
That month, law enforcement officers raided homes of prominent figures linked to the AKP – including the sons of three then-cabinet members (who subsequently resigned) – as well as the chief executive of a state-run bank, Halkbank, and found stashes of millions of dollars in cash.
Zarrab, among dozens of people arrested in the probe, was accused of heading a money laundering, gold smuggling and bribery network designed to bypass international sanctions over Iran’s nuclear activities by shipping billions of dollars’ worth of gold to Tehran in return for Iranian oil and natural gas.
Earlier research into the “gas for gold” scheme by the Foundation for Defense of Democracies and Roubini Global Economics found that Iran and Turkey’s Halkbank were exploiting loopholes in U.S. sanctions law.
As the corruption scandal swirled Erdogan, then prime minister, characterized the affair as a “coup attempt,” blaming the U.S., Israel and others of trying to bring down the AKP government, even implying at one point that Turkey may expel the then-U.S. ambassador, Francis Ricciardone.
Erdogan accused the investigating prosecutors of plotting against the government and removed them from their posts. Police investigators were reassigned.
In August 2014 Erdogan became president, and four months later the corruption charges were dropped.
Zarrab was freed from custody after 70 days. Last June he was honored with an “export champion” award at a ceremony attended by Turkey’s deputy prime minister and economy minister.