U.S. opposes Turkish state-owned Halkbank's move to have judge dismissed

U.S. prosecutors submitted a memorandum to court on Tuesday opposing Halkbank's demand for federal judge Richard Berman to be recused from the case against the bank.

On July 15, Halkbank filed a motion for recusal of the judge, asserting that Berman's remarks made in 2014 on the December 17-25, 2013 corruption cases filed against Turkish President Recep Tayyip Erdoğan's family, friends and allied businessmen rendered him biased.

The Southern District of New York (SDNY) opened an indictment last October against Halkbank, accusing the bank of playing a significant role in a scheme to circumvent U.S. sanctions on Iran by funnelling around $20 billion to the Iranians, particularly to Iran's Islamic Revolutionary Guard Corps (IRGC). 

According to Reza Zarrab, an Iranian-Turkish businessman who facilitated the laundering of billions of dollars of Iranian energy proceeds through Halkbank - one of Turkey's largest state-run banks - dozens of businessmen, bureaucrats and politicians were bribed in both Iran and Turkey to smuggle money under the guise of gold and food trading from Turkey.

Billions were smuggled to make a few people rich and both regimes stronger.

A December 17, 2013 Turkish police chief report - whose allegations were largely authenticated by the U.S. investigations and the conviction of a top Halkbank executive under the same allegations - had shown that the scheme operated for years with impunity due to backing among the top echelons of Turkey’s ruling Justice and Development Party (AKP).

In its motion, Halkbank's lawyers cited Berman’s participation in a conference on the rule of law in Istanbul in 2014, and his comments at that time as evidence of his lack of impartiality.

According to Halkbank lawyers and Michael Reynolds, the Director of Princeton’s Program in Russian, East European, and Eurasian Studies who provided expert testimony on behalf of Halkbank, Berman was not impartial as his allegations overlapped significantly with those of the 2013 corruption investigators.

Those investigators were allegedly linked to the Gülen movement, which Turkey has now designated as a terrorist group, which it labels the Fethullahist Terrorist Organisation (FETÖ), and blames for orchestrating the 2016 failed coup.

Reynolds said that Berman had used “the exact type of language that FETÖ used to characterise the Turkish response to the 17–25 December 2013 event” by criticising relocations of those investigators.

In response, U.S. prosecutors heavily criticised Reynolds, whose expert testimony to the U.S. courts included pro-Turkish government news reports as sources.

As those who have some understanding of the Turkish press know, Turkey’s pro-government media outlets are notorious for deploying conspiracy theories, outright lies and crazy arguments to level accusations against critics of Erdoğan's government. 

It is simply impossible to rely on pro-government media reports to give any credence to legal arguments.

U.S. prosecutors, in their opposition motion, also emphasised that while Reynolds is arguing that most Turks believe the 17-25 December corruption investigation was a vendetta by the Gülen Islamist group against the Erdoğan government, the findings of that investigation were authenticated by Zarrab as well at U.S. court proceedings. The motion said:

"One of the purported victims of this 'political vendetta,' authenticated the evidence from the Turkish criminal investigation; and Zarrab testified that he in fact engaged in the conduct alleged in the Turkish criminal case and paid bribes to secure his release from Turkish prison."

The SDNY added:

"Professor Reynolds’ opinions about the Turkish public’s alleged perception of these proceedings does not support deviating from the Court’s original conclusion that recusal is not warranted.”

Prosecutors said that Berman's remarks in Istanbul did not touch on Zarrab or Halkbank but instead addressed the question of rule of law and universal principles.

"The defendant’s motion is nothing but an attempt to manufacture the appearance of impropriety by injecting a Turkish political dispute into an American court of law,” the SDNY said in its motion.

There are indeed plenty of reasons to believe that investigators linked to the Gülenist movement - Erdoğan's erstwhile allies turned foes - launched the 2013 investigation as part of a political vendetta, as Reynolds argues.

But that does not mean the accusations were necessarily incorrect or bogus.

Not only were the accusations backed up by U.S. federal investigators’ own probes, verified by Zarrab’s testimony, but the same evidence was submitted to the U.S. court that convicted Hakan Atilla. Last week a New York appellate court upheld that conviction. 

Reynolds’ argument, that those who believed in 17-25 cases are aligned with the Gülenists, is exactly the line the Turkish government has been pushing for years to tar all critics with the same brush and call them members of a terrorist organisation.

Therefore, even though many of Reynolds' claims with regards to Gülenists' secretive agenda, past dirty tricks, and even sinister politics appear to be well researched and important, his attempt to argue that the 2013 corruption case is bogus is surely a step too far.

The stakes are high. The bank's lawyers underscored the importance of the case in their own motion saying that it "threatens Halkbank’s very existence". 

Berman is expected to rule over the dismissal request in the coming days.

The opinions expressed in this column are those of the author and do not necessarily reflect those of Ahval.