In this photograph taken on Dec. 10, 2019, pedestrians pass in front of state-run Halkbank on Istiklal Avenue in Istanbul. (Photo by OZAN KOSE/AFP via Getty Images)
The Supreme Court kept alive a massive money laundering prosecution against the Turkish state-run Halkbank, a sanctions case that sparked scandals roiling the leaders of two NATO allies.
In a mixed decision, the high court rejected two of Halkbank’s defenses against the case: a jurisdictional challenge and a claim under the Foreign Sovereign Immunity Act. Halkbank can still try another immunity defense before an intermediate court of appeals.
The Halkbank case grew out of former U.S. Attorney Preet Bharara’s prosecution of Reza Zarrab, a gold trader known as the “Turkish Gatsby.” In 2017, Zarrab agreed to cooperate with the government after pleading guilty to laundering billions in Iranian oil money. The government’s evidence showed his letter to Iran’s former hardline leader Mahmoud Ahmadinejad discussing “economic jihad.”
Before he pleaded guilty, Zarrab was represented by Trump’s lawyer Rudy Giuliani, who revealed in court filings that he shuttled between Washington and Ankara to negotiate a prisoner swap that would have ended the trial. After those talks failed, Zarrab turned state witness against Halkbank manager Hakan Atilla, and in his testimony, implicated Turkish leader Recep Tayyip Erdogan in the scheme.
Over the course of both cases, two former top prosecutors from the Southern District of New York — Bharara and ex-Manhattan U.S. Attorney Geoffrey Berman — complained of political interference from the Trump administration, allegedly pressuring them to end the case. Ex-National Security Advisor John Bolton accused Trump in his memoir of trying to protect Erdogan, whom Bolton described as one of the “dictators [Trump] liked.”
In recent years, political intrigue gave way to an arcane legal battle over whether Halkbank qualified for sovereign immunity and whether a U.S. court had jurisdiction over the case.
Beyond those legal abstractions lurked weightier concerns: During oral arguments, Department of Justice attorney Eric Feigin warned that immunizing the Turkish bank could allow any state-tied entity to become a “clearinghouse” for crimes.
“Petitioners asking for an extraordinary and unprecedented rule under which any foreign government-owned corporation could become a clearinghouse for any federal crime, including interfering in our elections, stealing our nuclear secrets, or something like here evading our sanctions, and funneling billions of dollars to an embargoed nation, using our banks and lying for regulators,” Feigin said in January. “That unprecedented rule is based on essentially nothing.”
Halkbank’s lawyer Lisa Blatt argued at the time that green-lighting the case could have “cataclysmic” diplomatic effects.
The lead opinion, drafted by Trump-appointed Justice Brett Kavanaugh, skips the political intrigue that has intrigued the press and public — and argues that the geopolitical fallout isn’t the high court’s concern. Instead, it assesses the applicability of the Foreign Sovereign Immunities Act (FSIA).
“In short, Halkbank’s various FSIA arguments are infused with the notion that U. S. criminal proceedings against instrumentalities of foreign states would negatively affect U. S. national security and foreign policy. But it is not our role to rewrite the FSIA based on purported policy concerns that Congress and the President have not seen fit to recognize.”
In a 7-2 decision, Kavanaugh and six other justices appointed by presidents from both parties allowed Halkbank to argue for common law immunity before the Second Circuit.
Two other justices, Neil Gorsuch and Samuel Alito, thought their colleagues needlessly complicated matters.
“In the FSIA, Congress supplied us with simple rules for resolving this case and others like it,” Gorsuch wrote. “Respectfully, I would follow those straightforward directions to the same straightforward conclusion the Second Circuit reached: This case against Halkbank may proceed.”
The Turkish government didn’t immediately respond to a request for comment left after business hours in their local time.
Read the ruling here.
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