Page 39 - IRANRptDec21

8.1.5 Bank news
US court rejects Turkish Halkbank’s bid to dismiss indictment for assisting Iran in sanctions evasion
State banks in Iran continue to cut costs by selling off branches surplus to requirements
A US appeals court on October 22 rejected Turkish state lender Halkbank's bid to dismiss an indictment accusing the bank of assisting Iran in the evasion of American sanctions.
The 2nd US Circuit Court of Appeals ruled that even if the Foreign Sovereign Immunities Act shielded the bank, the charge against Halkbank fell under the commercial activity exception, Reuters reported. Turkish President Recep Tayyip Erdogan was implicated in the alleged sanctions-busting conspiracy at the heart of the case during a trial that resulted in the conviction of a top Halkbank executive, but he strenuously denied the claims made against him. The US approach to the Halkbank case, pursued by New York prosecutors, came up several times during the Donald Trump presidency, with Erdogan attempting to get it dropped. A memoir by John Bolton, a former US national security advisor to Trump, released last year, claimed Erdogan gave Trump a memo saying Halkbank was innocent, and Trump told Erdogan he would “take care of things”. The former US president was alleged by Bolton to have told his Turkish counterpart that “the southern district [of New York] prosecutors were not his people, but were [Barack] Obama people, a problem that would be fixed when they were replaced by his people”. Ankara claimed Bolton’s book misrepresented Erdogan’s conversations with Trump.
The case against Halkbank is that it converted oil revenue into gold and then cash to benefit Iranian interests and documented fake food shipments to justify oil proceed transfers. Prosecutors have said Halkbank helped Iran covertly transfer $20bn of restricted funds, with at least $1bn laundered through the US financial system.
Halkbank entered a plea of not guilty to bank fraud, money laundering and conspiracy charges over its claimed use of money servicers and front companies in Iran, Turkey and the United Arab Emirates to facilitate the sanctions evasion.
State-owned Iranian banks are continuing with cost-cutting strategies that hinge on shutting down high street banks viewed as surplus to requirements, according to an economy minstry report cited by Donya-e Eqtesad.
Bank Melli Iran (MBI), Bank Mellat, Bank Sepah (sometimes wrongly associated with the Islamic Revolutionary Guard Corps, or IRGC) and Bank Tejarat (Trade Bank) are among those closing branches.
The state lenders have reportedly sold off branch assets for IRR280tn ($1.2bn at the free market exchange rate, but $6.7bn at the official rate) since January 2018 to private developers. The buildings are typically turned into restaurants or are torn down to make way for apartment complexes.
In the period stretching from the start of President Hassan Rouhani's first term in 2013 to the end of 2017, the state banks sold IRR135tn of commercial real estate assets, the report noted.
Successive governments in Iran have mounted increasing pressure over the years to force banks to divest all non-core assets, including companies that have come under their control following bankruptcies, impaired loans and bad debts.
Earlier in August, MBI announced it had divested non-core assets (commercial real estate and other assets) valued at IRR17.4tn ($102) in the previous Persian year (ended March 19).
Last November, MBI failed to find a buyer for the National Development Investment Company, which it listed as having a value of €1.4bn. The business
39 IRAN Country Report December 2021 www.intellinews.com