Trump directed Treasury, DOJ to address Erdoğan ‘concerns’ about Turkish bank

President Trump asked multiple federal agencies to address Turkish President Recep Tayyip Erdoğan’s “concerns” that Turkey’s state-owned bank would be under threat of U.S. sanctions, according to a response from the Treasury Department to a senior Democratic senator.

It is the first public U.S. admission of Trump directing Cabinet officials, in this case in Treasury and the Department of Justice, to involve themselves with Erdoğan’s concerns around Halkbank, a Turkish state-owned bank indicted last month by federal prosecutors for allegedly funneling billions of dollars to Iran in violation of U.S. sanctions.

It also raises questions about how Trump’s personal relationships and business dealings influence his foreign policy decisions, at a time when his dealings with Ukraine are under scrutiny as part of a formal impeachment inquiry led by House Democrats.

The answer from the Treasury Department came in response to a letter sent last month from Sen. Ron Wyden (D-Ore.), the ranking member of the Senate Finance Committee.

Wyden has launched an investigation into any lapses in financial or administration oversight leading up to the indictment of Halkbank, which was announced by prosecutors in the Southern District of New York last month after years of investigation and the convictions of two Turkish nationals for their role in evading U.S. sanctions on Iran.

The indictment coincided with the White House response imposing sanctions on Turkey for its incursion into northeastern Syria against Kurdish forces allied with the U.S. in the fight against ISIS.

Yet the timing of the indictment raised questions about whether the Trump administration had earlier sought to delay the case against Halkbank out of concerns from senior Turkish officials and lobbying efforts by the president’s personal attorney, Rudy Giuliani.

Trump has had a laudatory relationship with Erdoğan, saying in a press conference earlier this month that the two have “been friends for a long time,” and that he’s a “big fan” of the Turkish president.

The response by Treasury confirms an earlier report by Bloomberg that in April Trump directed Treasury Secretary Steven Mnuchin and Attorney General William Barr to intervene in the case against Halkbank following a phone call between the two world leaders.

“As was publicly reported, when Prime Minister Erdoğan raised concerns directly with President Trump in April 2019, the president referred the issue to the Executive Branch departments responsible by law for the investigation and enforcement of economic sanctions – the Treasury and DOJ,” Frederick Vaughan, the deputy assistant secretary in the Office of Legislative Affairs for the Treasury Department, wrote in the letter to Wyden.  

The response from Treasury fails to answer key questions laid out by the Democratic senator, which asked for the nature and substance of meetings between senior administration officials and their Turkish counterparts between 2017 and 2019.

“Secretary Mnuchin has met with senior officials from the government of Turkey on multiple occasions to discuss a range of foreign policy and national security issues,” Vaughan wrote.

“At some of those meetings Turkish government officials expressed concern about the impact on Halkbank of U.S. economic sanctions on Iran.”

Treasury identified seven meetings over the two-year period between Mnuchin and senior Turkish officials, including Erdoğan, Finance Minister Berat Albayrak — who is also Erdoğan’s son-in-law — and the former Deputy Prime Minister Mehmet Simsek.

Simsek’s position was eliminated in July 2018 following sweeping changes to Turkey’s governing system, abolishing the prime minister’s office and consolidating power in the hands of the office of the president.

Treasury said it is restricted in discussing conversations surrounding ongoing investigations.

“As previously noted, the U.S. government treats pending criminal matters with utmost sensitivity, and Treasury is unable to comment on any ongoing prosecution of potential sanctions violations or potential investigations thereof,” the agency said.

Both Erdoğan and Albayrak have earlier been implicated as conspirators in the federal case against Halkbank, their names given in testimony by Reza Zarrab, a Turkish-Iranian gold trader identified as the mastermind behind the sanctions evasion scheme, which resulted in the transfer of $20 billion to Iran between, at least, 2012 and 2015.

In 2017, Giuliani, who was at the time the lawyer for Zarrab, convinced Trump to pressure then-Secretary of State Rex Tillerson to drop the criminal charges against the gold trader, according to a report by Bloomberg. Tillerson refused.

Turkish officials, including Erdoğan, have often raised the issue of Halkbank with the president and other U.S. officials. In November 2018, Reuters reported that Erdoğan claimed Trump promised to “instruct the relevant ministers immediately” about concerns surrounding potential U.S. fines on Halkbank because of the trial, and that U.S. officials called Turkey’s treasury and finance minister the following day.

On Oct. 17, Vice President Pence said Turkish officials raised the issue of Halkbank with him following negotiations with Turkey to pause their offensive in northeastern Syria. The vice president said he responded that the issue was a matter for federal prosecutors.

Wyden said the delay in charges against Halkbank bears hallmarks to the impeachment inquiry surrounding the president and the question of whether Trump directed loyalists to hijack foreign policy for his own personal gain.

“Halkbank stands accused of the largest Iranian sanctions evasion scheme in U.S. history,” Wyden said in his statement. “Congress needs to know to what extent Donald Trump and his cronies were carrying water for a state-owned Turkish bank and whether they ran the same Ukraine playbook by roping U.S. government officials into their personal scheme.”