Halkbank must enter plea in sanctions case before fighting jurisdiction -U.S. judge


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NEW YORK (Reuters) – Turkey’s state-owned Halkbank must enter a formal plea to charges that it helped Iran evade sanctions before it can challenge a U.S. court’s ability to hear the case, a judge ruled on Thursday.

FILE PHOTO: People walk past by a branch of Halkbank in central Istanbul, Turkey, October 16, 2019. REUTERS/Huseyin Aldemir

“If Halkbank wishes the district court to decide its jurisdictional motion, this international bank holds the key to unlock its dilemma: travel to New York and answer the charges or have its legal counsel do so,” U.S. District Judge Richard Berman wrote in his ruling.

Halkbank would not give up its right to challenge the court’s jurisdiction by appearing and entering a plea, the judge said.

U.S. prosecutors brought the criminal case on Oct. 16, escalating tensions between the United States and Turkey as the latter was launching a military incursion in Syria. Turkish President Tayyip Erdogan called the case an “unlawful, ugly” step.

The bank has so far declined to make a formal appearance in the case. Prosecutors have called the bank a “fugitive” and said they may seek sanctions against it if it does not appear.

“We disagree with the district court’s decision denying Halkbank’s motion for a special appearance, which would have allowed the Bank to challenge the court’s jurisdiction without waiving its rights,” Ana Buling, a lawyer for Halkbank, said in an emailed statement. “We will carefully review the ruling with our client and consider our legal options.”

Prosecutors have alleged in an indictment that Halkbank and its executives worked between 2012 and 2016 to help Iran spend revenue from oil and gas sales abroad using sham food and gold transactions, in violation of U.S. sanctions. Turkish-Iranian gold trader Reza Zarrab and Turkish officials also aided in the effort, prosecutors said.

Judge Berman had previously presided over the trial of Mehmet Hakan Atilla, a former executive at Halkbank. Zarrab pleaded guilty and testified against Atilla, who was convicted and sentenced to 32 months in prison.

Atilla returned to Turkey this year after leaving prison, and was named general manager of the Istanbul stock exchange.

Halkbank said in a court filing that it intends to move for Berman to recuse himself from the case on the grounds the judge has “made statements both in and out of the courtroom that call into question the court’s impartiality,” though it did not give details.

Berman ruled on Thursday that he will not consider that motion unless Halkbank formally answers the charges.

Reporting by Brendan Pierson in New York; Editing by Paul Simao


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