Explainer: Turkey’s Halkbank appeals to US Supreme Court in Iran sanctions case

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The US Supreme Court heard arguments Tuesday on whether Turkey’s Halkbank helped the Islamic Republic of Iran evade American sanctions, in a bid from the juggernaut bank to try and avoid charges.

What happened: In 2019, the US Department of Justice charged Halkbank with bank fraud, conspiracy and money laundering, accusing the bank of “participation in a multibillion-dollar scheme to evade US sanctions on Iran,” according to a press release at the time.

Starting in 2012, Halkbank employees used entities in Turkey, Iran and the United Arab Emirates to evade sanctions related to Iran’s access to the US financial system, restrictions on Iranian energy sales and restrictions on the supply of gold to the Iranian government. Halkbank specifically helped Iran purchase gold using proceeds from oil and gas sales that were deposited at Halkbank, the DOJ said at the time.

The DOJ accused unnamed “high-ranking” Turkish and Iranian officials of participating in the scheme. Halkbank is majority-owned by the Turkish government.

Halkbank filed a motion to dismiss the case in a New York court in 2020, arguing that the bank had sovereign immunity since it is majority-owned by the Turkish government. Sovereign immunity grants legal immunity to governments in other governments’ legal systems.

A New York judge dismissed the appeal case. The bank then filed an appeal to the US Court of Appeals. In 2021, this court affirmed the New York court’s ruling on the appeal. In May of 2022, Halkbank petitioned for the US Supreme Court to hear the case, and the Supreme Court granted this the following October, according to the US website Lawfare.

The Supreme Court heard Halkbank’s arguments Tuesday. Halkbank argued that US legal precedent never included charging a foreign government in a US court. They said the bank has sovereign immunity based on the 1789 Judiciary Act, the 1976 Foreign Sovereign Immunities Act and other factors.

“For sovereign-immunity purposes, Halkbank is Turkiye (Turkey),” Halkbank wrote to the Supreme Court before the hearing, according to a court document.

Some conservative justices gave pushback to Halkbank. Brett Kavanaugh argued it would be “bizarre” for the court to undermine the president’s exercise of national security authority — reference to the DOJ’s charges against the bank, Reuters reported.

On the other hand, Justice Sonia Sotomayor cautioned against giving federal and state prosecutors the right to “insult” other countries, according to Reuters.

It is unclear when the Supreme Court may rule on the case.

Why it matters: The ordeal could further threaten the tense US-Turkey relationship. Turkish Foreign Minister Mevlut Cavusoglu traveled to the United States Wednesday to meet US Secretary of State Antony Blinken. One main purpose of the visit was to buy F-16 fighter jets from the United States. Many critics of the Turkish government in Congress, including Sen. Bob Menendez (D-NJ), are opposed to the sale.

Cavusoglu was asked about the Halkbank case as he was leaving a press conference in the United States Tuesday. The diplomat did not answer the question.

Turkish President Recep Tayyip Erdogan said in 2019 that the charges against Halkbank were “unlawful” and “ugly.” The New York Times reported in 2020 that Erdogan pressured then-President Donald Trump to drop the case.

The charges against Halkbank also further demonstrate the UAE’s role in evading Iran sanctions. In November, the US Treasury Department sanctioned another UAE-based company for allegedly facilitating Iranian oil sales.

Adam Lucente

Source:Al-Monitor

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