Nicholas Morgan
Nov 05 2019

Halkbank shuns U.S. court again, stalling Iran sanctions case

On Nov. 5, the money laundering and sanctions evasion case filed against Halkbank, one of Turkey’s largest majority state-owned banks, by United States prosecutors in New York continued in a new hearing.

There was little change in the status quo of the case. Representatives of Halkbank did not appear in court to argue against the charges filed against it after failing to show up for a previously scheduled summons on Oct. 22, a week after the initial charges were filed against it by federal prosecutors.

Instead, in a turn of events, litigators from King & Spalding appeared in court on its behalf after previously denying that it could speak on the bank’s behalf. In an unusual fashion, the King & Spalding attorneys led by Andrew Hruska continued that argument by insisting they would file motions on behalf of their client but while insisting that they still did not speak in any capacity beyond this move.

Ahead of the hearing, Hruska filed a motion that called for the recusal of Judge Berman and for the case to be dismissed on jurisdictional grounds. This argument echoed Halkbank’s own statements that given it’s lack of any branches or employees in the country, the United States lacked the jurisdiction to file an indictment. Instead, the defense requested that Halkbank be granted the right to a special appearance in this case where they did not have to physically appear in order to challenge the charges filed against them.

Quickly, Judge Berman expressed his doubts about the validity of these arguments. Initially, Berman asked why questioning the court’s jurisdiction is relevant at this point when the same questions asked were involved in the related cases of Hakan Attila, a Halkbank manager convicted for his involvement in the multibillion dollar scheme, and Reza Zarrab, whose case was the first in this ongoing saga.

Berman was equally skeptical about the defence’s filing for special representation in this case. When questioned about whether precedent existed for defendants being granted special representation in criminal cases within the Second District, where the Southern District of New York’s office operates from, Hruska acknowledged no authority existed granting that privilege. 

“Why would any court do that? Why would that make sense?” Berman asked the defence.

Federal prosecutors largely argued in line with Berman’s doubts about the legal strategy being pursued by Halkbank’s attorneys. “There’s certainly an air of gamesmanship here.” Assistant U.S attorney Michael Lockard said about Halkbank’s arguments for its continued refusal to appear in court and request for special appearance. “None of us are aware of any legal authority for that prospect.”

Lockhard’s assertion that Halkbank is engaging in a form of gamesmanship is supported by events inside and outside the case. Lockard told the court that federal prosecutors had their indictment physically delivered to its headquarters in Turkey through FedEx but were notified by the service that Halkbank refused to even accept the physical package. It is a obscure if still blatant attempt to even acknowledge the indictment filed from Manhattan.

Judge Berman himself cited an article in the New York Times on the day after the initial Halkbank indictment that reported previous negotiations between Halkbank and the U.S Department of Treasury over the size of any penalty for it’s sanctions evasion scheme.

These negotiations followed direct appeals by President Erdogan and his son-in law and Minister of Finance Berat Albayrak, to President Trump and his administration. These negotiations came to an end when prosecutors in Manhattan unveiled the indictment charging Halkbank on Oct. 15.   

Berman continued this line of argument by inquiring why a defendant that did not intend at all to appear in court would gin up it’s resources if it believed no case existed. He then went on to state with some exasperation that he does not understand what the defence hoped to achieve with this hearing given that the client was refusing to appear itself in court and that it’s arguments against appearance, jurisdictional ones and for fear of admitting acceptance of the charges, were already previously settled.

Even the defence at one point struggled to articulate whether Halkbank would appear in U.S court under any conditions. “Is your client prepared to say that if there is no waiving of it’s rights through its’ appearance, it would appear?” Judge Berman asked the defence.

The defence reiterated that it was not permitted to make that commitment on its client’s behalf without briefing it first.

At the end of the hearing, Judge Berman stated that the status quo of the case remains unchanged. Berman has granted the defense an extended window to brief Halkbank on the outcome of the hearing and determine what steps it would pursue next.

The deadline given by Judge Berman is Nov. 19 for the defense which would be followed by a government reply a week later by November 26. A short reply to that response would be allowed to be filed by December 2.

The opinions expressed in this column are those of the author and do not necessarily reflect those of Ahval.