The U.S. has reached a tentative deferred prosecution agreement to drop criminal charges against Turkey's state-owned Halkbank, which was accused of evading sanctions on Iran. Prosecutors cited "unique and extraordinary national security" reasons for the leniency, specifically crediting Turkey's instrumental role in hostage negotiations following the October 2023 Hamas attacks on Israel. The deal, which requires a judge's approval, would end a yearslong case that had caused diplomatic tension and allegations of political interference.
Main Topics Covered:
1. The tentative legal settlement between the U.S. and Halkbank.
2. The U.S. justification based on Turkey's diplomatic assistance regarding Israel-Hamas.
3. The background of the bank's charges for sanctions evasion and the case's political controversies.
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U.S. Reaches Tentative Deal Ending Prosecution of Turkish Bank
Court papers submitted as part of the agreement with Halkbank, which was accused of doing business with Iranian entities, said Turkey’s assistance “was instrumental” in the Israel-Hamas cease-fire.
The Trump administration has reached a tentative deal to drop criminal charges against a Turkish bank centered on accusations that it had done business with Iranian entities, saying it deserved leniency because of Turkey’s help in negotiating the release of hostages from the Hamas attack in Israel in October 2023.
The proposed settlement for the state-run bank, Halkbank, would resolve a yearslong case that spawned an international battle over corruption, raised concerns about political interference in President Trump’s first term and now appears on the cusp of being resolved with terms favorable to President Recep Tayyip Erdogan of Turkey.
“Various considerations contributed to the resolution of the charges,” federal prosecutors in the Southern District of New York wrote in a letter to a federal judge made public on Monday. Those considerations included “unique and extraordinary national security and foreign policy considerations,” particularly “high-level diplomatic discussions” between the United States and the Turkish government “to address the Oct. 7, 2023, Hamas terrorist attacks and obtain the release of all then-remaining hostages.”
The cease-fire between Israel and Hamas was announced last October, and court papers submitted as part of the deal said Turkey’s assistance “was instrumental.”
The court papers were signed by Justice Department lawyers and representatives of the bank, but only a judge can dismiss a pending indictment. It is extremely rare for a judge to fight a prosecutor’s decision to drop a criminal case.
The judge overseeing the case, Richard M. Berman of the Federal District Court in Manhattan, said he intended to hold a hearing on Wednesday to question both sides about the terms of the proposed deal, known as a deferred prosecution agreement.
The case was opened under the Obama administration, but officials did not bring an indictment against Halkbank until 2019, under the first Trump administration, on charges of fraud, money laundering and sanctions violations. At the time, the Justice Department accused the bank of participating in a multibillion-dollar scheme to evade U.S. sanctions on Iran. The authorities charged senior bank officials with helping move billions of dollars’ worth of Iranian oil revenue, saying they had been protected by high-ranking Turkish officials whom they described as having been bribed to let the scheme continue.
The Halkbank investigation was the subject of prolonged internal battles during the first Trump administration.
Reaching a settlement with a state-run bank accused of enabling the Iranian government is likely to generate a host of new questions about the reasons for the deal. But prosecutors wrote that the proposed deal would aid, rather than weaken, U.S. efforts to combat terrorist financing and financial support for Iran.
As part of the deferred prosecution agreement, the bank has agreed to hire an outside expert to review its compliance with sanctions and anti-money-laundering rules. That expert would submit a report to the court and Treasury Department officials.
Mr. Erdogan has long pressed Mr. Trump to quash the case. The Turkish government owns most of the bank and has great sway over its operations, so the investigation raised uncomfortable questions about members of Mr. Erdogan’s political party and family.
Attorney General William P. Barr had urged federal prosecutors in New York to forgo indicting the bank and instead let it pay a fine. The U.S. attorney at the time, Geoffrey Berman, rejected the terms.
Devlin Barrett covers the Justice Department and the F.B.I. for The Times.
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