Halkbank Hit With U.S. Demand for Millions in Contempt Fines

Bob Van Voris

(Bloomberg) -- Turkey’s Halkbank should pay millions of dollars in fines for its continued failure to respond to U.S. sanctions-evasions charges, federal prosecutors in New York said.

In a court filing Tuesday, the government asked a federal judge to impose a daily $1 million fine that would double each week the bank refuses to appear in the case.

Prosecutors charged the bank in October with aiding a yearslong scheme to help Iran evade U.S. economic sanctions and access $20 billion in frozen oil revenue. Since then, the bank has refused to accept service of the indictment or answer the case, leading prosecutors to deem it a fugitive from justice.

The U.S. pursuit of Halkbank, which is owned by the Turkish government, has been a sore point in relations between the two countries. Manhattan federal prosecutors previously won the conviction of a senior Halkbank executive in a case Turkish President Recep Erdogan likened to an “international coup attempt.”

Read More: Halkbank Threatened with U.S. Contempt in Iran Sanctions Case

“Halkbank has consistently sought to avoid responsibility for its role in a massive sanctions-evasion and money-laundering scheme that gave the Government of Iran access to billions of dollars’ worth of restricted oil proceeds,” the U.S. said in Tuesday’s filing.

The U.S. argued that Halkbank improperly ignored an initial summons, “intentionally frustrated” efforts to serve the summons and indictment, attacked the charges in the press and failed to show up for a required court appearance.

Andrew Hruska, a U.S. lawyer for Halkbank, didn’t immediately return a phone message seeking comment on the sanctions request.

A judge in December denied Halkbank’s request that it be allowed to make a “special appearance” to argue for the charges’ dismissal without submitting itself to the court’s jurisdiction. U.S. District Judge Richard Berman denied the request, leaving Halkbank with a choice between answering the charges and defending against them or not participating in the case in any way.

While Halkbank does almost no business in the U.S., it has some ties to the nation’s financial system, which the government could limit or sever.

In its initial filing, the U.S. provided conflicting statements about the amount of the proposed fine. In one section the daily $1 million fine was said to double at the end of each week the bank fails to comply. In another section the government said the fine would double every day. In a corrected filing, prosecutors made clear the fine should double only each week.

The case is U.S. v. Halkbank, 15-cr-867, U.S. District Court, Southern District of New York (Manhattan).

(Updates with amount of requested fine)

To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider, Steve Stroth

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