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UPDATE 1-Halkbank shares fall over U.S. case against Turkish-Iranian gold trader
May 26, 2016 / 3:47 PM / a year ago

UPDATE 1-Halkbank shares fall over U.S. case against Turkish-Iranian gold trader

(Updates with court documents, analyst, context)

By David Dolan and Daren Butler

ISTANBUL, May 26 (Reuters) - Shares of Turkey’s state-run Halkbank fell more than 3 percent on Thursday, with market participants citing fears about the impact of a case U.S. prosecutors have brought against a gold trader who had dealings with the bank.

Prosecutors in a New York district court on Wednesday opposed Reza Zarrab’s request to be released from custody on bail while he awaits trial for conspiring to violate U.S. sanctions against Iran, saying his wealth makes him a flight risk.

Zarrab, 33, was arrested in Florida in March on charges he and two Iranians conspired to conduct hundreds of millions of dollars in financial transactions through Turkish and Emirati companies, helping Iranian individuals and entities to evade U.S. sanctions.

A dual citizen of Turkey and his native Iran, Zarrab has pleaded not guilty.

In court documents filed on Wednesday, U.S. prosecutors said the FBI had obtained spreadsheets that appeared to “track the bribes” paid by Zarrab to the then general manager of Halkbank, Suleyman Aslan, as recently as 2013, as part of a massive bribery scheme to facilitate transactions benefiting Iran.

Reuters was unable to contact Aslan, who left Halkbank in February 2014 after it appointed a new general manager.

A Halkbank spokesman was not immediately able to comment. In March Halkbank issued a statement to the Turkish stock exchange, Borsa Istanbul, saying it was not under investigation by U.S. authorities.

Local market participants cited fear the probe could be widened to include Halkbank, which has always denied violating any domestic or international laws.

“We have to see whether accusations are going to remain on an individual level or spread on to the bank as well,” said one banking analyst, who declined to be identified. “A fine or a sanction against the bank ... would definitely impact its profit and balance sheet negatively.”

Shares in Halkbank, fell more than 3 percent in early trade, closed down 2.9 percent at 9.02 lira, underperforming a 0.7 percent decline in the BIST 100 stock index. The banking index fell 0.63 percent

U.S. prosecutors said the FBI’s investigation corroborated findings of a 2013 probe in Turkey that saw Zarrab arrested on charges he bribed high-level officials to facilitate the transactions.

That investigation was later dropped after a court ruled evidence was not properly obtained. Aslan was accused but never charged in that investigation.

Zarrab was an independent businessman who ran a holding company in Turkey and money services businesses in Turkey and the United Arab Emirates. U.S. prosecutors say Zarrab used these businesses to evade U.S. sanctions for the benefit of Iran.

His arrest in the United States came two months after world powers, led by the United States and the European Union, lifted crippling sanctions against Iran in return for it curbing its nuclear ambitions. (Additional reporting by Ebru Tuncay, Ayla Jean Yackley; Editing by Daren Butler and Jon Boyle)

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