Halkbank Soars as Zarrab's Jailhouse Recording Muddies TrialBy
Recording raises doubts about the truth of Zarrab’s testimony
Shares in the Turkish lender gained as much as 8.2% on Tuesday
Turkey’s biggest listed public lender surged the most in three weeks as investors speculated that remarks revealed in a Manhattan court on Monday undermine a key witness testifying against one of its executives in a sanctions-evasion trial.
Shares of Turkiye Halk Bankasi AS soared as much as 8.2 percent on Tuesday before trading 4.3 percent higher at 2:58 p.m. in Istanbul. The rebound came after lawyers for Mehmet Hakan Atilla, the former deputy chief executive officer for Halkbank, revealed Monday that key U.S. government witness Reza Zarrab said in a recorded jailhouse conversation that he would need to lie to get leniency, according to a summary of his comments submitted to the court.
Zarrab, the Iranian-Turkish currency and gold trader at the heart of the scheme, is “proclaiming his willingness to fabricate testimony out of whole cloth in order a obtain a reduced sentence,” Atilla’s lawyers argued on the basis of the recording, a summary of which was posted, then removed without explanation, from the publicly available court docket. “In America, in order to make it out of prison, you need to admit to something you haven’t committed,” Zarrab was cited as saying in a jailhouse phone call.
“This may support the defense’s, thus Mehmet Hakan Atilla’s, arguments; which helps support Halkbank’s shares,” Duygun Kutucu, an analyst at Oyak Securities in Istanbul, said by email.
Halkbank’s Atilla was arrested in the U.S. eight months ago on charges including bank fraud and conspiring to evade sanctions. The bank has denied any role in helping Iran evade U.S. sanctions. Concerns about the case reversed gains of more than 60 percent the lender had notched earlier this year.
Zarrab was initially the main defendant in the case and has spent a year in U.S. jails awaiting trial, before agreeing to plead guilty and cooperate with the prosecution.