By Luc Cohen
NEW YORK, June 17 (Reuters) – A federal judge is set to consider on Wednesday whether to approve an agreement reached by President Donald Trump’s administration and Halkbank to resolve the Justice Department’s criminal prosecution of the Turkish state-run lender for allegedly helping Iran evade U.S. economic sanctions.
The agreement promises to relieve an irritant that has bothered relations between NATO allies Turkey and the United States since the United States first brought the charges in 2019. The announcement of the settlement in March sent Halkbank’s shares soaring on the Istanbul stock exchange.
Manhattan-based U.S. District Judge Richard Berman then paused the case for 90 days to allow Halkbank to demonstrate compliance with the deal’s terms, which included barring it from entering transactions that benefit Iran and requiring a monitor to review the bank’s sanctions and anti-money laundering compliance.
When that period lapsed on June 10, prosecutors with the Manhattan U.S. Attorney’s office asked Berman to formally dismiss the case, writing that the monitor, Ernst & Young, had not found any instances of noncompliance by Halkbank.
Berman scheduled a hearing for Wednesday at 9 a.m. EDT (1300 GMT) to consider the request.
Legal experts have said that U.S. judges have little discretion to reject the terms of deferred prosecution agreements such as the one reached between the Justice Department and Halkbank.
No money changes hands in the agreement, and the bank did not admit criminal wrongdoing. During a March 11 hearing, Berman referenced a letter he received from an advocacy group urging him to press for an explanation as to why there was no financial penalty, but did not inquire about the issue.
U.S. prosecutors had accused Halkbank of secretly transferring $20 billion of restricted funds, converting oil revenue into gold and cash to benefit Iranian interests and documenting fake food shipments to justify transfers of oil proceeds.
Halkbank pleaded not guilty. Turkish President Tayyip Erdogan once called the case unlawful and “ugly.” But the countries now are experiencing their best ties in decades since Trump’s return to the presidency last year.
After Erdogan met with U.S. President Donald Trump last year, the Turkish president expressed hope for a resolution of the Halkbank matter. Erdogan said in October that Trump told him during a September meeting at the White House and in a subsequent phone call that “the Halkbank problem is finished for us.”
The settlement was announced after the Iran war began in February. The Justice Department has said dropping the prosecution would further the U.S. interest in curbing support for Iran.
(Reporting by Luc Cohen in New York; Editing by Will Dunham)
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