US prosecutors have asked a judge to impose escalating fines totaling millions of dollars on Turkey's state-owned Halkbank in an effort to force it to respond in court to charges it helped Iran evade US economic sanctions.
In a filing in Manhattan federal court, prosecutors said Halkbank should be fined an initial $1m a day for contempt of court, and which could double each week to counter the bank's "obstinacy" in refusing to defend itself in court.
That would bring the total fine on Halkbank to $105m after one month of further non-compliance and $1.8bn after two months.
[This refusal is] part of a long course of conduct by both the defendant itself and the defendant’s principal shareholder, the government of Turkey, aimed at obstructing the investigation"
Prosecutors charged the bank in October 2019 with aiding a yearslong scheme to help Iran evade US economic sanctions and access $20bn in frozen oil revenue. Since then, Halkbank has refused to accept service of the indictment or answer the case, leading prosecutors to deem it a fugitive from justice.
The US 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.
US attorney Geoffrey Berman called the bank's refusal to attend hearings "part of a long course of conduct by both the defendant itself and the defendant's principal shareholder, the government of Turkey, aimed at obstructing the investigation," the Financial Times said.
Prosecutors also said Halkbank undertook transactions on Iran's behalf that would have exposed the bank to sanctions, including allowing revenue from oil and gas sales to be spent on gold, and facilitating sham purchases of food and medicine.
Halkbank, one of Turkey's largest lenders, denies the charges by saying that the US justice system has no jurisdiction over its operations.
The dispute has caused tension in US-Turkish relations, and nine people have been criminally charged.