(Bloomberg) -- Turkey’s state-owned Halkbank can be prosecuted for conspiring to violate US sanctions against Iran, a federal appeals court ruled, sending the bank’s shares down.
Tuesday’s decision by the US Court of Appeals in Manhattan could remove legal obstacle to the longstanding case proceeding to trial. Last year, the US Supreme Court ruled Halkbank wasn’t shielded from prosecution by a US statute granting immunity to governments for official acts.
But while the courts have largely decided the legal issues, the future of the case may also hinge on the outcome of the presidential election. Geoffrey Berman, the former Manhattan US attorney who oversaw the investigation into the bank, has said he was subject to political pressure on the case based on then-President Donald Trump’s relationship with Turkish President Recep Tayyip Erdogan.
Shares of Halkbank reversed gains of as much as 4.7% to trade 1.2% lower as of 5:12p.m. in Istanbul.
US prosecutors in New York charged Halkbank in 2019 with being at the center of a scheme to give Iran access to some $20 billion in proceeds from overseas oil sales that were frozen at the bank. Halkbank has pleaded not guilty.
Evidence introduced in an earlier trial against a Halkbank executive showed that top officials, including the then-chief executive, took bribes and held meetings with a key money launderer to devise ways to move the money on Iran’s behalf.
Halkbank had argued that was immune from prosecution because it is majority-owned by Turkey, that the conduct occurred outside the U.S. and that it is beyond the jurisdiction of U.S. courts. The doctrine of sovereign immunity protects nations from being sued or prosecuted for actions of state, with exceptions for when a state acts as in a purely commercial or business capacity.
The New York court on Tuesday ruled against the bank on additional sovereign immunity issues that weren’t decided by the Supreme Court.
(Updates with background, share drop in fourth paragraph.)
©2024 Bloomberg L.P.
