Criminal Justice & the Rule of Law Foreign Relations & International Law

The Halkbank Case Should Be a Very Big Deal

Scott R. Anderson, Susan Hennessey, Quinta Jurecic
Saturday, October 31, 2020, 12:17 PM

There are no plausible benign explanations for Trump’s conduct here. Even three days before the election, people should care.

President Trump participates in a joint press conference with Turkish President Recep Erdogan Wednesday, Nov. 13, 2019, in the East Room of the White House. (Official White House Photo by Tia Dufour)

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If the New York Times’s story about the Justice Department’s handling of the case of a Turkish bank—and President Trump’s interference in that case—had broken any other week, it would be a very big deal. A week before the election, with the country inured to the president’s propensity to abuse law enforcement power, it has barely merited a yawn.

The case is worth your time.

Recall that back in June, the U.S. attorney for the Southern District of New York, Geoffrey Berman, was dismissed abruptly under somewhat confusing circumstances. Attorney General William Barr announced that Berman had stepped down from his position—only for Berman himself to deny having resigned. Berman then refused to leave until President Trump himself issued a letter firing him, after which Berman announced that he would depart from his job with the expectation that his deputy would “continue to safeguard the Southern District’s enduring tradition of integrity and independence.” The strange chain of events, including why the attorney general was so eager to be rid of the U.S. attorney, has never been fully explained.

Now, however, a recent story from the New York Times indicates that Berman’s bizarre firing may have been related to a pressure campaign by Barr and the White House to frustrate a high-profile investigation by Berman’s office. The story of Trump and Barr’s efforts to hamstring the investigation into the Turkish bank, Halkbank, says a great deal about Trump’s abuses of law enforcement, his financial entanglements abroad and his susceptibility to foreign influence.

The Halkbank investigation involves an alleged scheme on the part of the state-owned Turkish bank to evade U.S. sanctions on Iran. In October 2019, Berman announced that the bank had been indicted for fraud, money laundering and sanctions evasions—a development that followed a string of other indictments against individual defendants. The investigation was of great interest to Turkish strongman Recep Tayyip Erdogan, who has sought since 2016 to quash the probe. According to the Times, Erdogan may have come close to succeeding.

Erdogan seems to have found Trump to be receptive to his complaints about the investigation. In his book “The Room Where It Happened,” Trump’s former National Security Adviser John Bolton describes a meeting between Trump and Erdogan in 2018, during which Trump declared Halkbank to be innocent and told Erdogan he would, in Bolton’s words, “take care of things.” He then asked Bolton to reach out to then-Acting Attorney General Matt Whitaker on the matter. The Times reports that later in 2018, after Trump and Erdogan spoke again, the White House told the Southern District that the attorney general, the treasury secretary and the secretary of state would all become more involved in the case.

At this point, Treasury Secretary Steven Mnuchin had already reached out to the Justice Department seeking to scale down the potential fine paid by Halkbank in any settlement, following direct outreach by Erdogan’s son-in-law. Months later, the Times reports, following Trump and Erdogan’s conversations, Whitaker ordered Deputy Attorney General Rod Rosenstein to shut down the Halkbank case—stating, confusingly, that an indictment of the bank could pose risks to U.S. forces in Syria. Department officials opted to simply ignore Whitaker’s request. But after Barr was confirmed as attorney general, he too put pressure on the Southern District, pushing prosecutors to allow Halkbank to walk away with only a fine and a limited acknowledgment of wrongdoing—a proposal that Berman reportedly described as “completely wrong.” Berman eventually secured Justice Department permission for an indictment of Halkbank in October 2019. But Barr then dismissed him in June, citing Berman’s supposed unwillingness to reach a settlement with Halkbank.

There are no plausible benign explanations for Trump’s conduct here. The first and more nefarious possibility is that the president pressured the Department of Justice to go easy on Halkbank and Erdogan’s cronies in order to protect his own sizable financial interests in Turkey. The second possibility is less horrible, but it’s not exactly reassuring. Perhaps Trump was swayed by Erdogan’s influence to make policy decisions that cut against the prosecutorial interests of his own government.

Erdogan has been working to influence the Trump administration from before the president even entered office. In one of the earliest stages of this campaign, unearthed over the course of the Mueller investigation, Turkish officials hired soon-to-be National Security Adviser Michael Flynn to lobby the incoming administration for the extradition of dissident Turkish preacher Fethullah Gulen, whose followers Erdogan blames for the 2016 coup attempt against his regime. But the efforts have continued both through direct engagement between Turkish and American officials and through the hiring of individuals close to the president himself—including, inevitably, his personal lawyer Rudy Giuliani.

For his part, Trump certainly appears to have come to value what he sees as a personal relationship with Erdogan, lauding Erdogan as “a hell of a leader” and bragging that he is “the only one [Erdogan] will listen to” among NATO allies. To cement friendlier relations, Trump even invited Erdogan to a meeting at the White House in November 2019, just weeks after slapping sanctions on Turkey (and then removing them) for its offensive into northern Syria. Policy analysts have had trouble explaining the two leaders’ affinity. “[A]t every turn, the president kept leaping in,” former Trump administration National Security Council official Fiona Hill stated to the Times in describing the White House’s approach to Turkey, “and he wasn’t following the strategic threads of the relationship.”

Indeed, Trump has a long record of puzzling policy interventions when it comes to Turkey. Perhaps the most striking examples have come in the context of Syria, where the U.S. alliance with the mostly Kurdish Syrian Democratic Forces (SDF) has long been a point of concern for Erdogan, who sees the SDF as an extension of Turkey’s own Kurdish insurgent movement. During the early years of the Trump administration, U.S. policy toward Syria seemed to have settled on maintaining an open-ended troop presence in Syria, both to combat the Islamic State and to counterbalance Iranian influence. But in December 2018, following a call with Erdogan, Trump suddenly reversed course and ordered the complete withdrawal of U.S. troops—a move so unexpected that it ultimately led Secretary of Defense James Mattis and other senior officials to resign in protest. After another intervention by Trump in October 2019, following another call with Erdogan, Turkey was left in control of a broad swathe of Syria’s northern border, including Kurdish areas important to SDF allies of the United States.

The Halkbank investigation appears to have gotten tied up with this back-and-forth over Syria. According to the Times, it was just before Trump’s December 2018 Syria withdrawal order that Whitaker suggested that failing to drop the investigation against Halkbank might result in threats to U.S. forces in Syria—an argument that might have channeled threats that Erdogan’s regime was publicly making at the time. What’s more, the Justice Department finally authorized prosecution of Halkbank during a period in which the Trump administration was actively deploying sanctions and other measures in response to perceived offenses by Turkish forces in Kurdish areas of northern Syria.

Syria isn’t the only place where Trump and his administration have treaded carefully around Erdogan. The Trump administration has almost entirely declined to criticize Erdogan’s bad-and-worsening record on human rights, as he and his regime have engaged in politically motivated investigations and prosecutions at home and turned a blind eye to atrocities in those parts of Syria under its control. The White House has also done little to oppose Erdogan’s increasingly assertive regional posture, which has involved controversial interventions in Iraq, Libya, Nagorno-Karabakh, and other hotspots. The Trump administration has also refused to impose statutorily required sanctions on Turkey for its purchase of a prohibited Russian missile system, without explanation and despite congressional pressure to do so.

What exactly Trump has gotten in exchange for these positions is far from clear. Erdogan did arrange for the release of detained American pastor Andrew Brunson in October 2018—though only after the United States hit Turkey with an array of economic and trade sanctions, most of which have since been repealed. Moreover, Trump’s posture toward Turkey often seems to be in tension with the rest of the administration’s regional agenda. Much of the Trump administration’s Middle East policy has centered on its close relationship with Saudi Arabia, the United Arab Emirates, and to a lesser extent Egypt—three allied governments that are often on the opposite side of regional affairs from Turkey because of their conflicting views over the threat posed by the Muslim Brotherhood and related popular Islamic movements. Halkbank itself was being investigated for evading U.S. sanctions on Iran, the central pillar in what is arguably the Trump administration’s foremost foreign policy objective: its “maximum pressure” campaign against the regime in Tehran.

Of course, in any region as complicated as the Middle East, both U.S. and allied policy interests inevitably conflict and have to be reconciled. And of course, presidents are permitted to prioritize foreign policy considerations over law enforcement decisions; they are even permitted to intervene in specific cases to direct the Justice Department to decline prosecutions or cut deals. In 2010, for example, President Obama famously signed off on a deal to exchange individuals convicted as part of a Russian spy ring for the release of political prisoners held in Russia, including Sergei Skripal—whom the Russians later poisoned in the United Kingdom. Trump’s foreign policy views are eccentric, so his interventions might look unconventional. But his defenders might insist that, likewise, the Halkbank case is simply an instance in which the president determined the interests of the United States were best advanced by allowing a settlement.

Yet Erdogan’s consistent ability to come out on top in Trump’s policy deliberations is, to say the least, impressive. And here it’s impossible to ignore Trump’s financial interests in the country: According to the Times’s review of Trump’s tax documents, he received profits of at least $2.6 million from business operations in Turkey between 2015 and 2018. And earlier reporting by the Times on Trump’s taxes describes how the Turkish government and business community “have not hesitated to leverage various Trump enterprises to their advantage,” strategically booking Trump properties to host events in efforts to curry favor with the president.

If the president was motivated, in whole or in part, by a desire to curry favor with Erdogan in order to benefit his personal finances, that would be a grave abuse of office and plainly impeachable conduct. Indeed, some commentators have drawn parallels to Trump’s behavior toward the president of Ukraine: The impeachment scandal, after all, derived from Trump using the powers of his office to perpetrate a quid pro quo to benefit himself at the expense of the national interest. Trump has already been impeached for abusing his office for private campaign benefit; abuse of office for personal financial enrichment would be even worse.

It’s a very serious charge—but one that’s difficult to prove based on the information that’s now public. The financial conflict of interest is clear, and Trump could well believe that turning a blind eye to Turkish criminal conduct could redound to his own financial benefit. But this is the type of complex policy decision where it is nearly impossible to establish improper motives conclusively. As one of us wrote previously in the days before Trump’s inauguration: “Many national security decisions reflect a delicate balance of policies, values, and strategy. This means it can be difficult to understand, especially in retrospect, why exactly one choice prevailed over another .... Ethical transparency is critical to national security because it ensures that personal financial interests are not placed before the interests of the country.”

The Halkbank situation is exactly why presidents are expected to abide by ethics rules—including divesting from business interests—and why Trump’s refusal to adhere to the norms of good governance presented serious national security implications from the outset. The public is aware of the amount of money Trump made from Turkey in a three-year period only because of leaked tax documents provided to the New York Times, which themselves do not reveal the full extent of his financial interests in the country. Having taken no effort to avoid the conflict, Trump isn’t entitled to the benefit of the doubt. And notably, those privy to Trump’s actual decision-making with respect to Turkey aren’t extending that benefit. In private remarks after leaving office, Bolton said that he believes Trump’s policy approach to Turkey is dictated by his “personal or business interests.”

The simplest explanation here is brazen financial corruption. But even setting aside the obvious financial incentives—and the likelihood of mixed motivations—the alternative explanations aren’t much better. If he wasn’t seeking financial benefit, then Trump has somehow been persuaded by Erdogan to take actions that contravene his own stated policy goals. A president who is so easily outwitted and susceptible to improper influence is a frightening thing.

Turkey is not the only country in the region working to influence Trump in this way. Saudi Arabia and its allies have conducted their own charm offensive, engaging lobbyists and cultivating a notoriously close relationship between Saudi Arabia’s Crown Prince Mohammad bin Salman and Trump’s son-in-law, Jared Kushner. These efforts have also yielded real dividends, ranging from continued U.S. support for the controversial Saudi-led intervention in Yemen to Trump’s personal, strident support for bin Salman after he was credibly accused of directing the murder of dissident Saudi journalist Jamal Khashoggi. Moreover, these countries—along with Qatar—have all sought to leverage Trump’s personal business interests by renting rooms at Trump hotels, maintaining offices in Trump properties, and even cultivating present and future business opportunities.

Against this backdrop, it’s possible that Erdogan has simply stumbled on a more successful strategy for influencing the president: a combination of inducements and threats, bullying and flattery, favors and requests, all aimed directly at Trump in a way that he ultimately finds cumulatively persuasive.

The president’s defenders might argue that his strategic vision simply departed from that of his career advisers. But even then, it is concerning for a president to be so willing to dictate major aspects of U.S. foreign policy on the basis of his personal preferences, often without even checking them against the views of his advisers or coordinating them through the broader government bureaucracy.

Similarly, the corruption at play in the Halkbank story unfolds not just in the financial conflicts and policy atmospherics but also in the atypical process through which Justice Department leadership made Trump’s preferences known to prosecutors in the Southern District.

Consider the record.

Trump didn’t appear to reach some policy decision after careful consideration. His own national security team was baffled as to why Trump wanted to make large concessions to Turkey that cut against his stated desire to isolate Iran. While Mnuchin advocated for not leveling too large a fine against the bank, that goal was not advanced by immunizing Erdogan cronies altogether against what Mnuchin himself considered serious sanctions violations. And Whitaker then offered conflicting and nonsensical policy rationales for refusing to authorize charges, claiming that somehow the issue at stake was the safety of U.S. troops in Syria. Nor did Trump reach a considered legal position in consultation with the Justice Department; rather, he made a cursory review of Erdogan’s memo offering a thin legal theory about U.S. sanctions and sided impulsively with the authoritarian leader over the prosecutors of the Southern District.

Neither did Trump or the White House transparently announce their decision, internally within the government or to the public. Instead, Trump dispatched Whitaker and Barr on a kind of covert pressure campaign against the Southern District. Berman refused to go along with Barr’s proposed settlement, which he considered to be unethical. Months later, Barr fired Berman—and then lied about the circumstances and reasons why. According to the Times, “the administration’s bitterness over Mr. Berman’s unwillingness to go along with Mr. Barr’s proposal ... ultimately contribute[d] to Mr. Berman’s dismissal.”

Put it all together and the picture is ugly: Once again, the president is intervening in an investigation and a prosecutorial decision in a fashion that appears self-interested, appears to cut against stated U.S. policy to the benefit of an authoritarian leader and his interests, and appears influenced by the president’s own business concerns.

If the story had not broken just days before the election season winds up, people would care.

Scott R. Anderson is a fellow in Governance Studies at the Brookings Institution and a Senior Fellow in the National Security Law Program at Columbia Law School. He previously served as an Attorney-Adviser in the Office of the Legal Adviser at the U.S. Department of State and as the legal advisor for the U.S. Embassy in Baghdad, Iraq.
Susan Hennessey was the Executive Editor of Lawfare and General Counsel of the Lawfare Institute. She was a Brookings Fellow in National Security Law. Prior to joining Brookings, Ms. Hennessey was an attorney in the Office of General Counsel of the National Security Agency. She is a graduate of Harvard Law School and the University of California, Los Angeles.
Quinta Jurecic is a fellow in Governance Studies at the Brookings Institution and a senior editor at Lawfare. She previously served as Lawfare's managing editor and as an editorial writer for the Washington Post.

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