Turkey's "200 Tons Of Secret Gold" Trade With Iran: The Biggest, Most Bizarre Money Laundering Scheme Ever?

Tyler Durden's picture

The topic of Turkey's Oil-for-Gold 'deals' has not been far from our thoughts over the last few years (here, here, and here) but as Bloomberg reports, after accessing a report leaked on March 14 of a network that spanned Turkey, China, Dubai and Iran, the plot reveals "one of the most complex illicit finance schemes [prosecutors] have seen." It included the classic money-laundering techniques of over-invoicing and false invoicing (exactly as in the case of the Chinese commodity financing scandal underway) but the secret government plan to juice Turkey's exports goes much deeper; and if you think that the exposure of this scheme is slowing Turkey's manipulation, think again. Turkey’s trade balance continues to fluctuate unpredictably as gold stocks flow out of the country in bursts.  “Turkey’s going to continue it,” the Turkish economy minister said. “If those casting aspersions on the gold trade are searching for immorality, they should take a look in the mirror.”

We first started noticing major 'odd' exports of gold from Turkey to Iran in May 2012. But in 2013, with a plunging currency, surging inflation, slowing growth, and specter of rapid QE-driven hot money outflows leaving his nation desperate; Zafer Caglayan, the minister in charge of Turkey's $800 billion economy decided that the only way to ensure success in the looming election... was to cheat...

Bloomberg explains...

...Caglayan described the [trade] gap as unsustainable and said the government would take steps to improve it.


What he didn’t mention was a clandestine export-boosting operation started up more than a year before that was helping to solve the trade imbalance.


At the time of the television appearance, it was still underway. Three weeks before, Caglayan had been secretly taped by national-police investigators telling his collaborators to find a way to increase exports by at least $1 billion a month. His orders came from the top in a two-hour meeting with Prime Minister Recep Tayyip Erdogan, he told an associate.


The operation featured an Iranian-born businessman who liked fast horses, faster cars and the fastest planes. His unique skill: Getting gold into sanctions-encircled Iran. Enough gold that for a time he became the government’s key instrument in improving Turkey’s irksome economic imbalance.

Turkish judges and police were investigating this farce when, as we noted here, the judge in charge of the affair was mysteriously re-assigned (or fired) and in the run-up to March municipal elections this year, the prime minister decried the inquiry as an attempted coup. but their findings were leaked...

How a team that included Turkey’s economy minister sought to manage the current account deficit, as the gap is called, by juicing exports to Iran is laid out in a 300-page document prepared by Turkish investigators in 2013. Caglayan and his collaborators also came away with tens of millions of dollars in bribes, according to the document, which has been cited in parliament by opposition lawmakers.

What the enquiry found is incredible; and makes any economic analysis of Turkey's condition entirely useless...

The surge in exports was so rapid and so extensive -- gold transfers to Iran jumped from $53 million in 2011 to $6.5 billion in 2012 -- that it distorted Turkish trade figures, making the economy appear superficially stronger than it really was, said Atilla Yesilada, Turkey adviser at New York-based GlobalSource Partners Inc., an economic advisory firm.


“I don’t know what Caglayan’s motivations were, but he was a huge supporter of the gold trade with Iran,” said Yesilada in a phone interview from Istanbul.


“It never made any economic sense. This is not the kind of export that’s associated with a strong economy. What was the purpose of the gold trade with Iran? We’ve never gotten an explanation.”

When the gold trade was foiled by tightening American sanctions starting in July 2013, Sarraf and his collaborators kept exporting. As Bloomberg goes on to discuss, the details are extreme (and often downright idiotic)...

They sent thousands of tons of overpriced -- and sometimes fictitious -- food onto ships steaming between Dubai and Iran, according to the document (very reminscent of the fiasco unwinding in China currently).


Smoothing out the complications of this shadowy and complex trade were bribes to Turkish government ministers: multimillion-dollar diamonds, and millions of dollars stuffed into suit bags, chocolate boxes and even shoe boxes, the investigation document says.


The covert efforts that Caglayan and his associates undertook eventually swelled to a multi-billion dollar enterprise that reached from Ghana to China, according to the investigation. Tons of gold flowed from Turkey to Iran, much of it via Dubai. That freed up Iranian money trapped in Turkish banks, in turn boosting Turkish exports.

But things did not go according to plan...

While the gold transfers boosted overall exports by almost 13 percent in 2012, to $153 billion, from the previous year, they failed to offset the Turkish appetite for imports, which Caglayan himself once described as an “addiction.” The country ended 2013 with a $65 billion current account gap, almost $20 billion more than in 2012.

And while it's obviously non-economic, the plan was entirely politically motivated...

“All these ploys to demonstrate ever-higher export numbers have no relevance for the real economy,” said Sinan Ulgen, the chairman of the Center for Economic and Foreign Policy Studies in Istanbul. “If you concentrate too much on absolute numbers and don’t think about what those exports actually are and what they mean for the Turkish economy, then you tend to be too complacent about making the right policy choices.”


For Erdogan, the buoyancy and reliability of the economy goes to the heart of his promise to Turkish voters.

The leaked document that Erodgan tried so hard to hide, prepared by the Turkish National Police, shows that investigators probed the activities of a cast of characters that was both powerful and dependent upon each other for favors. There have been some arrests (but no politicians)

The first was Sarraf, the Iranian businessman, who changed his name from Reza Zarrab after he took Turkish citizenship in 2007. He and Erdogan were photographed on stage together at one public function, and met at a wedding in Ankara. After Sarraf was arrested in December, Erdogan told reporters that his gold-dealing had “contributed to the country.”

And Serraf gloated patriotically...

Sarraf estimated he had facilitated the transfer of about $12 billion in gold -- about 200 tons -- to Iran. That represented “about 15 percent-15.5 percent of the current account deficit that I closed by myself,” he said. He didn’t say what period he was referencing.


“There’s a serious benefit to the Turkish economy with profit that’s gone into state coffers,” he told the interviewer.




The business was certainly lucrative. Sarraf earned a 1.7 percent commission on the exports, according to a person familiar with his finances. He spent it on a lavish lifestyle.

But the bribes and kickbacks run deep...

The second participant was Caglayan, an engineer-turned-industrialist who won election to parliament in 2007.


The investigators said he received at least $50 million from Sarraf, some of which he then distributed to others, according to the document. He also received diamonds, a $343,000 watch and a $37,000 piano, according to the document.

and the last part of the puzzle...

The last member of this group was a man familiar to foreign investors: Suleyman Aslan, then-chief executive officer of Turkiye Halk Bankasi AS. Halkbank, as the country’s state-owned bank is known, was where the Iranian government parked payments for natural gas and oil.


He also served as an intermediary for instructions from Caglayan to Sarraf, the investigators said.


The document says Aslan was to receive $2.7 million in cash from Sarraf. Dropped off in rolling suitcases and stuffed into backpacks, the bribes were code-named “visitors” by Aslan and his wife in text messages.


In one exchange intercepted by investigators, Aslan wrote to his wife that he had “hosted five guests. They looked green, green.”

How the plan worked is complex but as Bloomberg explains, to get around restrictions on banking with Iran, Sarraf looked to China...

He and his associates obtained letters of introduction in Turkey and used four front companies in China, which then used Chinese banks as intermediaries in money transfers between Iran and Turkey, according to the document. One, Beijing-based Bank of Kunlun Co. Ltd., was sanctioned by the U.S. Treasury Department in July 2012 for sending as much as $100 million to blacklisted banks in Iran.


The document also shows an effort to push through as much gold as possible before July 2013. The U.S. that month added precious metals to the list of items that couldn’t be sold to Iran as part of an effort to curtail that country’s nuclear enrichment program.


“The Istanbul prosecutor’s report leaked on March 14 is a damning document that reveals one of the most complex illicit finance schemes I have seen,” said Jonathan Schanzer, a former terrorism finance analyst at the Treasury and now research director at Foundation for Defense of Democracies, a Washington policy institute focused on national security. “The networks spanned Turkey, China, Dubai and Iran. It included the classic money-laundering techniques of over-invoicing and false invoicing.”




“In a month and a half, they’re going to stop the gold,” he said, according to a transcript. “Let’s do a little food. Send it from Moscow, send it from Azerbaijan, wherever you can get a document from -- start right away this week.”


Substituting food for gold, and using Dubai as a hub to ship to Iran, proved an ineffective way to make up for the stalled high-value gold exports.


But this greed is where they came unstuck as investigators found comedic errors...

“Let’s talk about this wheat issue,” said Mehmet Hakan Atilla, according to the document. “This is a 140,000-ton order. I think it’s a little difficult for a 5,000-ton thing to carry a 140,000-150,000 ton order.”


Then he pointed out another difficulty.


“The document you sent has the origin of the wheat as Dubai,” said Atilla. “You know, because it’s impossible for wheat to have the origin of Dubai.” Dubai is in a desert.

This revelation will likely lead to further uprisings...

“No one is innocent in this situation. In Turkey, unfortunately, people’s lives have been mortgaged through techniques of surveillance,” said Sen in an interview in his office this month, referring to the taping and release of private conversations. “The government was complicit: It never spoke out against these things, and it let them happen.”

Especially as there is no consequences...

Sarraf was released on Feb. 28. His access to $18 million in liquid assets that had been frozen was restored after the prosecutor said there was no evidence to probe the charge. He still awaits trial.


Caglayan remains a member of parliament. A commission established to probe corruption allegations against him and three other lawmakers stumbled when Erdogan’s party failed to nominate anyone to sit on it.

And Turkey appears to happily going along doing the same thing...

Turkey’s trade balance continues to fluctuate unpredictably as gold stocks flow out of the country in bursts. In March, unidentified exporters sent $1.3 billion of gold to Switzerland, making the country Turkey’s top export destination. The following month the trade practically disappeared, with exports dropping 96 percent to $52 million.

Simply put - trust no one and nothing; gold is money; and the poeple are growing restless from this constant skimming, manipulation, and graft by the elites - see Ukraine (and more aware - no matter how many times you kill Twitter)

Read more here at Bloomberg

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NoDebt's picture

Corruption rages.  And yet, somehow, through all the insanity, the gold continues to flow west to east (or middle east).  Gold seems to know how to find a home that appreciates and values it, no matter what obstacles you put in its way.  US gold?  Already gone, just pretending we have it.  Turkish gold?  Apparently traded for the next election win.  Fools.

Follow the money.  The REAL money.  It will flow to power in its ascendancy every time.

Greenskeeper_Carl's picture

whatever it takes to keep the global ponzi alive a little longer

Pinto Currency's picture



Oil for gold is being marketed as some kind of a scheme.

Petrogold is back, plain and simple (it probably never left completely).

And it cannot be stopped.

THX 1178's picture

Just another nail in the $ coffin.

Supernova Born's picture

Baseless fiat remains backed by the full violence and hatred of the bankster cabal.

DoChenRollingBearing's picture

Turkey apparently is ashamed of itself.  Not for buying oil with gold, but covering it up (and getting caught).  Corruption and dirty dealings.  Lies.  Hmm, reminds me of some of the dynamics we see in politics here in the USA.  

IRS anyone?

dryam's picture

"When it becomes serious, you have to lie,"

Pinto Currency's picture



So far Bloomberg has told us this week that the Germans are not repatriating their gold (wrong).

And now Bloomberg says the Turks were running some wacky gold scheme (wrong).

The gold trade was oil from Iran to India, rupees India to Turkey, and gold back to Iran from Turkey.

And this program stopped when the US realized that they wrere reigniting the PetroGold trade.  It continues.

Bloomberg will also soon dig into the full story of the $200B Belgian Treasury purchases.


Article: India to Buy Iran Oil in Gold Not Dollars  http://www.presstv.ir/detail/222857.html

Article: Gold for Oil - India Iran Ditch Dollar http://www.forexcrunch.com/gold-for-oil-india-and-iran-ditch-dollar-report/

Turkey - India trade balance: http://www.mfa.gov.tr/turkey_s-commercial-and-economic-relations-with-india.en.mfa


There is something major going on in the gold world. 

Bloomberg and the usual suspects are making fools of themselves - Mike have a 64 oz. Slurpee and give your head a rest.

MeMadMax's picture

Hey erdogan:

Must be expensive arming those terrorists and sending them to syria huh?

StychoKiller's picture

Why not ask Mei So Riks or Bang Da Au?!

DeadFred's picture

Foolish Turks. Just keep your damning evidence on a recycleable harddrive and when things get dicey...

COSMOS's picture

Turkey is a sovereign nation they can do as they please with their business dealings and how they pay for things.  Its not of anyone's business, especially not the USA which sells guns to Mexican Cartels, overthrows democratic governments and who knows what other multitude of laws it breaks on top of the Constitutional amendments.

Theosebes Goodfellow's picture

I have a couple of thoughts on this. The first is that the US government is adding to the death of the USD by its punitive polices against countries it doesn't like. The rest of the world is sick of the meddlesome nature the IRS and DOJ engage in, and they have found a way to circumvent the Americans.

My second thought ponders what the situation will look like when suddenly these foreign, sovereign powers decide they no longer need to to the American line. I have a very distinct feeling that time is not far away, if it's not gone already.

The third is that there is a new player at the table in the Middle East. ISIS is going to impact this little shell game the Iarnians and Turks are playing. While there is an ideological/theological slant to this, this is, after all, business here, and other such conditions tend to take a back seat after a while. Just look at communism and China.

TruthHunter's picture

"the judge in charge of the affair was mysteriously re-assigned (or fired)"

Lucky bastard...he wasn't fired (at)

TeamDepends's picture

Gold, can six thousand years of success be wrong?

TahoeBilly2012's picture

Jim Willie called this a year ago.

Supernova Born's picture

Banksters are overplaying their baseless fiat hand.


Won't someone(s) want to know what the real "price" of gold is someday? Otherwise, why bother with all the secrecy and lies.  

Supernova Born's picture

"They" already do. The low value in baseless fiat stupefies John Q. Dumbshit while the Chinese continue their chess game.

potato's picture

Using anything besides Federal Reserve Notes to trade is suspicious and obviously a criminal scheme. Why haven't we droned them some democracy yet??

Urban Redneck's picture

I think Uncle Sam's decades old & several thousand ton, paper currency - paper gold - physical gold - black gold trade is actually the "Biggest, Most Bizarre Money Laundering Scheme" in history.

Newsboy's picture

Hmmm, Bundesbank?

You paying attention to all this?

NoDebt's picture

Buba figured out they were trying to squeeze blood from a turnip and quit trying before they started a panic.  Like was said above- anything to keep the ponzi going a bit longer.

bonin006's picture

Buba never wanted it, they are in bed with the FED. They only pretended to ask for it back because the German people wanted it.

TheReplacement's picture

Maybe he's saying that Germany's gold is gone via this or a similar scheme and it is time to wake the hell up if you are Germany.

Paveway IV's picture

And whatever it takes to use questionable laws and sanctions to discourage any weaker country from the ability to defend itself from the crony cabal countries.

Iran was scheduled for complete financial destruction by now (they're late!) and the subsequent U.S.-backed fake Iranian Spring uprising. The tool (as always): illegal, immoral and inhumane U.N. economic scanctions designed specifically to punish the weakest and poorest people of Iran. Why them? You can't depend on the few comfortable, middle-class Iranians to join your fake uprising to destroy their country. You need the powerless, destitude POOR Iranians that have had to watch their families starve for months on end and their babies die for lack of medicine and clean water. As soon as you demonize their leaders bad enough, you can convince them to revolt. That's the way it works in the comics, doesn't it?

Barbaric? Ask the U.S. - economic sanctions worked damn fine for bringing the poorest in Iraq to their knees in the 90's. Even Saddam Hussein himself was caving in by 2001 and was trying to make a deal with the U.S.. The poorest Syrian people were suffering for years under increasing economic warfare, preparing them well for the cabal 'assisted' uprising. Assad's slow but steady reforms? Screw that - KILL NOW!

So pay attention to the frequent mass media reminders that IRAN is the real villian here. Selling their oil for gold and not bank-transferrable (and traceable or controllable) USD transactions? Who do they think they are? They're suppose to be dying from sanctions, not trying to buy food and medicine on the sly. And damn them for the audacity to trade in anything but USD!

Note to eventual U.S. ground invasion force: we're going to need a few more dumpsters for all that missing Iranian gold. Note to U.S. banks: start lending out Iran's liberated gold right now - it's as good as ours. 

TheReplacement's picture

Just to be clear, can you cite the specific sanction to which you are referring?  Links would be appreciated since you will be referencing official docs.

Paveway IV's picture

No, because there are about a dozen U.N. resolutons that constitue the U.N.'s mass Iranian-civilian-punishment sanctions scheme. Those only support the ongoing and much more damaging U.S.- and E.U.-imposed Iranian-civilian-punishment sanction schemes. Iranian citizens will continue to be punished until they replace their leaders with the approved US-EU-Israel-GCC puppets. Try wiki

TheReplacement's picture

Which ones - you linked wiki, which specific ones are you upset about?  I appreciate the downvote for just asking a specific question.  Apparently that is now considered bad.

I wonder why you got two upvotes for taking the time to type a reply while not answering the question. 

Strange world.

Acidtest Dummy's picture

The USA has been after Iran since forever. The USA is a psychopathic meglomanical military financial genocidal empire. Maybe special didn't mention that.

what's that smell's picture

amen, dummy.

look at the psychopath's treatment of the recalcitrant cuba.

the biggest most bizarre money laundering scheme ever?---the FED and infinite fiat!

btw, there are two nations never attacked by the USA's propaganda front (MSM)....britain and israel.....hmmmmm.

they must be as clean as a virgin's honey pot.

Paveway IV's picture

No idea who downvoted you, TheReplacement, or upvoted me. I'll upvote you or anyone else just for questioning me - thats what ZH use to be about.

I don't have a specific sanction on that list to point to as the source of all sanction-imposed hardship in Iran. The first UN sanction in 2006 called for ceasing all enrichment activity. I don't think the UN has the right to make such crazy demands of a soverign nation, but at least it's specific to the nuclear program. No economic harm. Never mind that the one nation that ultimately seeks Iran's destruction - Israel - is heavily nuclear, chemical and biologically-armed. 

The 2007 UN sanctions call for an arms embargo and freezing of Iranian assets. This was a country that suffered chemical warfare casualties a few years prior in a war with it's neighbor, Iraq. The bitterly-hostile anti-Iranian U.S. was rearming Iraq in 2007 and arming and training anti-Iranian MEK terrorist 'assets' in Iraq (Camp Liberty). Iran is not going to just stop defending itself, so it has to divert resources internally to inefficient and costly internal weapons production. Resources that otherwise would have gone to developing Iran in much better ways. Argueably not that economically damaging to everyone in Iran, but a start. 

The 2008 sanction extended the asset freeze, 2009 and 2010 continued to tighten the economic screws that exerted and effect well beyond the confines of Iran's nuclear program - specifically to cause more general economic damage and punish the Iranian people as a whole. It' obvious from the detail and effect of those sanctions. They were designed to put the hurt all Iranians, not just their nuclear program. Much worse than the 2008 sanctions, but not as far as being economically lethal by a long shot. 

The widespread US and EU sanctions in 2012 were simply Mafia-style strongarm overt economic warfare intended to destroy the economy of Iran and concentrate punishment on it's most vulnerable citizens. The US and EU were not oblivious to those consequences - they were intended. Obey us, die a slow, painful death, or overthrow your rulers and install a U.S.-EU-Israeli-approved puppet government. I think a lot of this sour grapes from the U.S., still pissed off that Iran threw out it's last psychopathic lapdog - the corrupt Shah.

Do you need specifics like the suffering and death from lack of medical equipment and medicine that these sanctions have caused in the last couple of years? Or the risk to Iran's infrastructure when they can't get equipment or engineering help from almost anywhere? Impoverishing a small country back into the stone ages to obey has a significant humanitarian cost. Suffer or revolt? That's psychopathic to the core.

shovelhead's picture

They must not be working. Plenty of iPhones and luxury goods all day long in Iran.

Sanctions are pointless but going Full Drama Mama doesn't help your case.

dontgoforit's picture

When Iran test-fires its first nuke, the entire picture will take on a new, much more intriguing set of colors.  It won't be good for anyone except Iran, and that is a questionable thing in itself.

Canuckistan Al's picture

My guess, first test fire of an Iran nuke and the Israeli's will "glass them". US may piss around but Isreal won't.

Paveway IV's picture

"Full Drama Mama"? If your country was cut off from the global economic community out of another country's spite, you would be crying like a little girl in no time at all, shovelhead. You probably have no idea of the consequences if your basic understanding is that "...77 million Iranians can still get iPhones and luxury goods..."

76.9 million Iranians can't afford iPhones and crave crazy luxury goods like 90% of the drugs they need which are not made in Iran. Get cancer in Iran and you're screwed. No chemotherapy for them, and the hospital would be leveled if they caught an Iranian doctor using any kind of nuclear medicine. Unless you're a rich Iranian with connections - sanctions don't bother them much.

Saudi Arabia just started taking delivery of China's latest intermediate range ballistic missile. The country that gave the world wahabist extremism and al Qaeda probably has a few nuclear warheads stashed somewhere. Who do you think is more of a threat to the world - Saudi Arabia, Israel or Iran?

7.62x54r's picture

That Iranian gold held in the US is long gone by now ... just sayin' ...

Buck Johnson's picture

I have to agree with you, gold is flowing to where the real power is and that is out of the west.  If most people truly used their head they would know that paper money is just that paper and it won't last or it will last as long as the next fiat paper currency is brought forth.  So most in the east is buying gold with a passion with their fake fiat in order to have it when the reset happens.

Kirk2NCC1701's picture

@ NoDebt: "Corruption rages".

Define "corruption".  Seriously.  Especially given what the US, the Fed, Wall St, Big Oil, CIA, DOD, NSA, JPM, GS, HFTs, etc, are doing.

Sounds like more than just self-righteous, American Protestantism being projected.  Sounds like lack of fully understanding or appreciating how the real world, the rest of the world lives and does business.

p.s. Who really cares what they are doing?  Besides oil-for-gold (Iran-Turkey) and gold-for-Yuan (Iran-China), or gold-for-rupees (Iran-India).

natty light's picture

"Gold seems to know how to find a home that appreciates and values it"

Gresham's Law

doctor10's picture

All the gold flow is doing is running away from taxes. Thats why the price stays down.  Keep it in the West and its worth 50% less-heck 75% less if its in France.

Send it to the East-no reporting requirements-its automatically worth 50% more at least as soon as you get out from under the kontrol freaks runng the Western Socialist-Communist welfare states



tony bonn's picture

“If those casting aspersions on the gold trade are searching for immorality, they should take a look in the mirror.”

precisely...the criminal terrorist west spawned the gold trade with its project for a new american century horse crap motivated sanctions on iran. and we can thank dick cheney and the bush crime syndicate for that. they move the teleprompter in chief's cue cards.


bonin006's picture

From what I have read here recently, the Turkish leaders seemed like a bunch of assholes, maybe even worse than here in the US, but this makes me think again. Anyone who can just say fuck you to US sanctions can't be all bad.

Never One Roach's picture

That's why the Turkish Banks/Gubmint wants all the Turkish Sheeples to turn in their gold to the bankers "for safe keeping"....



Crazy Or Not's picture

Duh....doesn't anyone READ anymore? You actually trust Govt -anywhere?

frankTHE COIN's picture

Enriched Uranium Bars wrapped in a thin Gold coating.... And I thought Twinkies had no equal.

Atomizer's picture

How did you manage to create a new pink slime product line?

/ sarc 

Duc888's picture



"one of the most complex illicit finance schemes [prosecutors]useless shitbags have seen..."



As compared to sayyyyyy..... "the fed"?