Turkey's state-owned Halkbank got a mixed reception at the U.S. Supreme Court as the bank sought dismissal of criminal charges that it helped Iran evade economic sanctions.
Hearing arguments in Washington in a case with both economic and political ramifications, several justices questioned Halkbank's assertion that federal courts lack power to consider criminal cases against foreign governments and the companies they own.
Justice Brett Kavanaugh said blocking the prosecution could usurp the power of the president to make national security decisions. He noted that the Halkbank charges were filed while Donald Trump was president and now have the support of President Biden.
"This is at the highest levels of negotiations between the United States and Turkey, and this case is apparently part of those discussions," Kavanaugh said. "What expertise do we have to balance all those considerations?"
But Kavanaugh was also among several justices who suggested the New York-based 2nd U.S. Circuit Court of Appeals didn't adequately consider one aspect of the bank's argument for sovereign immunity, its contention that judge-made "common law" bars the prosecution.
The questioning raised the possibility of returning the case to the 2nd Circuit to revisit that issue.
The charges against Halkbank have been a major source of tension between the U.S. and Turkey. The 2019 indictment came after years of public and private lobbying by Turkish President Recep Erdogan to get U.S. investigations dropped. The government's Turkish Wealth Fund owns a majority of Halkbank's shares.
The Turkish lira reversed from losses to gains and was trading 0.1% higher at 18.7727 per the U.S. dollar at 8:55 p.m. in Istanbul, after the Supreme Court finished arguments in the case.
Should it go forward, the case could force Halkbank into a settlement costing $1 billion to $2 billion, according to Bloomberg Intelligence analyst Elliot Stein.
Prosecutors allege that Halkbank helped free up $20 billion of restricted Iranian funds and helped launder at least $1 billion through the U.S. financial system.
The case is Turkiye Halk Bankasi v. United States,
— With assistance from Onur Ant.
