Businessman's US Testimony Stuns Turkey

Turkish-Iranian businessman Reza Zarrab was supposed to go on trial this week for conspiring to dodge American sanctions on Iran—but in a turn of events that has made the legal drama grip his homeland, it emerged that he has already pleaded guilty and is now the star witness for the prosecution. In a Manhattan courtroom Wednesday, Zarrab described a web of bribery and corruption reaching to the highest levels of the Turkish government. Here's what you need to know:

• The witness. Zarrab, a gold-trading tycoon who owned a private jet and 20 homes, was first detained by Turkish authorities as part of a corruption probe in 2013, but was released after President Recep Tayyip Erdogan spoke out against a "judicial coup" and prosecutors were pulled from the case, the BBC reports. But after deciding to visit Disney World with his wife and daughter in March last year, he was arrested by US authorities and accused of money laundering and sanction-busting. He was released from custody Nov. 8, though he could still face prison time.

• The defendant. Zarrab testified this week in the federal trial of Mehmet Hakan Atilla, who is accused of facilitating illegal transactions worth hundreds of millions of dollars for the government of Iran, the Wall Street Journal reports. Other defendants charged in absentia, including former Turkish economy minister Mehmet Zafer Caglayan, are still in Turkey. Zarrab told the court Wednesday that he paid Caglayan around $60 million in bribes.
• The scheme. Zarrab said Wednesday that he helped Iran use funds deposited in Halkbank, a state-owned Turkish bank, to buy gold that was sold for cash after being smuggled to Dubai, Reuters reports. The bank and a private bank also implicated say they followed all the relevant regulations.
• The defense. Prosecutors say Attila was the architect of the scheme, though Victor Rocco, one of his lawyers, argues that Zarrab was the real mastermind who made hundreds of millions of dollars, NBC reports. "The evidence will show he waged economic jihad against the US," Rocco said of Zarrab in his opening statement.

• The Turkish reaction. The Erdogan government, which has senior minister implicated in the scheme, lobbied both the Obama and Trump administrations to drop the case, calling it a plot against Turkey. On Thursday, a government spokesman accused prosecutors of pressuring Zarrab to slander Turkey as part of a conspiracy orchestrated by US-based cleric Fethullah Gulen, who is also accused by Turkey of planning last year's coup attempt, the AP reports.
• The Flynn connection. Sources told NBC earlier this month that special counsel Robert Mueller was looking into allegations that former National Security Adviser Michael Flynn met with Turkish operatives weeks before Trump's inauguration to discuss secretly carrying out orders from Ankara—including securing Gulen's return to Turkey and having Zarrab's case dropped in return for millions in bribes.

(More Reza Zarrab stories.)