A U.S. government witness has testified that he paid over $50 million in bribes to Turkey's economy minister in 2012 as part of a $1 billion scheme to help Iran evade U.S. sanctions.

Turkish-Iranian businessman Reza Zarrab described his arrangement with former Turkish Economy Minister Mehmet Zafer Caglayan on November 29 at the beginning of several days of testimony at the New York trial of Turkish banker Mehmet Hakan Atilla, who is charged as Zarrab's accomplice in a conspiracy to evade Iran sanctions and bribe public officials.

Zarrab, 34, who has pled guilty to fraud charges in the case and is cooperating as the government's star witness, described discussing the scheme to evade sanctions with Caglayan, including using suitcases full of gold to launder Iran's money.

"I can help with this, provided there is a profit share of 50-50," Zarrab quoted Caglayan as saying.

Caglayan has been indicted in the case, but he remains at large. He has denied the charges.

Caglayan was economy minister when Turkish President Recep Tayyip Erdogan was prime minister. He resigned at the end of 2013 when Turkish authorities started investigating whether he and other ministers took bribes from Zarrab to help Iran evade UN sanctions. Zarrab was arrested in Turkey at the time, but Turkish authorities eventually released him and dropped all charges.

U.S. authorities have acknowledged their case picked up from the Turkish investigation. Assistant U.S. Attorney Sidhardha Kamaraju told the court Zarrab orchestrated a high-level conspiracy to help Iran evade U.S. sanctions and enable $1 billion in Iranian revenues from oil and gas sales to move through U.S. and global banking markets.

Zarrab testified that he ran into resistance when he approached an executive from the the Turkish government-owned bank Halkbank in late 2011 or early 2012 to try to gain access to Iranian money.

The executive, he said, feared that Zarrab's celebrity as the husband of Turkish pop star Ebru Gundes would draw scrutiny to the trades.

"I was a person who was in the public eye all of the time," said Zarrab, who was born in Iran but has Turkish citizenship.

Zarrab said he then met with Caglayan, who told him he would smooth the way for his transactions, but only if he got half the profits. Zarrab testified that Caglayan's share ended up totaling more than $50 million.

At one point, Zarrab drew diagrams for the jury to illustrate the elaborate web of transactions used to beat U.S. sanctions, which prohibit Iran from using U.S. dollars or the U.S. financial system. Zarrab said he made a fortune as a middleman in the scheme.

Zarrab said he used the proceeds from Iranian gas and oil sales to Turkey to buy gold, and had couriers carry the gold in suitcases to Dubai, where the gold was converted back into cash that was deposited into an account owned by a front company.

The money was further laundered through multiple bank transfers, including some through U.S. financial institutions in violation of the sanctions, he said.

Zarrab testified that the sanction-evasion scheme was done in consultation with Atilla, 47, who at the time was a top executive atHalkbank. He said Attila helped to doctor the trades so that the Iranian origin of the funds would not be detected by U.S. banks.

Atilla has pleaded not guilty to the charges. A lawyer for Atilla has attacked Zarrab's credibility, portraying him as "liar" and sophisticated con man.

The U.S. indictment describes Caglayan's role in the gold-transfer scheme and in another scheme in which he and other Turkish government officials allegedly helped disguise the movement of Iranian oil proceeds by claiming the money was connected with the sale of food and medicine to Iran and thus exempt from sanctions.

Erdogan has called on U.S. authorities to "review" the decision to indict Caglayan, saying the former minister did not engage in any wrongdoing because Turkey never imposed sanctions on Iran. Ankara views Tehran as an important trading partner.

Before Zarrab turned into the government's top witness, Erdogan repeatedly demanded that the United States release him. His ministers have asserted that the case was "fabricated" and Zarrab is being held "hostage" to force him to testify.

With reporting by AP, AFP, and Reuters

