A secret scheme to trade Russian oil , allegedly orchestrated by the family of Turkish President Recep Tayyip Erdogan , has been exposed as a fraud, with the “Sultan’s” family accused of stealing hundreds of millions of dollars.

Russia has not been idle in this development with Russian President Vladimir Putin retaliating against Turkey and Erdogan , which Nordic Monitor reports may include the imposition of violent measures.

The showcase company and trading of Russian Oil

Faced with Western sanctions , Russia has turned to Turkish trading partners to continue its exports undisturbed, hoping to tap into the US-linked Turkish banking system, which initially circumvented sanctions compliance at the behest of the Erdogan government.

Under oil-for-credit schemes, a portion of Russian oil sold to overseas buyers was channeled through Mosttrade Danışmanlık Ticaret Limited Şirketi (Mostrade), a small financial advisory firm founded on October 31, 2019 in Istanbul by Zal Suleimanov, a Russian citizen of Azeri origin.

The initial capital of the company was stated to be 10,000 Turkish Lira (about $1,750 at the time), suggesting that it was likely a storefront . The real owner is said to be Fouad Husseinli, a dual British-Azeri national, who is said to have set up the company in the name of his driver Suleimanov.

Moscow Credit Bank (Московский кредитный банк, MKB) provided credit to Mosttrade for the purchase of Russian oil , both directly and through Akida Trading Limited , a Hong Kong-based company with ties to MKB. On paper it appeared that Mosttrade had secured a line of credit from the bank and its subsidiaries, repaying the amount owed with interest.

Commercial register records show the transfer of all shares to Mustafa Zeren.

In reality, Mosttrade was merely acting as a collector of money from end-users in other countries, such as India and China, through Turkish and Emirati banks, since Russia was selling its oil at lock-in prices . Mosttrade reportedly spent 20 billion Russian rubles on a line of credit provided by the bank as part of the scheme.

The key man and the relationship with the Erdogan family

To gain access to the Turkish banking system, Mosttrade’s owner needed Turkish citizenship and the support of the Turkish government. Consequently, on 16 May 2022, the company was transferred to Mustafa Zeren, a 33-year-old financial consultant, and its shares were sold to him for 10,000 Turkish Lira.

Zeren , who previously ran a small family business, suddenly became one of the richest businessmen in Turkey, thanks to his close ties to President Erdogan’s family, notably his son “Sultan” Bilal Erdogan and his son-in-law Turk President Berat Albayrak . These ties not only enriched Zeren, his associates and members of the Erdogan family through government contracts and tenders, but also allowed them to operate freely in Turkey’s lucrative energy, mining, communications and construction sectors.

The intermediary who brought Zeren and the Erdogan family into contact is Halil Bajaci, a confidant of the Erdogan family, who played a key role in the execution of the plan. Bajaci is a close associate of Erdogan’s son and a friend of his since school days . Many reports refer to him as the family finance director of the Erdogan family, which has allegedly acquired billions in black wealth on the backs of the Turkish people.

Having secured such strong connections, Zeren faced no difficulty in obtaining licenses and permits and using the Turkish financial system, despite concerns raised by the Banking Regulation and Supervision Agency (BDDK), which feared possible US and EU sanctions. to facilitate trade in Russian oil.

The billions combine and the bursting of the bubble

On June 1, 2023, according to commercial registry records, Zeren proceeded with a 40 million Turkish Lira Share Capital Increase to give the impression that the company could manage hundreds of millions of dollars worth of Russian oil purchases .

In addition, for the transportation of Russian oil, Zeren established a shipping company named Eurasia Seali̇ne Gemi̇ci̇li̇k ve Ti̇caret Li̇mi̇ted Şirketi on June 23, 2022, with a capital of 100,000 Turkish Lira. Reports state that Mosttrade has used the shipping company in question to handle $56 billion worth of oil cargo.

The combine initially worked smoothly. Russian oil bought by Mosttrade using the Moscow bank’s line of credit was shipped to customers in India and China. Mosttrade received payment from end users and transferred the proceeds to the Moscow bank subsidiary, minus its commission. Turkish state lenders VakıfBank and Emlak Katılım Bank facilitated these transfers until December 2023, when the Turkish banks pulled out of the transactions due to concerns about possible US sanctions following stern warnings from US officials.

As a temporary solution, Zerin set up bank accounts in the United Arab Emirates and began funneling oil revenues through those accounts. Meanwhile, the group planned to acquire its own bank to facilitate these transactions more freely . On November 13, 2023, Zeren informed BDDK that he had signed an agreement to acquire Turkland Bank (T-BANK), which was owned by Lebanon’s Hariri family, which also has close ties to President Erdogan. The deal ran into obstacles in the BDDK, but Geren used his government connections to overcome those obstacles.

The deal was almost ready to be approved, until information about the Russian bank’s fraud came to light. Following a meeting between T-Bank president Michel Acad and BDDK officials in July 2024, the bank unilaterally canceled the sale.

The revelation, the courts and the Russian Commandos

While the Russian oil was being traded through Mosttrade, Zeren and his associates became increasingly greedy and began siphoning off the proceeds by transferring the payments to various private or corporate accounts they controlled in Turkey. Instead of repaying the line of credit debt, the funds were funneled elsewhere. It is reported that Zeren used the money to buy companies in Turkey, including hundreds of gas stations across the country.

As a result, Akida Trading Limited, the Hong Kong-based company responsible for collecting the debt owed to Credit Bank of Moscow, was forced to file a lawsuit in the Moscow Arbitration Court on May 2, 2024, requesting the seizure of the assets which belonged to Mosttrade and its owner. Judge AG Avagimyan ruled in favor of confiscating the assets. In addition, Akida filed a lawsuit at the International Commercial Arbitration Court in the Chamber of Commerce and Industry of the Russian Federation.

Erdogan’s man is also facing courts in Turkey. Akida’s lawyers filed a criminal complaint with the Istanbul Prosecutor’s Office, seeking compensation for the debt totaling $593.7 million and the opening of an investigation into criminal activities. The matter was then referred to the prosecutor’s office for organized crime.

Zeren, who is supported by the Erdogan family, seems undeterred by these actions . With Erdogan controlling justice in Turkey and law enforcement agencies needing political approval to take action against people with close government connections, Zeren continued to operate as normal.

Important political and business figures from both sides were mobilized to resolve the pending debt collection, but these efforts yielded no results. Roman Ivanovich Avdeev, who owns the majority of the bank’s shares, allegedly used Russian intelligence to intimidate Zeren , according to Germany-based Turkish journalist Çeveri Guven.

Russia also sent a group of armed men to storm the offices of the Zeren group in Istanbul. During the raid, Geren’s father, who is also a board member, was forced to sign a handwritten promise to repay the debt.

It appears that Erdogan’s associates miscalculated, believing that they could extract Russian money amid the sanctions regime , assuming that Moscow is dependent on Turkey. They underestimated the potential severity of Russia’s response, as evidenced by the extreme measures taken to collect the debt, including the raid on Zerin’s offices.

Erdogan’s associate, fearing for his life, has disappeared. The man who appeared frequently in the Turkish media and was deliberately portrayed as a major investor and global business tycoon is nowhere to be found. With the company having offices in the UK, the Netherlands, Switzerland, Montenegro and the United Arab Emirates, he may be hiding in one of these locations to avoid contact with Putin associates.