ANKARA - President Recep Tayyip Erdogan on Thursday said Turkey did not breach any US sanctions against Iran after a Turkish-Iranian gold trader admitted in a New York court to bribing a former minister.

Reza Zarrab told the court on Wednesday that he had bribed former economy minister Zafer Caglayan in order to facilitate illegal gold transactions with sanctions-hit Iran. Earlier, Turkish Dy PM Bekir said Zarrab was making defamatory claims because he was under pressure. Zarrab had initially been due to go on trial but is now the prosecution’s star witness. Dy chief executive of Turkish lender Halkbank Mehmet Hakan, accused of violating sanctions against Iran, as well as of bribery and money laundering, is now the lone man in the dock.

Analysts say that Zarrab’s revelations could prove embarrassing for the government while economists warn fines on one or more Turkish banks could prove harmful to the economy.

In his first comments since Zarrab’s testimony, Erdogan said Turkey had not broken the US embargo on Iran, according to state broadcaster TRT Haber.

“We did the right thing. We did not violate the embargo,” he told lawmakers from his ruling Justice and Development Party (AKP).

At any rate, he added, “no such commitment was made to the US .”

In an interview with state-run news agency Anadolu, Bozdag said “Zarrab has become a slanderer under pressure”.

The deputy prime minister repeated previous claims that US-based Fethullah Gulen, the alleged mastermind of the failed 2016 coup, and his network was behind the case.

- Zarrab ‘taken hostage’ -

AKP party spokesman Mahir Unal hit out at the US trial as a move against Turkey , vowing: “We will not allow Turkey to be taken hostage by a man taken hostage.”

Zarrab was one of the main figures in a 2013 corruption scandal in Turkey that Erdogan, then prime minister, also saw as a bid by Gulen to bring him down.

Gulen, who lives in the United States, denies Turkey’s claims.

The gold trader had spent 70 days in custody in Turkey over the scandal, but all suspects arrested in the probe were subsequently released.

Caglayan resigned from the government at the time along with three other ministers. He has also been named in the US indictment and is being tried in absentia.

Zarrab told the court that he paid 45 to 50 million euros ($53.2 to $59.1 million) plus approximately $7 million in bribes to the minister between March 2012 and March the following year.

He alleged banker Attila helped to doctor the trade so that the Iranian origin of the funds would be undetectable by US banks.

Halkbank denied any suggestion or claim that the bank had violated US sanctions , saying in a statement that it had “not been a party to any transaction that is ... illegal”.

- Strained ties -

The case has further strained ties between the NATO allies, who have many disagreements including over the US failure to extradite Gulen.

Bozdag denounced the Manhattan federal court trial as “theatre” and indicated it was a plot against the government which the main opposition party in Turkey was a part of.

The Republican People’s Party (CHP) leader Kemal Kilicdaroglu on Tuesday claimed he had evidence of offshore transfers made to a tax haven by relatives of Erdogan.

The president on Wednesday denounced the claims as “lies” and said he would file a legal complaint along with five others accused by Kilicdaroglu.

“It is necessary not to think of these two as separate (the US trial and CHP). Both of them are targeting Turkey and the president’s government,” said Bozdag, also government spokesman, adding that Kilicdaroglu’s claims were “slander”.