UPDATE 1-Halkbank to keep processing Iran energy payments for Turkey -Babacan
ISTANBUL Jan 8 (Reuters) - Turkey's state-owned Halkbank, whose general manager has been detained as part of a corruption inquiry, will keep processing payments for Turkey's oil and gas imports from Iran, Turkey's Deputy Prime Minister Ali Babacan said on Wednesday.
"The state of Iran has accounts with Halkbank and we deposit the payments for the oil and gas purchased to these accounts ... Halkbank will continue to carry out this function," Babacan told Bloomberg HT Television.
Halkbank general manager Suleyman Aslan was among dozens of prominent business people, the sons of three cabinet ministers, and state officials questioned as part of a corruption inquiry swirling around Prime Minister Tayyip Erdogan's government.
Most have been released but 24, including Aslan and two of the ministers' sons, are still in custody, local media says.
Halkbank has repeatedly said its dealings with Iran are entirely lawful, but its Iranian business ties had drawn Western criticism amid U.S.-led efforts to curb Tehran's disputed nuclear programme.
Turkey has bought natural gas and oil from Iran through an indirect system whereby Iranian exporters received payment in Halkbank lira accounts and used that money to buy gold. The bulk of that gold was then been shipped from Turkey to Dubai, where Iran could import it or sell it for foreign currency.
Halkbank said last month that the gold sales had stopped on June 10, in line with a July ban. Since then, sources say, Iranians have bought mostly food and medicine with the funds.