Country detains 17 in Zarrab case as Erdogan denounces US 'plot'

Turkey has detained 17 suspects in an investigation into a Turkish-Iranian gold trader who was once a close ally of the government but is now testifying against officials as a star witness in a high profile US case, reports said on Tuesday.

Reza Zarrab is giving evidence in a New York trial over alleged subversion of US economic sanctions against Iran that has implicated former Turkish ministers and even President Recep Tayyip Erdogan.

Zarrab, 34, was arrested by US authorities in March 2016 on suspicion of taking part in the alleged sanctions-busting scam but is now cooperating with the authorities in an apparent plea bargain.

Ankara has reacted with fury to the switch by Zarrab -- once seen as the golden boy of the Turkish business world with a pop star wife -- seizing his assets and opening an investigation against him on accusations of "espionage".

A total of 17 people have now been detained as part of this investigation, with three picked up initially and 14 more in a later sweep, the Anadolu news agency reported.

The three detained initially are accused of sending documents to the US regarding the case and links to the group of Fethullah Gulen who Ankara accuses of masterminding the July 15, 2016 failed coup. Gulen denies the charges.

Turkish officials have repeatedly argued that the US case is a bid by Gulen to besmirch Erdogan and Turkey, following a corruption scandal in late 2013 that had also seen Zarrab arrested.

"The case is not a plot against America, it's a plot against Turkey," Erdogan told supporters in a speech on Tuesday.

"The case has nothing to do with law, justice or trade, it's an acrobatic spectacle," he added.

Since Zarrab became a witness, deputy chief executive of Turkish lender Halkbank Mehmet Hakan Atilla is now the lone defendant in the dock accused of violating sanctions, bribery and money laundering.

Zarrab has admitted to bribing former Turkish economy minister Zafer Caglayan and being involved in the multi-billion-dollar gold-for-oil scheme.

On Thursday he told the court he was informed that in 2012, then prime minister Erdogan and then treasury minister Ali Babacan had given "instructions" for two other Turkish public banks to take part in the scheme.