(Adds testimony on Ali Babacan, details on bribe paid to Baris Guler)
Nov 30 (Reuters) - A Turkish-Iranian gold trader on Thursday told jurors in a New York federal court that Turkish President Recep Tayyip Erdogan personally authorized a transaction in a scheme to help Iran evade U.S. sanctions.
Reza Zarrab is cooperating with U.S. prosecutors in the criminal trial of a Turkish bank executive accused of helping to launder money for Iran. At the time of the alleged conspiracy, Erdogan was Turkey's prime minister.
Zarrab said he learned from Zafer Caglayan, who was Turkey's economy minister, that Erdogan and then-treasury minister Ali Babacan had signed off on the transaction.
Erdogan said earlier on Thursday that Turkey did not violate U.S. sanctions and "did the right thing" in dealing with Iran, CNN Turk reported. A spokesman for Erdogan's government has called the case a "plot against Turkey."
Zarrab also said for the first time on Thursday that Turkey's Ziraat Bank and VakifBank were involved in the scheme. Ziraat denied the allegation. VakifBank could not immediately be reached for comment after business hours on Thursday.
The testimony came on the third day of the trial of Mehmet Hakan Atilla, an executive at Turkey's state-owned Halkbank , who has pleaded not guilty in Manhattan federal court.
U.S. prosecutors have charged nine people in the case, although only Zarrab, 34, and Atilla, 47, have been arrested by U.S. authorities. Prosecutors have said the defendants took part in a scheme between 2010 and 2015 involving gold trades and fake purchases of food to give Iran access to international markets.
Zarrab, who began testifying on Wednesday morning, has told jurors that he helped Iran use funds deposited at Halkbank to buy gold, which was smuggled to Dubai and sold for cash.
Zarrab has said that Atilla helped design the transactions, along with Halkbank's former general manager, Suleyman Aslan.
Zarrab said that he paid bribes worth more than $50 million to Caglayan to further the scheme. He said he bribed Aslan as well, but never bribed Atilla.
Both Caglayan and Aslan were charged in the case. Turkey's government has previously said that Caglayan acted lawfully, and Halkbank has said it acted lawfully as well.
Zarrab said that he had tried to duplicate his scheme in China before Chinese banks shut him down.
He said he paid a $100,000 bribe to Baris Guler, the son of then-interior minister Muammer Guler, to get a letter of reference from the Turkish government to present to Chinese banks. (Reporting By Brendan Pierson in New York; editing by Jonathan Oatis, Dan Grebler and Steve Orlofsky)