Mongolia has vowed to resolve its deep-rooted corruption problems, a response to the thousands of angry protestors who tried to storm the parliament last December while calling for an investigation into a US$1.8 billion coal theft case.
The Mongolian Independent Authority Against Corruption (IAAC), an independent government body, announced on April 12 that it had unveiled a national strategy to combat corruption in the public sector and set 10 related goals to achieve by 2030.
The mineral-rich nation will seek help if needed from China, which accounts for more than 80% of its total exports, for information about officials or company executives who may have absconded.
“This coal theft case is a very big case, involving more than 200 people,” Khishgeegiin Nyambaatar, Mongolia’s Minister of Justice and Internal Affairs, told Asia Times in an exclusive interview. Those suspected range “from members of the parliament and officials of the customs and tax authority to transportation and mining company executives,” he said.
“Our prosecution officers contacted their Chinese counterparts, who have expressed their willingness to cooperate in this case,” he said. “It will take some time to sort everything out but I want to emphasize that anyone who is involved in this case will be held accountable at the end of the day.”
He added that the Chinese side remains open to providing information on specific cases but not on broader cases.
“As a friendly neighbor, China believes the Mongolian government will properly probe and handle the case,” Mao Ning, a spokesperson of China’s foreign ministry, said back on December 6. “If Mongolia makes a request, the relevant authorities in China will provide necessary assistance in accordance with relevant laws and regulations.”
Dirty coal lies
Last November, the anti-corruption authority announced that more than 30 officials and executives of Erdenes-Tavantolgoi JSC, Mongolia’s largest state-owned coal miner, were under investigation for embezzlement.
Dorjhand Togmid, a parliamentarian in Mongolia, said at that time that a total of about 6.4 million tons of coal, worth US$1.8 billion, had not been registered by Mongolian customs since 2013 but had been recorded by Chinese customs. Whistleblowers said corrupt customs officials registered coal-loaded trucks as passenger vehicles.
Media reports said the Mongolian government had received a list of its corrupt officials from Beijing. In early December, thousands of protesters rallied in front of the Government Palace in Ulaanbaatar’s Sukhbaatar Square, calling on the government to disclose the list.
On December 8, Nyambaatar ordered the arrests of eight people, including Erdenes Tavantolgoi’s former Chief Executive Battulga Ganhuyag and his wife, sister and son-in-law.
On December 13, the IAAC disclosed the names of 17 suspects, including former Mongolian President Battulga Khaltmaa, two of his ex-staff, seven MPs, four Southgobi province lawmakers and former Erdenes Tavantolgoi directors.
“When Mongolia transitioned to a market economy in the 1990s, our GDP was about US$3 billion, and now it’s more than $12 billion, up by 300%,” Nyambaatar said. “But our poverty rate has not significantly improved while our education and health sectors have been deteriorating.”
“The general public is not very happy with what has evolved over the past 33 years,” he added. “A majority of Mongolians would agree that a lot of local businesses were close to the politicians, who opened doors and provided extra opportunities for themselves.”
He said the government will face a lot of resistance from the business sector as it bids to disrupt a system from which many companies have profited.
Last month, Nyambaatar froze the bank accounts of 18 people who had fled overseas during the anti-graft investigations. He said the government plans to repatriate more than 100 criminal suspects from 23 countries.
Poverty and corruption
According to the Household Socio-Economic Survey (HSES), Mongolia’s poverty rate was 27.8% in 2020, meaning that about 900,000 out of its 3.3 million people were living in poverty. The figure has hovered between 30-40% in the past decade, the data shows.
Last year, Mongolia scored 33 point out of 100 on the Corruption Perceptions Index compiled by Transparency International, a global corruption watchdog. The country scored 36 points a decade ago. The lower the score, the higher the corruption in a country’s public sector under TI’s rating.
By comparison, the United States scored 69 on the 2022 Corruption Perceptions Index while China scored 45. The US’s poverty rate was 12.8% last year while China’s was about 13% in 2020.
Along with Mongolia, the Philippines and Ukraine also scored 33 on the Corruption Perceptions Index. Last year, the three tied to rank 116th out of 180 countries in terms of clean governance.
“There is a strong urgency for us to change the situation as Mongolia’s Corruption Perceptions Index has not improved,” Nyambaatar said.
“There is public anger because some people in authority used public funds to send their kids to universities abroad,” he said. “A lot of properties in prime locations were acquired by those who had information that was not available to the public.”
As for who was on the receiving end of the mining licenses and subsidies, “a majority of them were people who had higher authority, or their alliances [did].”
He said the country’s widening wealth gap and shrinking middle class are giving impetus to the latest anti-corruption drive.
The IAAC’s newly-launched anti-corruption strategy includes five areas: whistleblowing, removal of corrupt public officials, extradition and repatriation of those under indictment, asset recovery and transparency.
“The strategy is an ambitious undertaking and is aimed at preventing the risk of corruption in public institutions, officials, private sector, civil society, political parties and groups,” said IAAC director general Dashdavaa Zandraa. “We will also work with the government for a more transparent, open and responsible society.”
Poor transparency, scarce information
Mongolia launched its Anti-Corruption Law in 2006 but it was poorly enforced due to a lack of transparency and access to information, an inadequate civil service system and weak government control of key institutions, according to the US State Department’s Office of Investment Affairs.
The Mongolian government has recently submitted three proposed laws for adoption in the parliamentary spring session, namely the protection of whistleblowers, campaign finance reform and the transparency of state-owned enterprises (SOEs).
“With the campaign financing reform, we are trying to improve the political party’s finance systems,” Nyambaatar said, adding that parliament will start reforming its election system in May while increasing the number of its members.
“As long as there is a strong involvement of the government in the SOEs, there will be corruption and bribery,” he said. “Because of this, we are proposing a new SOE law to prohibit government’s involvement and an open and transparent recruitment process for those who are going to be leading those companies.”
Last year, the government submitted to parliament a mining transparency law, which aims to identify all beneficiaries in the supply chain through the use of information and communication technology and artificial intelligence.
Read: Interview: Mongolian ministers have a revival plan
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