EURASIA BLOG: Mongolia fights uphill battle against corruption

By bne IntelliNews September 17, 2015

Terrence Edwards in Ulaanbaatar -


A group claiming to be from Mongolia's Ministry of Tourism approached tourists queuing to get their passport stamped at Chinggis Khan International Airport, saying all foreign visitors must purchase a book of coupons. They pointed towards signs and handed pamphlets stating that a new law required visitors buy the coupons to enter the country.

But there never was any such law and the officials were not who they said they were. It was just a sophisticated scam.

Ranking 80th out of 176 countries last year in Transparency International's Corruption Perception Index, Mongolia is now attempting to clean out the muck from its government halls by investigating and arresting corrupt officials. Some politicians, however, would rather create loopholes to wipe clean the records of colleagues convicted of corruption, and close investigations before they go to trial.

Although the country has high-ranking officials who want to improve transparency and crack down on corruption to help attract investment and better serve the public, the fact that there are so many hard-to-reach middle management bureaucrats who are on the take makes it a slow and painful process.

Mongolian prime minister Chimed Saikhanbileg saw for himself the tourist scam during a surprise inspection of Chinggis Khan International Airport in September. He came down hard, ordering the sacking of the airport executives and government officials who allowed the scammers to pass through security to approach the tourists. Yet, it's anyone's guess whether or not the ones responsible will suffer any consequences.

Protecting the guilty

Parliament dodged a bullet on September 15 to Mongolia's reputation when it decided not to overturn a partial veto of a controversial Amnesty Law by President Tsakhia Elbegdorj. The law would have wiped clean the records of corrupt officials, allowing them to take office again. It would also have closed investigations into politicians from before last July, such as the one into former prime minister Norov Altankhuyag.

The law came under fire after it was quietly passed by the parliament during an extraordinary legislative session in August. Many protested in the streets and demanded the names of every politician who voted in favour of the law.

“We're very against this law,” said Khashkhuu Naraa, head of the human rights and free speech group Globe International in Mongolia.

The biggest proponent of the law was the Mongolian People's Revolutionary Party, the minority partner in Saikhanbileg's coalition government. They stalled on the decision for five days because of their desire to see their party leader, Nambar Enkhbayar, return to office after being convicted of corruption in 2012. They didn't have the numbers to overturn the veto alone, however, as it requires a two-thirds majority from the parliament.

The Independent Agency Against Corruption that leads these investigations on officials may still be under threat, said Naraa. Some politicians have called for its disbanding, claiming that the agency has become a political tool of the president, who makes many of the top appointments there. Although that does create some conflict of interest issues, she recommends handing over that responsibility to a public council rather than dissolving the agency.

“I don't deny that the agency might be politically affected, but we really need this kind of independent group,” she said.

Licensing merry-go-round

The area where the country is making the biggest push for openness and transparency is in the mining sector. Mongolia's core commodities for export – coal and copper – are currently struggling because of the economic troubles of Mongolia's top trade partner, China. But when Saikhanbileg took on the job of the prime minister late last year, he saw repairing the mining sector as key to restoring the economy after more than two years of falling foreign investment and slowed growth.

Shar Tsolmon, a coordinator at the Extractive Industries Transparency Initiative in Mongolia, said the mining ministry has done well in improving communication with mining companies and reporting figures about the industry to the public. “ They are doing a good job,” he said.

So when Mongolia announced it would end a four-year moratorium on new licenses for exploration, the intention was to do it with openness and fairness. Investors at the start of the year, however, said it missed the mark .

Eight months later, many investors are making the same complaints. “They've gone back to a system worse than five years ago before the moratorium was in place,” said an investor who asked not to be named because of concerns about how his negative comments might affect the applications for exploration licenses he's submitted to the Mineral Resources Authority.

Although Tsolmon thought the system was a step in the right direction,  “transparency is weak”, he said, because of all the technical aspects that make it difficult to judge.

The reason Elbegdorj put the moratorium in place five years ago was because of rampant speculations over the licences. Speculators will sit on prized licences for years before selling them at a steep price. Meanwhile, deposits go untapped, without any employment to run operations and taxes or fees paid to the government.

Many feel, however, that the new system hasn't improved on this issue because the government dropped many of the restrictions just before the system went online earlier this year.

“It's ironic that there were 1,100 applications on Monday,” said the investors on September 11, “but how many groups are actually exploring at the moment?”

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