One of many foreign investors banned from leaving Mongolia calls on UN for help

By bne IntelliNews December 10, 2014

Terrence Edwards in Shanghai -


An American businessman trapped in Mongolia is requesting emergency assistance from the UN so that he can return home, while the Central Asian country lauded for its democracy continues to bar hundreds of foreign investors from leaving.

Mongolia's reputation as a investor-friendly destination and a democracy that respects human rights has suffered as foreign investors have become increasingly afraid to visit the country and worried about any new investments they might have made. With a growing number of expats complaining they are trapped in the country, many investors fear they could be the next ones barred from leaving if the authorities – perhaps for ulterior or corrupt motives – accuse them of crimes such as tax avoidance or fraud.

Prime Minister Chimed Saikhanbileg, who last week won approval from the parliament to form a new government after taking office in November, has ordered an investigation into cases concerning at least 50 foreigners denied exit visas because of worries it is scaring away already scarce foreign direct investment (FDI). Foreign investment was down 57% in the first 11 months of the year compared with the same period in 2013, because of weak investor sentiment related to troubles in the country’s mining sector and a soft market for mineral commodities.

The prime minister hopes to give more context into these investigations into expats, because reports in media have provided few details of the cases, according to a December 8 statement from the government. "The Prime Minister views that although the Government carries out the policy of supporting FDI, because of the actions of few individuals, issue will be raised that relate to the reputation of Mongolia," reads the statement, which was translated and disseminated by email to clients of Independent Mongolian Metals and Mining Research.

Investors such as Justin Kapla, former president of the mining unit operating the Ovoot Tolgoi coal mine for Mongolia-focused miner SouthGobi Resources, has been barred from visiting home for more than two years because he is suspected of tax fraud. Kapla has requested to return home to visit a sick relative, but without success so far. “My grandfather (102 years old) was put in hospice care last week so I have made an emergency humanitarian request to have the travel ban lifted with the support of the [US] Embassy,” Justin Kapla tells bne IntelliNews in an email.

Another former employee at SouthGobi who was banned from leaving the country missed the passing of his father because the government denied a request for compassionate leave, says Kapla. “We are coming up on our 3rd Christmas of being banned from leaving.”

The UN Human Rights Committee has registered Kapla's human rights complaint, according to a letter viewed by bne IntelliNews.

Mongolia's Prosecutor General has announced they were opening a new investigation after a judge returned the cases of tax fraud against Kapla twice as incomplete. Investigators are now looking at the transfer of licenses from the majority stakeholder of the time Ivanhoe Mines to SouthGobi in 2007 – five years before Kapla even became president of the mining company.

Kapla told bne IntelliNews last May that dozens of exit bans had been placed on foreign investors in Mongolia. Simply opening an investigation into a foreign or Mongolian individual is enough for authorities to ban them from leaving the country.

A letter from Minnesota Senators Al Franken and Amy Klobuchar sent to the Prosecutor General this week urges him to lift the ban “on a humanitarian basis,” because of the health of Kapla's grandfather. Kapla is also requesting the support of US Secretary of State John Kerry in the matter.

Mongolia's state-owned news agency Montsame on December 8 reported a message from the UN to Mongolia in observation of Human Rights Day that makes no mention of the exit visa bans. "We denounce authorities who deny the rights of any person or group,” says UN Secretary General Ban Ki-moon, in a report that glosses over the fact the Human Rights Commission has recognized the exit ban on Kapla as an example of just that.

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