For four years, Mongolian Prime Minister Oyun-Erdene Luvsannamsrai promised to end corruption in his country and usher in a new era of transparency. In the end, it was questions over his own financial wealth that ended his rule.

In the early hours of June 3 in Ulaanbaatar, Oyun-Erdene lost a vote of confidence in Parliament, with several MPs from his own party joining the revolt. Just 44 MPs voted in favour of keeping him in office, while 38 voted against the measure following 10 hours of debate. 

Oyun-Erdene needed at least 64 votes to stay in office. His party, the Mongolian People’s Party (MPP), has 68 seats in the Great Hural. The defeat sets in motion a 30-day period to select a new prime minister.

Forced to resign due to the vote of confidence he initiated, Oyun-Erdene will stay on as a caretaker until a replacement is selected.

The PM came into office promising a cleaner government and touted his administration’s efforts to rid the country of a so-called “coal mafia” that had been sending coal-laden trucks to China while under-reporting their contents. But his own finances have been scrutinised in recent weeks following revelations that his son had been spending large sums of money, mostly on gifts that he lavished on his girlfriend-turned-fiancée. The allegations sparked street protests that lasted over two weeks.

“He doesn’t have the moral standing to lead our country,” said Oyungerel Tsedevdamba, leader of the Civic Unity Party and a frequent government critic.

“His government doubled the electricity price, tripled the automobile tax, doubled the city tax, increased heating prices and confiscated 1,200 small business kiosks. However, all the tax money is going to make him and his family richer. People are really angry about this,” she said.

In a last-ditch effort to stay in power, Oyun-Erdene pleaded his case to MPs, saying that under his leadership, Mongolia has strengthened its democracy and transparency while the free world is under threat.

“At a time when a once-in-a-century pandemic and war had closed borders and dimmed hope, I took on the grave responsibility of serving as the prime minister of Mongolia,” Oyun Erdene said.

“Together we managed to revive and expand the economy and we brought a fresh wave of change into Mongolian politics.”

Part of his address included a list of efforts he made to unearth corruption, but in the end, it wasn’t enough to convince MPs. Oyun-Erdene also faced internal opposition from others within his own party, including President Khurelsukh Ukhnaa.

But with his son ordered back from Harvard by anti-corruption authorities to answer questions about the family finances, Oyun-Erdene’s call for unity wasn’t successful.

It remains unclear what happens to the coalition government, which includes three parties and was formed by Oyun-Erdene to create stability as he pushed forward his programme featuring 14 megaprojects, including hydropower plants, mines and border crossing upgrades.

The prime minister has spent much of the past year telling the public his programme would nearly double per capita GDP.

The outlined plans are now on hold as investors wait to see what comes next. Mongolia has a history of toppling its prime ministers and sometimes requires weeks or months to find a successor.

Tumentsogt Tsevegmid, chairman of the Business Council of Mongolia, said the political crisis impacts Mongolia by adding heightened uncertainty that could slow down important economic drivers and foreign investment.

"The whole purpose of the coalition was to ensure stability, make political decisions and get moving," Tumentsogt said. "In the last year, the coalition passed several important decisions."

Tumentsogt described how the coalition government had been successful in pushing forward stagnant projects, mostly in rail and infrastructure. He also credits the government for moving ahead on a lucrative uranium mining deal with France's Orano.

"Sentiments in the business community are that the collapse of this coalition government could definitely affect the economic situation and create more uncertainty," Tumentsogt said.