Mongolia to take public company at heart of coal mafia corruption scandal

Mongolia to take public company at heart of coal mafia corruption scandal
The public purse is said to have lost billions of dollars thieved by a coal mafia that embezzled proceeds paid by China for coal mined from Mongolia's huge Tavan Tolgoi deposits in the country's south. / US Library of Congress, public domain
By Anand Tumurtogoo in Ulaanbaatar December 14, 2022

Mongolia's government has announced that it is to take public Erdenes Tavan Tolgoi (ETT), the state-owned miner embroiled in the “coal mafia” corruption scandal that has engulfed the country in the past couple of weeks.

Officials said that 30-40% of ETT would be sold on the stock exchange in a first sell-off round on December 14 in an effort at bringing transparency to the coal mining industry and cracking down on graft.

Finance Minister Ganbaatar Jambal added: "In order to prevent future coal theft, a digital mining exchange should be operated."

On the afternoon of December 14, hundreds of protesters were keeping up demonstrations against the government in central Ulaanbaatar over the scandal in which officials and company executives have allegedly stolen billions of dollars of export proceeds on coal clandestinely hauled to China. Some protesters told bne IntelliNews that names of suspects provided by the authorities in the affair so far were “just scraps” and that the government was protecting some of the criminals who “stole prosperity from the people”. Among protesters braving sub-zero winter cold to maintain protests were some who have set up traditional tents, gers, to allow them to stay in the capital’s central square overnight.

One concern raised during a panel discussion between lawmakers and protesters on December 10 was that under the current coal sales system, coal is sold in an impromptu open market with no oversight.

Minister of Justice and Internal Affairs Nyambaatar Khishgee told reporters on December 13 that officials were currently drafting amendments to the criminal law to ensure that corruption cases were not handled in a simplified manner and that the public was involved in the cases, in an effort to promote greater transparency from the government and judicial system.

On December 13, the Independent Authority Against Corruption (IAAC) announced the arrest of 17 people for coal theft. Former President Battulga Khaltmaa, two of his former staff, and seven MPs were named, along with four Southgobi province lawmakers, both current and former, and former ETT directors.

Noting that the former president was a member of the Democratic Party (DP), presently the opposition party to the ruling Mongolian People's Party (MPP), the DP declared that it was being subjected to a witch hunt and smears. It accused the MPP leadership of caving in to corrupt politicians within its party ranks.

Nyambaatar, meanwhile, told Reuters, the government would appoint a top international auditor to investigate ETT's finances.

The authorities said that part of the coal mafia investigation was focused on 7,373 trucks that repeatedly carried coal to the Chinese border between 2013 and 2017 but appeared to have arrived “empty”.

ETT owns a large part of a sprawling 6-bn tonne coking coal deposit near Mongolia’s border with China.