Düsseldorf, Germany, Sep 26, 2023 (PlatoData via 500NewsWire) -- Mongolia’s economic growth has been negatively impacted by serial governmental corruption that is bleeding the country of its chief export revenues.
The coal-rich state is a prime example of “the resource curse,” which is a prevalent phenomenon among former Eastern Bloc and Soviet satellites that are rich in natural resources. This effect was perpetuated by thirty years of political instability following the country’s transition from the Mongolian People’s Republic to its modern multi-party system.
The country’s Tavantolgoi Coal Deposit is one of the world’s largest, with 7.3 billion tons of reserves. But within only ten years of tapping this national resource, $11.6 billion in revenues have already been stolen, in what is known as the “Mongolian coal theft.”
State participation in mineral resource exports lays the groundwork for conflicts of interest, cronyism, and corruption.
Investigations by Mongolian authorities revealed that for the past decade, transport records for trucks laden with Tavantolgoi coal bound for China through the southern corridor were falsified to show the trucks were empty.
At least seventeen members of Parliament were allegedly involved in the multibillion-dollar swindle from Erdenes Tavantolgoi, the state-owned company that manages the deposit. Mongolia’s Independent Authority Against Corruption (IAAC) used the national media to release the names of the MPs, citing how the officials abused their power and influence for personal gain. Five politicians were charged, and another three have been suspended from their positions while investigation by authorities is ongoing.
Mongolia is no stranger to political corruption, and Prime Minister Oyun-Erdene Luvsannamsrai has a reputation for tough anti-corruption legislation. His 2023 “Five W Operations” – Whistleblowing, Wiping-out, “Operation Wasp,” Wealth, Wide-open – initiative shows promise in securing the country’s economic future by routing-out the endemic, high-level government corruption. Now he is adjusting his focus on the coal industry.
The Prime Minister demanded that parliament members be placed under investigation and is aggressively pursuing the discovery and prosecution of coal theft crimes. Luvsannamsrai[A1] is sending the very clear message that all parties will be held accountable.
As this policy noose is tightened around those complicit in the coal theft scandal, two high ranking politicians are abusing their power and influence to interfere with investigations by authorities.
At the center of this interference campaign are Amarbayasgalan Dashzeveg and Chuluunzagd Tsedenpil, who are not among the seventeen MPs being implicated in the coal theft scandal. The Chief Cabinet Secretary of the ruling Mongolian People’s Party, Dashzeveg, along with his adviser Tsedenpil have been implicated in another sophisticated coal theft scandal involving influence, bribery, fraud, and favoritism.
Amarbayasgalan Dashzeveg is regarded by many as a good political strategist, which would explain why he wasn’t charged for a previous indiscretion where he took a loan from the Small and Medium Enterprises Development Fund. Now, however, his involvement in a complex coal theft scheme makes him a prime target by investigators.
Chuluunzagd Tsedenpil is currently under investigation by the IAAC, and a criminal case has been opened against him. Dashzeveg is accused of using his position of authority to interfere with investigations into their involvement.
Mongolian politicians are expressly prohibited from operating private businesses while in office. As a result, it is common practice for powerful and politically influential people to quietly run businesses from behind proxies such as relatives, friends, and business contacts.
According to the official website of the Erdenes Tavantolgoi state-owned mining company, a cooperative partnership called MTAS operates as a contractor for Tavantolgoi’s Bor Teeg mine. One of these MTAS companies is Admineral LLC, which is building a concentrator for converting raw coal into semi-coking coal. Admineral’s coal concentration plant servicing the [A2] mine was awarded a 30-year government contract.
Dashzeveg and Tsedenpil reportedly established Admineral on July 2, 2021. According to company records, the registrants and owners of Admineral LLC are Tsedenpil’s brother, Lamjav Tsedenpil, and Xueping Wang. Chuluunzagd Tsedenpil’s wife, Bayarmaa, works as the company’s accountant, and serves on the company’s board of directors.
Three investment companies own shares in Admineral LLC. Mongolia’s Monovant LLC owns 45%, China’s Quzhou Longyuan Trading Co. Ltd owns a 34% stake, and the Hong Kong Ruishen Global Group LLC owns the remaining 21%.
The majority shareholder, Monovant LLC, was founded and owned by a businessman in China named Khasbaatar Nasan-Urt, and Lamjav Tsedenpil.. Nasan-Urt and Lamjav Tsedenpil also happen to be co-founders of Road and Mining Technology LLC.This intricate network is used to siphon money and contracts from the Mongolian state.
On October 4, 2021, Quzhou Longyuan Trading and Ruishen Global Group purchased 300,000 tons of coal from Erdenes Tavantolgoi, and another 500,000 tons on July 9, 2022.
Between June 29, 2021, and October 29, 2022, a sum of $2,164,769 was transferred into the account of Admineral LLC from Quzhou Longuan Trading, Ruishen Global Group Co. Ltd, Dongsheng Petroleum Co. Ltd, and Sino-Mongolian AITS Intelligent Pte Ltd.
On July 2, 2021, Admineral’s Lamjav Tsedenpil transferred $52,000 described as a loan to his own company, Monovant LLC—just after Xizhou Zhang of Admineral transferred $101,970 on June 29, and $62,994 to Monovant on June 30, 2021. On July 6, Admineral LLC issued $102,000 to Monovant’s co-owner, Khasbaatar Nasan-Urt.
This transactional labyrinth has all the hallmarks of a kickback scheme that involves contractor bribery and supply skimming through unauthorized sales. It is alleged that Amarbayasgalan Dashzeveg profited by skimming 47,000 tons of coal from the Tavantolgoi Coal Deposit through Admineral. An investigation into these findings is currently underway, but Dashzeveg is using his influence for running interference.
There are twenty different subcontractors competing for Mongolia’s Tavantolgoi coal transportation, at least one of which has financial ties to Amarbayasgalan Dashzeveg. His wife Byambasuren Dashkhuu founded Jabco LLC in 2010, and Topmedia LLC in 2011, both of which were reported in Tsedenpil’s 2017 income statement when he was a member of the City Council. A man named Erdenejargal Batkhuyag manages Dashkhuu’s two companies through E-Commodities Mongolia Intelligent Logistics.
Batkhuyag also happens to be the founder of Global Guur Trans Co. Ltd in 2010, which transported 26,840 tons of coal from a Tavantolgoi mine to Tsagaan Khad, Maanit, and Choir train stations. Considering other activities and businesses connecting Amarbayasgalan Dashzeveg to Tavantolgoi, this is an unlikely coincidence.
The General Secretary of the ruling party and the Chief Cabinet Secretary of Mongolia are prohibited from direct participation in contracting deals. Dashzeveg used his wife’s companies as a front for his behind-the-scenes role in selecting state contractors with whom he shared a financial interest.
Nyambayar Lkhagvajav is a friend and business partner who owns 24% of Byambasuren Dashkhuu’s Hasmedia Group company. Lkhagvajav is a member on the Board of Directors for Gashuun Sukhait Road LLC, which is responsible for registration and control of coal transportation roads.
The other proxy Dashzeveg appointed was his friend Gursoronzon Buyantogtokh, the director of the state-owned National Road Transport Center, which is responsible for licensing and regulating coal transport vehicles.
There is further evidence that Amarbayasgalan Dashzeveg and Chuluunzagd Tsedenpil are using their posts to influence public policy in the energy sector.
The Ministry of Energy is proposing a semi-coking plant, based on a $51.5 million 45-day experiment that showed a considerable reduction in emissions from refined coal. Quality improvement of refined coal and pollution reduction are both in the public interest, but what is unclear is why the General Secretary of the ruling party and his own companies and associations should be considered for performing these services.
Admineral LLC and Global Guur Trans Co. Ltd are a threat to the integrity of Mongolia’s democracy. Their complicity in government-run racketeering is fracturing the ruling party, which itself has a strong anti-corruption initiative. Using proxies to usurp control from the Prime Minister could represent a decline in economic prosperity.
If Prime Minister Luvsannamsrai navigates through the political instability woven by his own party members and continues to push for transparency and prosecutions, then it will foster a favorable environment for investors in Mongolia, and an enticing opportunity for multinational corporations to establish local subsidiaries.
It remains to be seen who will ultimately win the fight for Mongolian prosperity--a government representing national interests, or corrupt officials from within who are lining their own pockets. Mongolia’s future hangs in the balance.
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