Ahead of polls, Mongolian President accused of mining license fraud

In a daring act of fraud that has the potential of jeopardising his re-election in the June 26 presidential polls, Mongolian President Tsakhiagiin Elbegdorj and his close associates ingeniously duped a South Korean investor into buying a license for a gold mine that, after due diligence, was discovered to have no gold value at all.

This deception was carried out in mid-2012, but the Mongolian Government was able to use its influence to keep it under the wraps until now.

Mongolia's economy is growing rapidly as a result of a mining boom.

Leading investors describe Mongolia as the "Kuwait of Central Asia", but rampant corruption, political infighting and a still-incipient judicial system could hold its development and progress back.

The country has vast and largely untapped mineral deposits of copper, gold and coal, but until recently, has remained largely on the breadline.

With several big mining projects on the horizon, there is scope for an economic boom through foreign investment. Such a scenario also paves the way for opportunists to exploit for personal and political gain.

According to reports, a South Korean investor was approached by President Elbegdorj's men, who offered their support and services on behalf of the government.

As a goodwill gesture, the investor offered humanitarian assistance by helping to reduce Ulan Bator's winter smog problems by installing electrically heated floorboards for traditional Ger (Yurt) dwellers, who normally burn coal to escape the frosty conditions.

The head for Ulan Bator City Environment issues met the South Korean investor and informed her that the Mongolian Government wanted to show its appreciation by offering her a gold mining license with high-quality gold reserves for five million dollars.

It was a steal, they emphasised, as they had planned to offer the mining rights to a German company for 10 million dollars.

The trap was set. There was also a hidden agenda. The investor was politely asked to top it up with a two million dollar 'political donation'. Seven million was still a good deal.

President Elbegdorj's coffers for the 2013 presidential election had begun to swell.

Thereafter, it was all about co-ordination and strategy.

Sources say Mongolia's Charge d Affaires in South Korea, Mr. Sukhee, met the investor and asked her to make the financial arrangements.

The head of the presidential administration, Mr. Tsagaan, and the foreign policy advisor of President Elbegdorj, Mr. Purevsuren, later arrived in South Korea and picked up four cashiers' cheques, amounting to 150 million Won each, and a cheque for 100 million Won. This was approximately 650,000 dollars.

The investor had also transferred three million dollars and began a due diligence of the mining area. Exploration studies were conducted at the cost of 400,000 dollars, which the investor and the Korean State Mineral Corporation (KSMC) financed together.

To their utter shock, there was no sign of gold anywhere in the region. They realised they had been hoodwinked by the Mongolian Government.

What is most shocking is that the gold mining site had been proposed to the investor by state officials. They were ordered by President Elbegdorj's foreign policy advisor, Mr. Purevsuren, to market the mining license.

Everything was official and left little room for doubt regarding the deal's authenticity.

The dumbfounded investor is said to have accosted Mr. Sukhee, but now we hear that he has been conveniently appointed as Mongolia's Ambassador to Kazakhstan.

This is a matter that needs serious investigation and a closer looking into.

Otherwise, a country that under Genghis Khan ruled most parts of Asia, will simply wither away due to such corrupt practices.

Meanwhile, former British Prime Minister Tony Blair has added the mineral rich backwaters of Mongolia to his portfolio of multi-million-pound business interests.

Under the terms of his contract, Blair will advise the Mongolian Government on its economic and business decisions.

However, with rampant corruption and pegged contracts staring at incumbent President Elbegdorj's face, it remains to be seen how successful he is in steering Mongolia's promising economy to its deserving heights.