On April 3rd, 2013 International Consortium of Investigative Journalists (ICIJ) revealed on The Guardian, a British news paper, that the Deputy-Speaker Mr. Bayartsogt Sangajav has a company registered in British Virgin Islands called – Legend Plus Capital Limited. The company’s account is in a Swiss bank.
Mr. Bayartsogt told ICIJ that the account had 1 million USD at first when he intended to participate in global equity markets. He says that 200,000 USD came from his family wheat business and the rest from his business associates. Today, all of the money has withdrawn leaving 3 million MNT, he told the local Mongolian reporters.
Mr. Bayartsogt gathered the press to explain about his offshore company that its’ Swiss account that had 1 million USD at some point. He admits that he failed to mention it on IAAC (Independent Authority Against Corruption) profit and income report. He explains that he had included the 3 million MNT in the income section of the report without declaring the name of the BVI registered company.
ICIJ reported that Mr. Bayartsogt told them that he is worried about his family and regrets that he had opened the account. He also told ICIJ that he might resign of his position. It is unclear that if he meant resigning from his Deputy Speaker position or giving up his seat in the parliament.
He will, as told the local reporters, accept any lawful punishment for his mistake. According to the Mongolian Anti-Corruption Law, the parliament/SGK has to impose a punishment because the legal employer is the SGK. He didn’t mention if he will voluntarily resign his position.
The company was registered and the account was opened in the middle of 2008. He insists that the timing did not coincide with his appointment as a Finance minister in October, same year, and Oyu Tolgoi deal, the following year.
ICIJ reports that: “Bayartsogt was at the forefront of encouraging foreign mining companies to move into Mongolia. For instance, he championed changes to tax laws and other concessions in 2011 that had been demanded by the multinational mining company Rio Tinto, based in Britain and Australia.
The changes reduced the benefits for Mongolia and increased the returns for Rio Tinto of a planned multi-billion dollar copper and gold mine at Oyu Tolgoi in the Gobi Desert.
There is no suggestion his public stance had anything to do with his private offshore activity, but his Swiss bank account and offshore company remained secret throughout his years as minister.”
From an analyst perspective it is apparent that he would have used the non-public information to invest in various stocks of companies that has been investing in Mongolia. Most notably, Rio Tinto, Turquoise Hill Resources and Entrée Gold, as the Oyu Tolgoi deal had started not in 2009, as he points out, but way back in 2007.
He goes on stating that he strongly supports the new government’s crusade against corruption. He emphasizes that double-taxation agreements with other countries aren’t beneficial to a country with a small economy, Mongolia, that would not invest abroad as much as it receives foreign investment. He believes that all the double-taxation agreements with other countries should be terminated.
Ownership of Turquoise Hill Resources Inc.’s 66% in Oyu tolgoi is controlled through two companies, one registered in BVI, another in Netherlands. Netherlands had a double-taxation agreement with Mongolia which has been terminated but in force until January 1st, 2014.