Senior Mongolian MPs and cabinet members had a session on whether Goldman Sachs had a conflict of interest when it advised the Mongolian government at the times when Oyu Tolgoi deal was in negotiation. The Goldman Sachs (Asia) LLC was one of the advisors to the government on the economics and financial aspects, such as building a model, of the project.
The government received legal and financial advisory services on the deal from many organizations with help of The World Bank. Some of them performed the services without a charge due to project’s reputation to be added into their portfolio, says a person familiar with the matter. However, Goldman Sachs charged USD 250K, according to the introduction given by Erdenes OT LLC at the session.
The Mining Minister Gankhuyag D. concluded the session by stating that it is hard to determine if the Goldman Sachs had conflict of interest, and if it did, it should be identified by the court. Which court? Traditionally courts in Mongolia prove the wrongdoing to proceed with a legal action. It is hard to find a major investment institute that hadn’t invested into Turquoise Hill Resources Inc. formerly Ivanhoe Mines. Goldman Sachs is famous among the conspiracy activists that it can configure between both buy and sell sides as it dominates the investment industry with its’ full service.
Last month, when Oyu Tolgoi shareholders gathered, the Goldman Sachs conflict of interest matter was in the list of the agenda. It was dropped after the government realized that it is not relevant to discuss it with Turquoise Hill Resources and Rio Tinto representatives.
If the Goldman Sachs financial advisory disassociates with all the projects and companies that its’ asset managers have bought stocks, it will be impossible to perform their jobs. If the Mongolian government wants go on with this argument, it should consider bringing in S.E.C or other relevant financial regulatory agencies where the shares traded in at the time of the deal was non-public, and determine if the Goldman Sachs used insider information to take positions.