MONGOLIA HAS CHANCE TO SHINE OR FACE LEGAL GLOBAL IMAGE FAILURE

MONGOLIA HAS CHANCE TO SHINE OR FACE LEGAL GLOBAL IMAGE FAILURE
February 17 01:52 2015 Print This Article

Global attention for events in Mongolia is unusual. The cases of imprisoned coal mining executives American Justin Kapla and Filipinos Hilarion Cajucom Jr. and Cristobal is providing Mongolia’s President Elbegdorj and Prime Minister Saikhanbileg an opportunity to show their strength of leadership at home and abroad. This opportunity comes at a critical time for Mongolia with the economy in a state requiring conversations with the International Monetary Fund.

Visiting Japan this past week, sources say Prime Minister Saikhanbileg faced questions about the legal situation of the three imprisoned former SouthGobi mining executives at every meeting. Japan has in recent years been prominent in providing the government of Mongolia debt financing needed to stay afloat and avoid economic collapse. International perspective of Mongolia is not only important for its mining industry but also to the economic health of everything in the country including energy infrastructure, healthcare and education.

John Viverito, an attorney at DLA Piper in Singapore, is representing Mr. Kapla’s case before the United Nations Office of the High Commission for Human Rights. Mr. Viverito says:

Based in Singapore, I know this case is being closely watched by members of the international business community. International executives are given pause by a case like this that if this can happen to these three men, it could happen to their employees or themselves as well. This case is having a chilling effect on Mongolia’s economy which is dependent on Foreign Direct Investment to thrive.

For Prime Minister Saikhanbileg, it has been a trying early run of months on the job since November 2014. In an effort to put public pressure on his parliament to support his reforms, Prime Minister Saikhanbileg conducted a national poll by text message in late January. Voters were asked to choose one of two options to improve Mongolia’s economy:

1. To stabilize the currency by encouraging foreign investment in mining projects.

2. To stabilize the currency via austerity policies of economic discipline, reducing spending and expenses that would mean cuts to government social programs.

Voting results were not convincing despite a seemingly one-sided question. 56.1% voted for mining and 43.9% voted for austerity with less than 12% participation. A local analyst further questioned the utility of the question: “Why can’t we have both austerity and mining? There are reasons for both.”

Australia’s Chamber of Commerce in Mongolia yesterday joined the international outcry about the rulings from the SouthGobi case on January 30, 2015, that sent three men to jail and heavily fined SouthGobi Resources.

The Board of AustCham Mongolia supports calls by prominent Mongolians and numerous other business chambers and business groups for urgent review of the [SouthGobi] verdict… and the immediate release Messrs Justin Kapla, Hilarion Cajucom and Cristobal David… we believe Mongolia as a functional democracy, has the maturity to recognize, that there were many contentious issues in the handling, nature and processes of the [SouthGobi] case pertaining to tax evasion… If left unaddressed not only will these issues continue to hamper foreign investment into Mongolia but they are likely to have a deleterious impact on Mongolian citizens who have no option but to seek legal redress and justice through the Mongolian legal system.

The letter from Australia’s Chamber of Commerce concludes with the hope of many concerned parties in this case:

We believe this verdict in the [SouthGobi] case could be a watershed for the Mongolian legal system if the authorities listen to the justifiable complaints aired in the wake of the decision.

Jon Springer

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