From Transparency to a Participatory Revolution

By Julian Dierkes and Damdinnyam G

[Mongolian Version: “МОНГОЛЧУУД: Ил тод байдлаас зѳв оролцооны хувьсгал руу…“]

Even by the standards of Mongolian politics, the last two months have been eventful. Scandals, no confidence votes, demonstrations… one might think it’s an election year, but the election is still 18 months off.

What HAS happened is that many Mongolians are (finally) beginning to make use of the arsenal of transparency tools that policy makers have handed to them over the past decade, they are actively engaging as citizens in a democracy!

From EITI to Glass Accounts

Transparency has been a catchphrase in policy-making around the world for more than two decades. The basic principle is that citizens who have access to information will hold governments accountable and that this monitoring by citizens will lead to better policy outcomes.

Given links between transparency and governance, these questions have been particularly prominent in the context of the transformation and growth of Mongolia’s mining sector from 2005 on. As this transformation has occurred with some understanding of the potential risks that come along with a mining boom (the “resource curse”), many initiatives have aimed at creating transparency throughout Mongolian society to promote accountability.

Yet, much of this push has been initiated from outside of Mongolia via development activities, international organizations, etc. Mongolian policy makers have largely complied with foreign requests for legislation and regulations that enable transparency, but there has not been a strong sense of an embrace of the underlying principles. Nevertheless, since 2007 a series of laws and regulations have created reporting mechanisms and methods by which the public can gain information about public funds and activities.

Here’s a selection of some of the most significant initiatives in this regard with the year they were created:

Over the past twelve years, laws and regulations have created many tools for Mongolians to engage and demand accountability from their government. However, until recently, this has remained a legal possibility only and not a practice.

Over this period, Mongolia has seen three parliamentary elections, three presidents and has had six prime ministers from S Bayar to U Khurelsukh, four from the MPP, two from the DP. Virtually all these governments have promised to fight corruption and to strengthen the nation through transparency. Voters had many chances to use transparency tools to examine politicians’ and governments’ action.

Below are the three most prominent contexts in which discussions of wasteful spending or corruption have emerged, the Chinggis and Samurai bonds, the ₮60b case, and the SME Fund.

Foreign Debt

Today’s fiscally precarious situation has been caused by the massive debt that was taken on via US$ (2012) and ¥ (2013) bonds. There certainly is a strong sense that these funds were not invested productively, but mostly wasted on populist projects. This unproductive investment has saddled Mongolia with sovereign debt that required the 2017 IMF-orchestrated bailout and will continue to restrict productive government spending until it can be paid off, most likely through revenues generated by the ramp-up of production at Oyu Tolgoi, but only if additional dept is not added until then.

While the landslide MPP victory in the 2016 election could be seen as voters’ reaction to the lack of accountability for this spending, demands for detailed information on that spending have been fairly limited.

The ₮60b Case

One of Mongolia’s biggest individual corruption cases has been the ₮60b case. This involves an audio/video recording allegedly showing a presentation to M Enkhbold and others in the MPP leadership on how much money could be raised from selling state offices with an election victory in the 2016 parliamentary election. That case remains unresolved and M Enkhbold continues to serve as speaker of the Mongolian parliament, but he has become the focus of recent demonstrations calling for his removal.

While he has not been prosecuted, he has also not really denied the allegations. As the video has been available to the public for some time, many Mongolians seem inclined to believe the allegations, being able to see the discussion for themselves.

In this case, Mongolians are not so much echoing allegations against an individual, but instead are seeing (quite literally) the evidence themselves. The availability of the original information has energized much of the objections to the apparent sale of offices. It thus raised awareness of and engagement with corruption allegations among the population.

The SME Fund Scandal

The SME Fund scandal broke late in 2018 and has been the most pointed impetus to direct engagement with transparency tools by Mongolians.

This engagement has built on a change in the law on beneficial ownership that resulted in the May 2018 publication of a list of all companies that had received low-interest loans from the SME Fund.

In a June 21 recap of parliamentary decisions, news.mn highlighted the amendments to the General Registration Law and explained what these meant. But as this was published in late June, i.e. just before Naadam, little attention was paid to these disclosures.

The investigation of the SME Fund and the extent to which politicians availed themselves of this fund really gained steam in the Fall.

Importantly, Ikon.mn was the first news organization that began to put these different sources of information together by looking for the owners of companies that had received loans from the SME Fund and pointing out that some of these owners were MPs or individuals with connections to Pres Battulga, PM Khurelsukh, and other high officials. In some ways, the entire political class and financial system has been implicated.

Here is a brief chronology of information that Ikon.mn put together from information that Ch Bolortuya, Ikon.mn’s editor-in-chief, kindly provided. The sequence of publications focused on the SME Fund scandal have been collected on the Ikon.mn webpage.

The investigations started with social media posts that identified the specific involvement of politicians and matched the SME Fund data with the declaration of income and assets from the IAAC (Oct 24). These matches were then expanded to thousands of public servants and Ikon.mn also published 2015-2018 expenditure of SME fund from ‘Glass Account’.

For an explainer of the scandal, see

Some credible actors emerged with a specific focus on information, accountability and transparency.

The specific linking of different sources of information demonstrated to many Mongolians that they could acquire and interpret information on corruption themselves and no longer had to rely on others’ allegations.

The Long-Term Significance of Recent Events

Currently, it is fairly uncertain what will happen next in Mongolian politics. There is a growing sense (certainly among Mongolia-watchers in Vancouver!) that a revolution of some kind is coming, but it is very unclear whether this will be a sudden upheaval, or gradual reforms and also unclear what will result from this upheaval. But, with so much polarization and little mediation at the moment, reasons for revolutionary change are mounting.

But, in the context of recent scandals, Mongolians have discovered the power of their access to information.

Cost of Corruption

Presumably, corrupt officials make a calculation about the financial gain that might come to them through corruption vs. costs like prosecution and sentencing. Past corrupt practices are also likely to be more costly, as more investigations may lead to a need to pay of more people, especially other corrupt officials, including law enforcement.

Grand corruption has been possible in the past because grand amounts enable corrupt officials to share the spoils from corruption. More scrutiny has changed this calculation.

Blame Game

Until now, corruption allegations have always been levelled at individuals. The typical response has been counter-allegations. The clearest example of this was the 2017 presidential campaign.

With an embrace of transparency tools and deepened political engagement, more and more Mongolians will realize the fundamental institutional problems with lack of prosecution and accountability. Yes, individuals helped themselves to the SME Fund and are individually guilty, but it is a system of state funds and lack of transparent authority over these funds that is the real problem and that is coming to light.

Propaganda Questioned

Political communication has inundated voters with distractions. It has redirected their attention from causes to symptoms. With an embrace of transparency tools, voters will see hard evidence of the background structures and causes and thus look past surface symptoms. Such a focus on causes is also a defence against populist appeals.

MAHAH at a Crossroads

Given recent scandals, it seems possible that voters will perceive both large parties, the DP and the MPP, to be fundamentally corrupted and reject this duopoly. Lack of confidence in political parties in the abstract, will also hinder the emergence of third parties.

At the same time, there are many DP and MPP members who are not corrupt and who believe in the efficacy of the party and of ideology to determine Mongolia’s future. These party members will demand accountability within the party as much as of the government, and will put pressure on the party leadership to embrace genuine reform and a new generation of candidates for the 2020 parliamentary election.

Justice and Democracy

Fundamental to an embrace and practice of transparency is a dedication to justice and democracy. Many Mongolians still share in that vision. There is also recognition that ultimately and in the long term, democracy is the best bet at providing justice, even though authoritarian reforms might be a shortcut to temporary justice. Even though political frustration is growing in Mongolia and may be reaching a boiling point, solutions have to be democratic solutions because justice can only be provided in democracies not under populism or dictatorship.

About Damdinnyam

Damdinnyam completed his MASc in Mining Engineering at the University of British Columbia with a thesis entitled “Stakeholders’ Perception on the Applicability of Shared Value Creation in Mongolian Mining Development” and is currently working on developing his dissertation research. He tweets at @Daimka07

This entry was posted in Corruption, Damdinnyam Gongor, Law, Politics, Public Opinion, Social Change, Social Movements, Taxes and tagged . Bookmark the permalink.

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