By D Tegshbayar
Mongolia’s IAAC (Independent Agency Against Corruption) announced on April 12, 2023 that it has presented a new national anticorruption strategy to be implemented up to 2030 to its parliament. This draft strategy drastically shifted its previous focus of the national anticorruption program that focused on legislative changes and punishment to objectives more fostering private sector and emphasizing collaboration with civil society and public.
According to the working group who developed a national anticorruption strategy, basic rights such as a) public’s right to information, b) government’s duty to be transparent, c) efficiency and effectiveness of public services, d) inclusiveness in societal life and services and e) digitalization features were considered in every single action which sets a new standard approach that would be taken to reduce corruption. This, as per the developers of the program, will make a national anticorruption strategy a truly worthy document to reduce corruption through human rights -based and public engagement-based approaches. A strategy also expected to help country’s macro-economic aspects in a long run.
New strategy’s shift in focus
A national strategy was due for adoption in 2023 as the previous national anticorruption program (2016-2023)’s second phase ended this year. Overall, 75 percent of the actions identified by the previous national program was successfully implemented, as explained by the external assessment during the IAAC organized meeting in February, 2023.
At face value though, after 75 percent accomplishment of a national program against corruption, public office corruption must have been lessened. According to Corruption Perception Index (CPI) generated by Transparency International, the global corruption watchdog, Mongolia ranked in 72 out of 168 countries in 2015, with scores of 39 out of 100. Very next year, in 2016, Mongolia has adopted its national anticorruption program for the year 2016-2022, in II phases. After 7 years of implementation of the national program, Mongolia’s CPI scores lowered by 6 points, felling its global ranking down to 116 out of 180 countries. Mongolia was listed among 10 countries where public office corruption is rising in Transparency International’s 2022 report which showed that actions taken before by this program were not up to international standards nor were effective to reduce country’s corruption. The CPI is assessed by 8 sources in Mongolia and in some countries, it ranges between 3 to 13 different sources, meaning expert assessment or survey results of 8 different reports are compiled to generate the estimation of Mongolia’s public office corruption perception, focusing more on implementation area of legislations and compliance with international development organizations’ recommendations.
Surely an announcement that CPI of Mongolia was reduced was not expected by Mongolian government after what they have done in terms of instigating US$1.8billion coal theft case investigation, involving over 200 high-level public officials starting from last December and commencing investigations on Development Bank’s concessional loan-related cases, involving 257 politicians and their affiliates since earlier this year. However, reports and assessments of international organizations, including the CPI, focused on an effective implementation rather than on assessment of country’s strategic actions aimed at curbing corruption from the very core. This made the government shift its focus area, having more consideration on international standards and strategies aimed at addressing development organizations’ recommendations.
After falling on the CPI, the government declared 2023 as the ‘Year of Anti-Corruption’ and announced ‘Tavan-Sh Operations’ namely 1) whistleblowing operation of corrupt officials, 2) transparency operation of public offices, 3) sweeping operation of illegal appointees from public offices 4) bird operation on bringing fled corruption crimes criminals from abroad, and 5) asset recovering operation.
Meanwhile, the IAAC started drafting the national anti-corruption strategy, the medium-term development policy, forecasting CPI scores’ improvement by 2030. The policy not only incorporates Transparency International’s general recommendations, but also examined all 9 sources of CPI in detail to identify key areas of focus through lifespan of the strategy, incorporating and mainstreaming compliance rules and recommendations of international financial institutions and development organizations such as OECD standards and minimum requirements on corporate governance and tax compliance, FATF recommendations on tackling financial crimes, recommendations of human rights shadow report UPR, etc.
‘In the private sector, instead of organizing ineffective training for companies or exercising number of vague activities that give no boost in reduction of corruption, this strategy aims at improving compliance with international standards that will assist in fund raising for companies from domestic and foreign markets. In public offices, rather than shaming a whole sector as highly, moderate or less corrupt or listing government offices in order of immorality, we need to start identifying process risks to better tackle abuse of power….’ said a member of the working group to develop a national strategy. The draft’s goals, objectives and actions are based on more than 40 laws, including the Criminal Law, the Anti-Corruption Law, the Law on the Regulation of Public and Private Interests in Public Service, and the Prevention of Conflict of Interest.
However, implementation becomes a key area where the government of Mongolia fails significantly. Compared to other countries, Mongolia has laws and regulations that are impressively aligned with international best practices but, it fails in obvious sections to comply with transparency, public engagement, inclusiveness, documentation or reporting requirements. Since this part is still a concern with current knowledge and awareness of public officials, IAAC’s priority actions aimed at addressing awareness raising of public officials.
About the National Anticorruption Strategy
Mongolia’s economy is based heavily on the extractive sector. The national strategy implementation of activities in phase I is targeted at extractive industry transparency, along with budget and special fund transparency. Extractive industry transparency is targeted as a priority objective as it involves risks identified by the national risk assessment in 2020.
In a second phase is more about reducing political involvement in SOEs’ governance and moving towards public trading of companies, while listing and social accountability compliance is ensured in the first phase at SOEs.
A total of 10 goals, 45 objectives, and 224 targeted activities were identified in the national anticorruption strategy. While complete activities which are yet to be open to public on D-Parliament may give more detailed information about what will be done during two-phases (I phase- up to 2026; II phase 2026-2030) a brief summary is below:
The first goal is to improve the will, effort, leadership and transparency in the fight against corruption in the political sphere.
This goal outlines the objectives aimed at improving the legal framework to prohibit all forms of vote buying during elections and non-elections; making election expense reports transparent by both political parties and candidates for all levels of elections; clarifying jurisdiction to investigate election and political crimes and violations; improving accountability and ethics of parties and candidates; and refining citizens’ oversight and audit in relation to political financing. The identified objectives are aimed at reducing election costs and fostering equal competitive opportunities in political life.
The 2nd goal comprises six objectives to strengthen the civil service and ensure it is free of corruption.
Actions aimed at eliminating conflicts of interest, creating conditions for a transparent and competitive selection and appointment of public officials; preventing abuse of power in the appointment and extending revolving-door period of civil servants; receiving provisional declarations of assets and income open to public while allowing public to review their conflict of interest prior to their appointment, and requiring inspection of expense discrepancies against earned income by interfacing tax statement with income and asset declaration statement. Ensuring public engagement and oversight over any public decision will make a valuable contribution to Mongolia’s fight against corruption. Revision of corruption risk assessment in public sector to assess operational risks to identify effective measures is addressed within this goal.
The 3rd goal includes four objectives to strengthen the effective control and participation of citizens, public organizations, and the media in anti-corruption measures.
The implementation of “Vision 2050”, Mongolia’s long-term development policy, requires measures to support government – civil society – and private sector partnership. This includes ensuring the fundamental rights of citizens, as well as genuine and inclusive participation of citizens and civil society in the development, decision-making, implementation, and evaluation of government policies. The Government will also make additional efforts to provide information that meets standards of government transparency. Protection of the whistle-blower’s rights, witnesses, journalists and victims is one of the key areas of the program. These objectives will ensure that Mongolia’s transparency and accountability are brought in line with international standards and best practices as well as support the robust development and integrity of the civil society.
The 4th goal is to create a culture of zero tolerance for corruption in the private sector.
This will introduce international best practices in ethics and compliance, reducing risks of money laundering from corruption and building a system and culture that will attract foreign direct investment through increased trust and transparency. Measures to improve the arbitration process, and to strengthen the capacity to resolve disputes between investors and others have also been included. In addition, corporate social responsibility (CSR) standards will be introduced, aligning with the goals set out in “Vision 2050”.
The 5th goal is to ensure the autonomy and independence of anti-corruption agencies and to reduce the risk of internal influence.
This goal includes measures aimed at strengthening the autonomy and independence of the IAAC, prosecutors and the judiciary and the restoration of citizens’ trust in courts. The Government will establish a unit to detect stolen assets, conduct financial investigations, protect witnesses, victims, and informants, and provide security to whistle-blowers and develop a recovered assed management policy. Risk assessments and counteractive measures for corruption will be introduced by strengthening the cooperation between the National Audit Office and the IAAC. This represents best international practice and will contribute to the end of the embezzlement of public funds.
The 6th goal is to improve the legal framework
The Extractive Industry Transparency law, law on SOEs, law on Whistle-blower Protection, law on Political Parties are among those laws to be prioritized for endorsement by this strategy. It is mandatory to examine current laws to improve terminologies, sanctioning of public officials for their wrongdoing both in terms of violation and crime. Ensuring implementation of the UN Convention against Corruption and the recommendations of the Financial Action Task Force should has no exceptions. Improving the system of monitoring the crime of corruption in connection with money laundering, tax avoidance and tax evasion and other financial crimes; ensuring international cooperation in extradition of persons charged with corruption, recovery of assets, and increasing the number of mutual legal assistance agreements to the required level is absolutely necessary at this stage. Abolishing immunity at all level in corruption-related cases and establishing a new whistle-blower system and creating an exemption from criminal liability for those who bring evidence of bribery to the authorities are new areas of focus of this goal.
The 7th goal has been defined as improving budget, financial and audit control and reducing the risk of corruption in procurement.
Eliminating double budgeting by creating the blockchain coding for each item of budget discussion, transparency of budget planning, projection, spending, management and control to align with Transparency of Budget Index is crucial. Transparency in income and spending of special funds shall be ensured while pushing towards management by professional fund managers in compliance with international fund management is another focus area of the program. Expenditures not included in the budget, such as paying extra-budgetary expenditures from the SOEs’ budget such as public debt payment, or spending on social welfare, will be prohibited. Public’s right to know, transparency of regulation on tendering, bidding and direct procurement by public offices and SOEs will be ensured. More importantly the objectives are focused on improvement of arbitration and protection of intellectual rights. Ensuring in laws the appointment of the state audit as a plaintiff on behalf of the state will resolve many outstanding burdens accrued at court.
The 8th goal aims to create a transparent, efficient and liable control system for the governance of state-owned and local legal entities in accordance with international standards.
This goal focuses on contract law, clarifying the legal status of state-owned and local companies; reducing the number of appointments made by the state; introducing competitive selection methods based on professional capabilities; and extending contracts based on performance results. These measures have been included to prevent corruption and conflict of interest, to reduce the participation and influence of high-ranking government officials and politically influential individuals, to improve the profitability of state-owned companies, and to support businesses’ professional activities autonomously and independently from the government. In addition, implementing measures such as establishing criteria for liquidation and creation of new SOEs, gradually reducing dependence on the state by trading their shares on the stock exchange, introducing a dividend policy to the state-owned companies, and ensuring oversight of the activities of the natural resources income funds are essential.
The 9th goal will organize educational activities to create long-term cultural change in the fight against corruption.
In addition to raising public awareness of the functions of law enforcement agencies, efforts will be made to support the new whistle-blowing system and protect whistle-blowers. These educational activities are aimed at preserving and protecting children’s ethics and shaping social ethics in the long run. Mongolia will develop a culture of zero tolerance towards corruption from an early age. Educating voters is crucial in the fight against corruption thus, awareness raising on content analyzing and cyber-education by different metrics will become one of the important educational area.
The final 10th goal is the establishment of a corruption prevention system with special functions for disaster prevention, emergency operations and national security.
A legal framework will be established to declassify and disclose all procurement and expenditure not related to the strategic resources of the above-mentioned institutions and defence resources. Emergency management and organizations with special functions such as defense, police, etc. have the power to conceal huge expenses by classifying them as confidential. This carries a high risk of corruption and conflicts of interest. It is, therefore, necessary to reduce the risk of corruption and avail public with information transparency. Here, activities to ensure transparency of expenditure of state budget, foreign donation and funding management and procurement during the state of emergency or during circumstances of different level of emergency classifications will be ensured, without any negligence to public engagement and, refine accountability measures in laws. In addition, a methodology for corruption risk assessment in unforeseen situations that may arise in the future will be developed, while taking precautionary and risk prevention measures.
According to the law on Development Policy Planning and its Management and the Anti-Corruption law, this strategy should be considered equal to as other 7 medium-term development policies of Mongolia on 1. human development, 2. social development, 3. economic and infrastructure development, 4. Environment, 5. Governance, 6. regional development, and 7. national competitiveness improvement programs.
The IAAC has presented the national anticorruption strategy to parliament. The Standing Committee on Legislations will be responsible for carrying out further public discussions, its transparency and proposal to parliament, following same procedures to adopt the law. The discussion of the document is projected together with anticorruption legislations during spring session.
It is no secret that corruption, abuse of power and positions of authority, and award untoward priority to others, thereby restricting opportunities of citizens and creating inequality. This holds back the country’s development and negatively affects the evaluation of international organizations, leading to a decrease in public trust in the government. We have also failed in building capacity of boutique NGOs, specialized in specific area such as raising awareness or assessing relationship between corruption and macroeconomy, corruption and extractive sector, or corruption and human rights and inclusiveness, or corruption and environment, etc. Implementation was never a key area given focus, rather than adoption of documents. Our drawbacks do not end here.
However, endorsement of this mid-term development document based on public discussion, may give hope to shake current social and economic stagnation if the most important area of implementation of the strategy would follow contextual principles of ideas that developers intended. It is a program that will be implemented not only by the IAAC, but by all government institutions, civil society organizations and private sector companies. As a result, Mongolia could improve its assurance in international arena by showing boost in Corruption Perception Index and improving its credit risk ratings that are high due to country’s risk to corruption in public offices.
D.Tegshbayar is an independent consultant working in Mongolia specialized in financial crimes compliance. Tweets @Davandai