Guest Post: A quick reaction to the on-going Facebook conversations on Oyu Tolgoi agreement and the role of Mr Bayartsogt in signing it

By Undariya Tumursukh

The news that the Swiss are investigating the possible corruption case involving the former Finance Minister S. Bayartsogt (DP) and Rio Tinto has triggered some agitated discussion, including on Facebook, about Mr. Bayartsogt’s central role in concluding the Oyu Tolgoi (OT) agreement in 2009.


Mr. Bayartsogt was re-elected to the parliament in 2012 despite the controversy surrounding this investment deal and even appointed as a Vice-Speaker of the Parliament. However, he was forced to resign from this post in 2013 when his unreported offshore company with one million USD in a Swiss bank account surfaced through the Offshore Leaks Database of the International Consortium of Investigative Journalists . Mr. Bayartsogt claimed he simply forgot to include these assets in his legally required declaration of income and property when assuming his public office. He reportedly added that “one million USD is not such a large amount” (link).

Now, Mr. Bayartsogt’s offshore accounts have resurfaced as a result of Swiss authorities’ investigations into the source of not one but ten million USD transferred to Mr. Bayartsogt soon after he was appointed a Finance Minister. Reuters reported that the said accounts have been frozen and the Swiss court is investigating whether funds are likely to have been a bribe to the former Finance Minister in exchange for signing an investment agreement disadvantageous to Mongolia (link). As a number of other compromised politicians, Mr. Bayartsogt had been living in luxury abroad since his defeat in the 2016 parliamentary elections. He has recently come home and held a press conference at which he claimed that the funds in question have nothing to do with his role as a Finance Minister or Oyu Tolgoi agreement as he had simply borrowed that money from a friend. The said friend remains unidentified.

Social Media Discussions Defending Bayartsogt

My purpose here, however, is not to prove or disprove Mr. Bayartsogt’s guilt or argue the pros and cons of the OT agreement. My purpose is more modest: to reflect on a few arguments I encountered, to my initial surprise, in an ardent defense of our former Minister of Finance and the OT agreement. Among the proponents are people considered well educated and informed and concerned about Mongolia’s development. That initial surprise is what triggered this reflection.

What concerns me is the logic of arguments that defend powerful and privileged men whom we have sufficient reason to suspect of corruption and even treason in so far as they allegedly colluded with transnational and domestic private interests to cheat the Mongolian people of their public assets. That Mr. Bayartsogt figures here is of little importance. The limelight could have shone on any other politician such as, say, Mr. S. Bayar, former Prime Minister (MPP), also deeply implicated in corruption charges and also living abroad in luxury. Instead of OT, it could have been Erdenet or any other significant source of national wealth (and sadly they have been too) that is privatized through a non-transparent process, with Mongolia’s national interests poorly guarded (or easily sold?) and with the neoliberal ideology of the free market, private property and limited government serving both as legitimation and a smokescreen.

Argument 1: Innocent Until Proven Guilty

The first line of defense is, predictably, that Mr. Bayartsogt’s crime has not been established by the court. Indeed, a core principle of a humane and democratic system is the presumption of innocence until proven guilty. Whilst in this particular case, there is hope that the Swiss judicial system will prove trustworthy and effective, it is important to reflect on this defensive argument in the Mongolian context as it surfaces every time there is some effort to demand accountability from a powerful politician. Very simply, we cannot trust our legal and judicial institutions to systematically work fairly and competently. Both our lived experiences and corruption perception surveys indicate they are plagued with significant corruption. Recent revelations about the private wealth accumulated by some judges confirm these suspicions. If the courts themselves are a part of the corruption network, a corrupt politician may never be proven guilty through the formal processes. In such a situation, should we continue to believe men like Mr. Bayartsogt to be innocent since never proven guilty?

Then there is the issue of the difference between law and justice. Laws are a product of political processes in which those with more power often dictate their will onto those with less. Hence, if laws are designed to protect the interests of the wealthy and the powerful, even if the courts work effectively according to the law, we cannot expect justice. Nevertheless, for those of us committed to democracy and, hence, the goal of fostering an independent and fair judiciary, we have little choice but to wait for the courts to run their course as a matter of an ethical principle. So that is that.

Argument 2: Western Companies Are Intrinsically Good

The other pro-Bayartsogt arguments I have seen are a bit more perplexing. One states that since Rio Tinto is not a Mongolian or Chinese but a western company and one that operates on a global scale, it would never do such a dirty thing as bribing a public official. In this view, foreign, especially western and large, transnational companies are ethical, socially responsible, accountable, transparent, i.e. “nice and clean” in a presumed contradistinction to domestic and non-western companies. This absolutely unfounded and extremely naïve view is mind-boggling! A simple google search would show reports of Rio Tinto charged for fraud in US, imposed a fine in UK and facing investigation in Australia in relation to a coal reserves deal in Mozambique (link); investigated by UK authorities for corruption in relation to an iron ore project in Guinea; and implicated in human rights violations and environmental degradation in Papua New Guinea (link), etc. I strongly wish my compatriots, especially those who consider themselves intellectuals, would read up on the empirical history of western capitalism. To clarify, I do not mean reading, once again, the ideological treatises of the likes of Hayek and Friedman but critical studies grounded in the historical, material and social realities of countries and people.

Argument 3: Be Happy with the Leftovers

Another argument was that we should award rather than prosecute Mr. Bayartsogt as he at least made OT operate. In this view, whether or not the former Finance Minister colluded with transnational corporate interests to sell Mongolia short is irrelevant so long as the deal brought some income for some Mongolians. This argument is not as naïve as the previous ones. It expresses a worldview that has made peace with corruption and injustice. If we adhere to it, there is no need to hold accountable corrupt officials and businesses so long as they let some revenues to trickle down to Mongolians and we, as Mongolians, are to be grateful to the “big guys” for the opportunity to scramble for their leftovers. This view is not just defeatist, it is devoid of any morality.

Argument 4: The REAL Costs of Oyu Tolgoi

And then, in all of this, there remains a side to the OT agreement or any other similar arrangement that is still largely left out of the public discussions: the REAL COST of the mining in the fragile Gobi ecosystem. Once the minerals have been depleted and the wealth extracted and channeled abroad not only through the gains made by transnationals but also through Mongolia’s capital flight and imports, we shall face more than a loss of revenue. We will be left to face a devastated environment, severe water shortage and desertification, deterioration of public health, destruction of traditional livelihoods, massive social dislocation and exacerbation of inequalities and violence. When Mr. Bayartsogt bedazzled Mr. S. Ganbaatar during their televised debate by his now infamous reference to the twenty thousand variables included in the “highly complex” theoretical model underpinning the OT agreement, no word was said about the non-market costs to be borne by Mongolia. Mr. Ganbaatar had no wherewithal to challenge the limitations of the model as he himself had come to that debate as a neoliberal believer with a typically myopic vision of discarding the social and environmental costs as extraneous to economic relations.

Argument 5: The Bigger Picture

I believe the various positions (and omissions) on the matter of Mr. Bayartsogt‘s role in the OT agreement reveal much broader issues related to the post-socialist attitudes of Mongolians to economy, politics, public good, social values, and ethics. In the end, it is not just Bayartsogt. At the very least, two other ministers who represented Mongolia in the OT agreement negotiations and signing are implicated: Mr. L. Gansukh, then Minister of Environment, who allegedly bought a million USD house soon afterwards, and Mr. D. Zorigt, then Minister of Energy and Mining, whose private portfolio has reportedly reached 30 companies since then. A deal of this magnitude had to involve more people from both MDP and MPP. However, the issue is not just that corruption is institutionalized in post-socialist Mongolia. The challenge is that it is facilitated by neoliberal ideologies that have become hegemonic.

About the Author

Undariya Tumursukh is a PhD Candidate in Public Policy at the Auckland University of Technology and former National Coordinator of the MONFEMNET National Network.

Note: The initial, briefer, reaction was posted on Facebook on March 21.

About mendee

Jargalsaikhan Mendee is a Deputy Director of the Institute for Defense Studies of Mongolia. He holds a PhD in Political Science from the University of British Columbia, and MAs in International Relations from the US Naval Postgraduate School and in Asia-Pacific Policy Studies from the Institute of Asian Research of the University of British Columbia.
This entry was posted in Corruption, Foreign Investment, International Agreements, Mining, Oyu Tolgoi, Undariya Tumursukh. Bookmark the permalink.

1 Response to Guest Post: A quick reaction to the on-going Facebook conversations on Oyu Tolgoi agreement and the role of Mr Bayartsogt in signing it

  1. Anonymous says:

    A well considered arguement

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