Guest Post: A free but not a Fair Election: It Was All About Money

By Bat-Orgil Altankhuyag, Batkhishig Gankhuyag

Mongolia recently conducted its tenth competitive election since 1990 in June 2024 (the first multi-party elections). In general, various electoral observation reports, including the one conducted by OSCE-ODIHR, suggest that the 2024 parliamentary election was free, but not fair, primarily due to issues surrounding electoral campaign financing. Over the past two decades, the electoral competition in Mongolia has transformed into a money-marathon (Enkhtsetseg and Bat-Orgil 2024). According to the State Audit Authority of Mongolia (2024), the total amount of money spent by political parties and independent candidates on electoral campaigns reached 66.6 billion MNT. The Mongolian State Audit Authority establishes spending limits for electoral campaigns by political parties and candidates before each election. In 2024, parties and coalitions were prohibited from spending more than 6.4 billion MNT, while individual candidates were restricted to spending between 895 million MNT and 1.5 billion MNT, depending on constituency size. While this practice aimed to regulate electoral financing to some extent, it has been widely criticized for allowing money to play a significant role in electoral competitions.

During my interviews with candidates for the 2020 election, many of them claimed that undisclosed expenses were three to four times higher than the reported financial figures. One candidate even alleged that only those who spent over 3 billion MNT actually emerged victorious in the 2020 election. Given the increased size of constituencies in the 2024 election, it is likely that campaign funding in reality tripled or quadrupled compared to 2020. For instance, there was a well-known case involving Kh.Nyambaatar, a leader of the MPP, following the 2020 election. An actor and influencer claimed to have received 100 million MNT from Kh.Nyambaatar for the purpose of supporting his election campaign. Subsequently, Kh.Nyambaatar clarified that the funds were provided by his relatives who reside abroad, without his knowledge, to support his campaign.

Consequently, the electoral competition became an uneven playing field, favoring the ruling party over other parties. The ruling parties have access to various state resources for funding their campaigns, with even large corporations contributing to their campaign finances. State-owned mining companies, such as Erdenet Mining Corporation and Tavan Tolgoi coal mining, have been significant sources of party financing (Enkhtsetseg and Bat-Orgil 2024). Smaller parties, on the other hand, had to find alternative means to finance their campaigns. For instance, the DP notably employed the use of “Denchin” (Pledge money) in previous elections, a practice that was prohibited in the 2024 election. The short duration of the campaign period (17 days) posed a major hurdle for smaller parties in terms of financing their electoral campaigns.

Private funding

According to the Law on Parliamentary Elections, individual donations should not exceed 10 million MNT, while corporate donations should not exceed 30 million MNT. Donations exceeding 1 million MNT by individuals and corporate donations exceeding 2 million MNT must be disclosed publicly.

Table 1: Electoral campaign finance for 2024, billion MNT

Source: Based on the State Audit Authority 2024

From the analysis of the financial statements, it is evident that CWGP solely relied on private donations totaling 337 million MNT, without any form of funding from corporations. On the other hand, DP received donations from two companies, namely Mongol Teever Negdel LLC and Newcom LLC, amounting to 30 million MNT, with the majority of their revenue coming from individuals (846 million MNT). It should be noted that each candidate on the DP party list contributed 10 million MNT as private donations. In contrast, the party list candidates of MPP did not make any financial contributions to the party. As previously mentioned, the ruling MPP party had access to various sources of funding, including state-owned mining companies, making external donations unnecessary for their party list.

MPP received a substantial amount of funding from corporations, amounting to 1.5 billion MNT, with the largest contributor being the MCS Group, which accounted for 1.1 billion MNT (75%) of the total corporate donations. Interestingly, MCS Group also provided significant financial support to the KHUN party, with a similar amount of funding (960 million MNT out of a total of 1 billion MNT). In terms of MPP, it is understandable considering that there were MPP candidates who had previous affiliations with the MCS Group, such as L.Enkh-Amgalan. However, the donations to the KHUN party from MCS Group raised suspicions about the close association between the KHUN party and the ruling MPP. In terms of the National Coalition, individual donations amounted to around 3 billion MNT, with half of this sum originating from the personal funds of the coalition leader, N.Nomtoibayar. Notably, this reveals a loophole in the law on parliamentary elections, as a party list candidate is allowed to donate up to 1.5 billion MNT to their party, compared to the cap of 10 million MNT for regular individual donations. Furthermore, the National Coalition received donations totaling 452 million MNT from 22 corporations.

This trend of wealthy individuals being successful in elections is not unique to the 2024 parliamentary election. Previous elections demonstrate that individuals with significant financial resources often achieve electoral success. Mendee and Radchenko (2017) argue that ” there are deep links between political and business interests. Business visibly entered Mongolian politics in 1996 (in the DP’s case) and 2000 (in the MPP, in its earlier reincarnation as the MPRP). In the 1996 Parliamentary campaign, the [Democratic Union] sought out entrepreneurs both to fund their campaign activities and to attract qualified cadres to fill party offices” (p. 1040). Morozova also contends that the success of the MPP can be attributed to its ability to attract top businessmen in Mongolia since 2000.

Allocation of state resources to electoral campaigns

The Mongolian People’s Party (MPP) has effectively utilized significant state resources, taking advantage of their incumbency and supermajority rule. In a rapid and comprehensive manner, the government has employed the national civil service to implement a large-scale program called “New Cooperatives (Shine Khorshoo),” just 60 days prior to the elections. The genesis of this program can be traced back to the devastating dzud that occurred before the 2024 election. The dzud, a cold-season disaster, resulted in the deaths of around 7.4 million livestock and caused an economic loss of 2.2 trillion MNT. This calamity affected 70% of herder households, jeopardizing their means of subsistence and pushing them closer to poverty. Consequently, the dzud has emerged as a significant catalyst for poverty in Mongolia, compelling nomadic herders to abandon the steppe and migrate to urban areas.

However, this disaster presents both opportunities and risks for the incumbents. With a supermajority in parliament, the Mongolian People’s Party swiftly enacted the Law on Mitigating the Adverse Impact of Climate Change on Traditional Livestock Husbandry as a response to the dzud. Subsequently, the government introduced a disaster relief plan known as the “New Cooperatives Movement,” which bears resemblance to the political movement called “Saemaul Undong” or “New Village Movement” that took place in South Korea during the 1970s. Under this program, a subsidized loan of 5 trillion MNT will be made available over the next five years. Herder households have the opportunity to obtain a guaranteed loan of up to 50 million MNT through commercial banks. Additionally, cooperatives participating in the program can acquire 5 hectares of land. In response to these actions, the Democratic Party, the opposition, has appealed to the Constitutional Court. “The law was adopted as ‘urgent’ without sufficient preliminary research and approved a substantial amount of funding for the implementation of a cash-based program leading up to the elections.” argued Kh.Nomingerel, a lawyer and candidate from the opposition party list. Winning the support of rural voters is crucial for the incumbents to secure victory in the elections due to the electoral system’s bias, favoring rural districts where the ruling party enjoys significant support compared to urban areas.

Furthermore, the government has increased the salaries of all civil servants by 10%, as well as raised the pay for general service workers by 20%. These adjustments encompass a total of 225,200 public sector employees, with additional benefits afforded to civil servants employed in local administrations. While civil servants in soums (administrative subdivisions) have received a 40% increase in their monthly salary, government employees stationed in provinces and in three isolated districts of the capital have been granted a 20% local allowance.

Conclusion

Since the ruling party has access to various resources, they have an incentive to increase the amount of money in an election, resulting in the election becoming a money marathon. Firstly, the design of the electoral system such as block voting system used in the 2020 election favored big spenders. The increased size of electoral districts in the 2024 election tripled the electoral cost, making it difficult for candidates without significant wealth to cover such large constituencies that spanned three provinces. Secondly, it is apparent that private financing has become the primary means of funding. Big corporations such as MCS and MAC (N.Nomtoibayar) have been the main contributors to political parties. These corporations often end up benefiting from winning various licenses and concessions after the election. This is why one of the main recommendations from the experts at International IDEA (2018) was to limit or prohibit corporate donations. Thirdly, the strategy employed by the ruling party to win the election involved restricting companies from donating to opposition parties. This was evident in the case of DP, which only managed to secure donations from two companies, each contributing 30 million MNT. Therefore, it can be argued that the 2024 election was a free but not fair one.

About the Authors

Altankhuyagyn Bat-Orgil is a political analyst and PhD Candidate at the University of Bonn.

Gankhuyagyn Batkhishig is an independent analyst formerly worked as a Research Assistant at the DeFacto Institute.

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