Off The Wire
Mongolia minister says he expects to be cleared in mining deal graft probe
* Ex-minister says $10 mln transfer not connected with Oyu Tolgoi
* Swiss, Mongolian authorities investigating
* Politicians call for review of Oyu Tolgoi investment deal
By Terrence Edwards and Munkhchimeg Davaasharav
ULAANBAATAR, March 21 (Reuters) - A former Mongolian minister who helped launch the landmark Oyu Tolgoi copper-gold mine in 2009 told reporters on Wednesday that he expected to be exonerated by a Swiss probe into the transfer of $10 million into his account.
As finance minister, Bayartsogt Sangajav signed the 2009 investment deal that granted 66 percent of the giant Gobi desert property to Robert Friedland’s Ivanhoe Mines, now known as Turquoise Hill Resources and majority-owned by Anglo-Australian mining giant Rio Tinto.
The Swiss Office of the Attorney General (OAG) is conducting a criminal investigation into a seized account that court documents say was used to transfer $10 million to Bayartsogt in September 2008, the month he was appointed minister, Reuters reported on Monday.
Discussing the origins of the $10 million, Bayartsogt denied allegations it was connected to Oyu Tolgoi, saying it was transferred to him by an investor to support a business he had established. He declined to give the investor’s name.
Mongolia’s anti-corruption authority said on Tuesday that it was working with Swiss counterparts to investigate the allegations. The agency is already looking into suspected abuses of power by officials during the negotiations for the project, Turquoise Hill said in an announcement last week.
Bayartsogt said he had returned to Mongolia from his overseas studies as a result of the investigation, adding that he would remain until it was completed.
“I am happy the Mongolian Anti-Corruption Agency is collaborating with the Swiss Office of the Attorney General,” said Bayartsogt during a televised press conference, adding that a joint investigation by the two countries made sense because Mongolians did not trust one another.
Since Monday, Mongolian politicians have been scrambling for details about the investigation, saying that wrongdoings should trigger a review of the 2009 deal.
Deputy mining minister Zagdjav Deleg said in remarks published on Wednesday that while the agreement had brought in $6 billion of investment, it needed to be revisited if it turned out to have been secured by graft.
“If there was corruption, the government’s ownership could grow from 34 percent to 100 percent,” he said in an interview published by newspaper Zuunii Medee. The ministry did not respond to requests for comment.
“In addition to the suspicion surrounding the investment agreement, there is major disagreement over the distribution of income from the project to Mongolia,” Zagdjav was quoted as saying.
A spokesman for Rio Tinto, which took control over management of Oyu Tolgoi in December 2010, declined to comment when contacted by Reuters on Wednesday.
Mongolia’s opposition Democratic Party, which was part of a coalition government in 2009, expelled Bayartsogt and said it was also seeking clarity from Swiss authorities.
Party Secretary Magnai Otgonjargal said the 2009 deal should be questioned if corruption was found to have taken place.
“If this is a problem with S. Bayartsogt, it is imperative that we review the agreement with Rio Tinto from Mongolia,” he said.
Additional reporting by David Stanway in Shanghai and John Miller in Zurich Writing by David Stanway Editing by Nick Macfie