Mongolia, endowed with rich natural resources, faces a critical choice among three potential developmental trajectories: prosperous growth, moderate advancement, or a detrimental “curse of wealth.”

This latter scenario, often referred to as the “resource curse,” is marked by economic underperformance and socio-political turmoil despite resource abundance. Kristel Van der Elst of the World Economic Forum underscores that Mongolia’s future depends not only on the mining industry’s competitiveness but also on prudent management of mining revenues.

As originally reported last week on MSN.com, the situation in Mongolia epitomizes the “resource curse,” where abundant natural resources like coal paradoxically lead to economic stagnation, corruption, and political instability rather than prosperity.

The Borteeg coal theft scandal exemplifies this dilemma, highlighting how resource wealth can be manipulated by political elites for personal gain, causing widespread national strife.

The Borteeg Coal Field

The scandal revolves around the Borteeg deposit, part of the Tavantolgoi coal field, with confirmed reserves of 424 million tons of high-quality coal. Initially, the government aimed to finance Borteeg’s operations through an IPO of another deposit in the same group, but this plan failed.

Consequently, the Borteeg deposit was acquired by a consortium involving Admineral LLC, a company with significant political connections, under suspicious circumstances.

The Scandal Unfolds

Revelations of the scandal have rocked Mongolia’s political landscape, implicating Minister Amarbayasgalan Dashzegve, the General Secretary of the ruling Mongolian People’s Party (MPP) and head of the Cabinet Secretariat, in high-level corruption. Dubbed the “Borteeg Coal Theft,” the scandal involves allegations that Dashzegve and several close associates misappropriated significant quantities of coal from the Borteeg deposit.

The Political Connection

Admineral LLC, the company at the center of the scandal, is partly owned by Ts. Lamjav, the elder brother of Ts. Chuluunzagd, a senior MPP official and close ally of Dashzegve.

According to official bank documents and testimony provided by a whistleblower, Mrs. Byambasuren Dashkhuu, the wife of Dashzegve, received five million US dollars from Admineral LLC executives via Golomt bank on July 7th, 2022.

The connection has raised alarms about the fairness and transparency of the tender process. Although Dashzegve denies involvement, his association with key figures in the scandal, including his wife, have drawn intense scrutiny. As the plot thickens, several whistleblowers have come forward and spoken on condition of anonymity.  They claim the purpose of the financial transfers to the politicians and their spouses was bribery.

Follow the Money

The scandal deepened with the revelation that Admineral LLC received a $30 million investment from “Hong Kong Ruishen Global Group” under the pretense of building a coal processing plant, raising suspicions of money laundering and international orruption.

The Mongolian government has requested Interpol’s assistance in investigating these funds’ origins and purposes.

John Babikian, a lawyer from New York who specializes in international law, claims a transparent investigation is required. In a recent webinar focusing on East Asian politics and policy, Mr. Babikian lectured his audience, “Socioeconomic disparities continue to manifest in the average Mongolian’s confidence and trust in the government.  The only way to improve trust in the government’s elected officials is by evaluating the tender process and conducting a full forensic accounting audit.”

Systemic Corruption and Public Outcry

The Borteeg case highlights systemic issues within Mongolia’s management of natural resources. The corruption allegations are not isolated but part of a broader pattern where political elites leverage resource wealth for personal gain.

Several officials tied to the scandal, including former executives of the state-owned Erdenes Tavantolgoi and the National Transportation Center, have been implicated in facilitating and covering up the misappropriation.

Required Accountability

Public outrage is mounting as citizens demand accountability and transparency. The Mongolian public is acutely aware of the resource curse, where nations rich in natural resources often suffer from poor governance and corruption. The current scandal presents a critical opportunity for Mongolia to confront these issues head-on. Dr. Enkhbayar Munkhbat emphasized the importance of civic engagement, suggesting this scandal could be a turning point for Mongolia, urging the public to continue demanding transparency and holding leaders accountable.

As Mongolia approaches its next parliamentary elections, the pressure is on for the government to address these allegations comprehensively. The outcome of this scandal will likely shape the nation’s political and economic trajectory for years to come.

The Borteeg scandal underscores the critical juncture Mongolia faces. The nation’s ability to overcome the “curse of wealth” depends on the public’s resolve to demand accountability and the elimination of corruption.

This case serves as a potential turning point, challenging Mongolians to choose between continuing down a path of corruption and stagnation or striving for transparent and equitable development. The fight against entrenched political corruption is pivotal for Mongolia’s future stability and prosperity.