Coal Theft Scandal: Mongolia’s Battle Against Corruption in Mineral Sector Amidst China Trade Allegations
Mongolia, known for its vast mineral resources and significant coal exports to China, was rocked by allegations of corruption within its coal trade industry late last year. This scandal, which drew public outrage and international attention, exposed crucial weaknesses in the management of the country’s minerals sector.
Overview
- Mongolia’s reliance on coal exports
- Emergence of corruption allegations
- Institutional shortcomings and political implications
Coal Exports as a Cornerstone Commodity
Coal is a significant commodity for Mongolia, accounting for over 80% of its foreign trade and a substantial source of revenue.
Allegations of Illegally Transported Coal
However, allegations emerged that coal was being illegally transported across the Chinese border, implicating high-ranking politicians and influential business leaders. The potential losses to the Mongolian economy were estimated at around US$11 billion.
Institutional Shortcomings and Political Implications
Strategic Importance Designation and Transparency
The strategic importance designation of the coal deposit led to the withholding of information, ultimately undermining transparency and accountability.
Opportunities for Corrupt Practices
The lack of adequate transportation infrastructure and border facilities, coupled with COVID-19 related restrictions, created opportunities for corrupt practices.
Railways and Customs Officials
Railways and customs officials, as well as border militias, reportedly demanded bribes to facilitate the passage of coal through the border.
Government Response and Ongoing Efforts
Criminal Law Amendments and Investigations
In response to this high-profile scandal and others, the Mongolian government amended its criminal laws in December 2022 and took steps to address corruption within its strategic minerals sector and broader economy.
Parliamentary Hearing and Investigations
A parliamentary hearing and investigation were announced but have since been delayed.
Criminal Cases and Charges
To date, eight criminal cases have been launched, and five have been concluded. The former CEO of the state-owned coal company and 11 others have been charged with money laundering.
Challenges and Room for Improvement
Enforcing Anti-Corruption Measures
Mongolia has an array of anti-corruption laws and institutions, but their enforcement and operationalization are lacking. There is ample room for improvement in addressing the identified gaps and bolstering efforts to combat corruption within the strategic minerals sector and across the economy.
Sources
- Bayar Dashpurev, Ph.D. candidate at the Max Planck Institute for Social Anthropology
- Previously taught law at the National University of Mongolia and German-Mongolian Institute for Resources and Technology
- Extensive experience as a litigator in administrative courts and the Constitutional Court of Mongolia
- Handled cases and disputes related to natural resource management and the environment
Photo Credit
baiterek_media – stock.adobe.com - Copyrighted
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