Mongolia’s Elite - Lies and a Solution
|By Jon Springer|
Most politicians in Mongolia are closely related to Mongolia’s business elite. This relationship between economic and political elite is not unique. It is the norm in many countries. Unfortunately, Mongolia’s elite has not matured beyond the post-communist era to concern themselves with building a strong nation for all.
A famous political quote from the late 1800s says, “There are three kinds of lies: lies, damned lies, and statistics.” In the spirit of lying, American author Mark Twain attributed this quote to British politician Benjamin Disraeli. In fact, Mr. Twain coined the phrase and foisted it on the politician to give it power.
Mongolians will not be surprised that a famous political quote is a lie because Mongolians are familiar with politicians and fat lies. There are three lies about Mongolia’s society which politicians perpetuate that must stop.
Lie 1: Mongolians are lazy, poorly educated, not hardworking people. Ridiculous. The laziest Mongolians are those who perpetuate the myth that Mongolians are lazy. Mongolians I have met are hard working, have a deep sense of pride about their families and nation, and are tough as nomadic people who had the largest land empire the world has ever seen.
Lie 2: Geographically vulnerable. Placed between Russia and China, politicians play on an historic sense of vulnerability and hate of the Chinese. Japan, South Korea, Germany, the United States, the United Kingdom & Kuwait among others want to be Mongolia’s strong allies when Mongolia will accept them, and not use them. It is the political elite’s failings that these countries are not strong allies.
A lack of allies leaves room for fear and rumors about China. This cannot continue.Mongolia’s economy will have trouble without Chinese imports from Mongolia. Thus, Mongolia is in trouble if it fears China due toa lack of strong allies beyond its neighbors. Mongolia’s political class uses fear about China to evade responsibility for development failures.
Lie 3: Outdated. Mongolia is seen as behind the times, a country that cannot develop sufficient infrastructure. False. Mongolia had better infrastructure under communism than today. The demographics of where people live changed dramatically partially due to a lack of political will to adapt infrastructure to post-communist needs. If politicians concerned themselves more with citizens’ needs, and less with contracts they (or their business relations) willget or lose from the government, Mongolia would develop with help from those allies waiting to build relationships.
Mongolia’s citizens know what they need when people take the time to speak with them. Mongolia’s politicians must show they care to figure out how to raise the incomes of all people from nomadic herders to teachers, in a manner that keeps pace with the mining boom’s inflation; but without government handouts of cash that increase inflation and put the nation further into debt.
Redirecting 100 People
How Mongolia’s elite became elite between 1991 and 2010 must be acknowledged. In that post-communist period:
• Those with political connections from the communist regime that were not too prominent to be remembered got ahead, particularly those formerly with the secret service.
• Those who were willing to smuggle got ahead as the brothers from Max Group admitted in an article in last year’s Forbes magazine.
• Those who knew the right people to bribe or where to get the right paperwork approved got ahead.
• There was a wild and unregulated way of doing business in this era, and that was the rules of that time.
And now, that time must end.
The ACA’s Role
I believe that the Anti-Corruption Agency in the past months has made a mockery of itself. It has been used as a tool of political corruption. Unable to arrest those sitting in the Grand Khural or other national political offices, it has arrested the competition of those in power during the run-up to elections. In my opinion, this is shameful, undemocratic, and a total failure to arrest those most corrupt.
The 2000 Point Challenge
The ACA should cease arrests based on events prior to January 2010. No one who gained wealth or political power during that era is clean. Acknowledge and move forward.
Now, it is time to modify behavior for Mongolia to move forward. No one should be immune from prosecution, not members of parliament, not the President or Prime Minister.
Smuggling by the rich must end. Blocking infrastructure development must end. Impoverishing Mongolia’s citizens must end.
HERO magazine publishes a list of Mongolia’s 100 richest people. Assign them reverse values: #1 worth 100 points, #2 worth 99 points, and so on, with #65 worth 35 points, to #100 worth 1 point.
Although former President and Prime Minister Enkhbayar was arrested on pre-2010 charges, give the ACA 4 points for arresting him as he was #96 on HERO magazine’s top 100 list. He is the only one among the top 100 list arrested.
While I believe Mongolia’s wealthiest person is not corrupt, many of Mongolia’s 100 richest are known by citizens to be corrupt yet immune from the ACA due to government membership.
The ACA is hereby challenged to clean the country up, arrest and imprison 2,000 points of Mongolia’s richest people (from 5,050 points available) based solely on actions since January 2010. This is not a game, but a way for citizens to track if the ACA is doing its job or merely arresting people for show and political motivation. If the ACA is unable to arrest the most corrupt, it is merely a tool to keep down the competition.
Capitalism will be good to Mongolia, however the crony capitalism practiced now punishes Mongolia’s citizens. The honorable among Mongolia’s 100 richest are great patriarchs and matriarchs to their nation to be admired and respected. They must also admire and respect all the citizens of their great nation, and lift it up.
Jon Springer is a graduate of the London School of Economics. He has visited Mongolia twice and strives to be the most knowledgeable person in the world about investing in Mongolia not living in Mongolia (in lieu of convincing his wife to move to Mongolia). He blogs regularly on SeekingAlpha.com.
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Dig deeper, Jon.
And ask question of the MPP leaders.
By Oyungerel Tsedevdamba, Ulaanbaatar, Mongolia
I admire The Economist’s ability to cover stories from around the world. I understand that it must be quite difficult to write with accuracy reports about every country, especially when it is too expensive to maintain resident reporters everywhere. So, I never expect absolute accuracy from any media covering the world stories. However, in the era of the Internet and cheap telecommunications, I do expect more precision than was possible in the 1990s for example.
The Economist’s recent story on Mongolia, “Steppe in an ugly direction” was, I regret to say, poorly researched. So, I decided to do some fact-checking just to let The Economist know that it needs to respect its readers in Mongolia with more accurate reporting.
Fact One that The Economist missed: The Mongolian public was surprised at the high degree of the obstruction of justice from Enkhbayar and his supporters, and the low degree of respect for law that Enkhbayar himself helped create during his years in government.
When police and the Anticorruption agency officials came to arrest Enkhbayar on the night of April 11, Enkhbayar’s bodyguards obstructed the arrest. One of them pointed a gun directly at the Anticorruption Agency officer, who responded by pulling his own gun. Special Force police officers quickly disarmed Enkhbayar’s bodyguard. His pistol was loaded and ready to shoot. In this process Enkhbayar’s car window was broken.
The next obstruction the Police faced was Enkhbayar’s supporters. At the gate of Enkhbayar’s residence, police officers encountered scores of heavy-set guards blocking all entrances to the compound. Enkhbayar’s backers pushed and pulled the police, knocking off their hats, slapping their faces and cursing at them. All of this was televised live by Mongolian television stations (including pro-Enkhbayar TV 9) and can be viewed on Youtube. No need for The Economist to go to the expense of sending a reporter all the way to far Mongolia. Heaven forbid. All one needs to do is turn on a computer, go to Youtube and look. I wonder whether British police would have shown the same degree of restraint if, for instance, Rupert Murdock was indicted, and in response recruited scores of beefy guards to block, shove, and kick the police coming to arrest him – or if the Occupy Wall Street people had pushed and kicked the police away.
As for Enkhbayar’s supposed respect for the law, the Mongolian public was shocked to learn he had been summoned to give testimony to the Anticorruption Agency some 10 times since October 2011 and each time declined to appear. That kind of brazen disrespect for the law is not tolerated from ordinary citizens in either Mongolia or Great Britain. We rightfully wondered how Enkhbayar felt entitled to just say “no” when summoned to testify. The Anticorruption Agency had heard enough “no’s” from Enkhbayar when he was asked to put his shoes on and just picked him up and carried him out of his compound in his socks.
Fact Two: “The small hotel” and “a local newspaper” that The Economist talks about are big deals in Mongolia. Just look at their location. The “local newspaper” is housed in an historic building located in the most expensive location in city of Ulaanbaatar. It is less than 50 meters east of Parliament and by no means “small”. Would any London “local newspaper” building be considered a small deal if it were located next to the Houses of Parliament?
Fact Three, timing: The Economist is quick to conclude that the timing of Enkhbayar’s arrest shows that it must be politically motivated. The timing of the arrest is, indeed, critical but for quite different reasons. The timing dilemma confronting Mongolian law enforcement was created by the Parliament. When law enforcement agencies attempt to investigate allegations of corruption the train often leads to the doorsteps of Mongolia’s newly rich oligarchs some of whom can be found comfortably ensconced in Mongolia’s Parliament -- as the costs of contesting a seat in Parliament are prohibitive for anyone other than the most wealthy or well-connected. During 2010-2011, the General Prosecutor’s office twice investigated MPs, ultimately charging them with misusing their powers and mishandling government money. However, they were not arrested because Parliament had given its members immunity from prosecution and decided not to lift that immunity in their cases. The obvious message for politicians who are likely to be charged with a crime is, “get yourself elected to Parliament as soon as possible”. The Mongolian public hates this of course and blames law enforcement for letting politicians slip from their grasp by not acting in a timely manner. In Enkhbayar’s case, law enforcement faced a serious time dilemma: To arrest him before the election while he did not have parliamentary immunity or to delay and run the risk of enabling him to hide behind his parliamentary immunity, perhaps for years. I wonder what would the British anticorruption agency do in that situation.
Fact Four: The Economist totally “missteps” in its conclusion about current president Tsakhiagiin Elbegdorj. He is still the most dedicated democrat that Mongolia can find. He opened up public hearings and debates for the first time ever. He courageously established a moratorium on the imposition of the death penalty. He called upon his male colleagues to support women in politics. He has undertaken sweeping initiatives to reform Mongolia’s weak judicial system. He actively participates in budget reforms initiating citizens’ participation in budget planning. And most importantly, he remains a passionate supporter of a free media. TV9 Television, which devoted 90% of its news hours in support of its patron, Enkhbayar, during his presidential campaign and the months following, is under threat of being closed for its questionable origins involving the use of Japanese donations of equipment intended for Mongolian Buddhist organizations. However, it is President Elbegdorj and his team that has become the most effective guarantor of media freedom. The President’s draft law on press freedom is striking confirmation of his democratic agenda and stands in marked contrast to the law draft put forward by the Ministry of Justice and Interior which is under the political control of Parliament’s dominant party, the Mongolian People’s Party (the old Mongolian People’s Revolutionary Party whose name Enkhbayar’s new party has co-opted).
When the day before his arrest Mr. Enkhbayar released internal government transcripts of the July 1, 2008 post-election disturbances, the Mongolian public was proud to read how Elbegdorj, alone, demanded a halt to the brutal beatings and arrests of hundreds of young men, demanding the arrest of the killers who shoot demonstrators, and demanded the prompt restoration of the free media after Enkhbayar had ordered the independent media (television and newspapers) shut down for a period of four days. The transcript suggests nothing like what The Economist concluded. I believe the document’s English language version is still available on the UB Post’s website. Obviously The Economist did not bother to google the transcript and read it.
Because I do want to continue reading Mongolia reports on The Economist, I would like to offer a small bit of advice regarding your future reporting on Mongolia. Please find more varied sources for your stories. Do not continue to rely on a handful of over-consulted and poorly researched books and biased few. One of well-known historian’s grossly inaccurate and biased book on the history of Mongolian democracy begins with an inaccurate story. Instead of describing the Youth Cultural Center’s modest square, it describes Sukhbaatar Square as if it was the first anti-communist rallies began there. Those who actually participated in the Youth Cultural Center’s Square demonstration laugh at that book, pointing out that its sources who pretended they were there on December 10, 1989 were nowhere near the square.
A few years back, only a few of the old time elites were able to converse in English and therefore become main sources on contemporary history of Mongolia. Nowadays, the English language is in everyday use here. The Economist should take advantage of this new reality and diversify its sources.
After reading this article and all the posts, Ayush, I'd say you should recognize a rant when you see one, since that is all you have written, in as much space as the original article.
You'd better put your future where your mouth is. If you want to change Mongolia, and with it, comments about where it is going and why it is investable, then it is up to you and your
fellow citizens to take control and make democracy and capitalism work. Platitudes won't help you.
OMG, I only used two sentences, seven to eight words; the rest is an attachment, can't you see? An article by Ms. Oyungerel, an MP-elect. Of course, she wrote it before she was elected.
And who tells you that it's up to you? sure it's up to us. That was a platitude - on your part. Why would I expect you to care more about Mongolia than us? And why do you think that we are unaware of what you and Jon are writing about. Both of you probably can't speak and read Mongolian. All this has been debated, discussed thousands of times, including the fact that the politicians are not acting on the corruption-related issues. You're late to this. Your job is to pontificate, ours is to do. If it were easy, it could have been done yesterday. There is no magic wand. If it were easy, the euro issues would have been resolved, the US deficit erased, all problems solved.
Yes Ayush, all these things have been debated and discussed, and nothing changes. When I was at Coal Mongolia, four different Question and Answer sessions all began with a question about when rail infrastructure would be built.
Your comparison to the politics of Europe and the U.S. is not germane. Yes, those place have unresolved problem and idiotic politicians. However, Mongolia is in a much better position to solve its problems because of Mongolia's size, scale, geography, and economic opportunities.
please give Oyungerel her due credit.She has a great website
I am a Westerner who recently sold off my Mongolian investments in the chaotic runup to these elections. I retain my earlier compassion for the Mongolian people, and I know they will eventually prevail and build a great country... But as an investor I must also recognize periods of unrest when the environment is just not mature enough for me to take on the risk.
Jon is a brave man and an enlightened journalist. Sometimes a few words like this can be a trigger that ignites change...
Why don't you go ahead and invest in Venezuela.
Why, LOL, for the same reason I am not investing in Mongolia. Hopefully the new government (whatever it may be, it would appear that the DP will lack willing partners, so the list of possibilities is short) will not elect to follow up on a program of nationalization, such as that of your hot tip regarding Venezuela...
Frankly it was not altogether a bad thing when the prior government floated the confiscatory tax scheme for non-Mongolian investments. For one thing, it was honest - particularly in the sense that it gave everyone fair warning. Hard to complain later that your investments get taxed when you were given such early notice of intentions. Were Mongolia truly another Venezuela, the opposite would have happened - Westerners would have been assiduously courted to bring in their money, right up until they nationalized the assets.
I believe that Mongolian commodities will eventually paint a bright future for the country.
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Beware then of revolutionary and people's parties
Beware of becoming like Zimbabwe or some slightly less fouled up African nation suffering from Dutch Disease.
Ayush, the article you cite is interesting and blithely one-sided by a clear Democrat Party apologist. I am weary of reading blather by those who support the DP or the MPP or the MPRP and provide their personally skewed view of the world. As the parties in power for the first two decades of Mongolia's existence, both the DP and MPP have engaged in corruption and I hold neither to a lower standard.
The fact is bribery is still normal in Mongolia. I hear stories from people that they must give a bribe to the clerk issuing their driver's license to get the document in their hands. And while this petty bribery is problematic, it begins at the top with the most wealthy and the most politically powerful, then extends all the way down to the lowest levels.
Is it good to be the Minister for Roads, Transport, Construction and Urban Development? Is it good to be Minister for Mining? Is it profitable to be in these positions? Is it profitable to work for these ministries?
How is it that there are so many buildings in Zaissan, a national park meant to be preserved from all structures? Why does a corporation own part of parliament square? Why do local and foreign companies keep building structures in Ulaanbaatar that do not heed the regulations for 30% of the land to be green (and instead build on the entire piece of land)? Why is it nearly assured that the Childrens' Park, the last large green area in Mongolia's center is already owned and will be covered by more buildings with no green spaces?
Did Robert Friedland bribe some officials in Mongolia as part of negotiating the deal for Oyu Tolgoi? Have other mining companies done the same? Do sovereign nations bribe Mongolian officials on behalf of business enterprises from their country? Are funds from aid agencies used as an incentive to get Mongolia's government to act favorably toward business from the countries where the aid agencies are based?
In all these questions, there are two things that are clear:
- this is how business is done in Mongolia.
- it is up to Mongolians, not the foreigners, to accept responsibility for how business is done in their own country and change the way business is done in their proud nation.
Dig deeper indeed. That is what the ACA must do. And first, the Prime Minister, the President, all the Ministers, and the Parliament, must all give up their immunity from ACA prosecution. The people must demand this for the future health of the nation.
Forgot to mention, the President has long ago spoken on immunity. Guess who's been controlling parliament.
Politicians speak about many things. Words from politicians mean nothing when their actions run contrary to their words. That is a global problem, not unique to any one country.
Your laundry list is in line with what has been reported in the press for years. Nothing new. The question is who had passed all those decisions. Zaisan is the city's land. The MPP/MPRP has run the city for almost a hundred years. Etc.
Yes Ayush. It is nothing new. Yet, it continues unabated.
I agree Jon Springer needs to dig a lot deeper if he is to comment on Mongolia's situation most of his article is a simplistic lecture showing his lack of detailed knowledge on his chosen subject. I have been posting comments which relate to the IAAC or the ACA as Jon calls it.http://ubpost.mongolnews.mn/in...
Oyungerel is a well know former Democratic Party Advisor and well respected,brave commentator on many issues in Mongolia she is not an apologist and her writing is not blather that is what most of yours is Jon
With all due respect Nyam, I was given 1,000 words for this article, not the entire newspaper, and certainly no advance for a book (and it is a book that would be needed to cover all the corruption that has transpired in Mongolia for the last two decades). Mongolians KNOW what is going on, what is needed is the will to change it.
Mongolians like to talk about "VISION" and "DIGGING DEEPER" and other big ideas that are diplomatic pleasantries for putting off addressing the problems at hand. Enough of this nonsense that puts things off until tomorrow and next year. It is time to do and take action and be responsible and be accountable.
There is no need by ME to dig deeper. There is a need for corruption to be cleaned up. It doesn't matter if I can prove that 30 or more of the 100 richest people in Mongolia are corrupt. It matters if the corruption agency and the people of Mongolia will enforce the rule of law and have a desire to raise the level of their own society.
For foreign investors, if Mongolia wants to continue to do business the way it does, it is of no consequence at all. THEY (which includes me) don't need to do anything except understand the rules of investing in the sovereign nation. Investors invest to make money and have no moral stake in the future of your nation.
It is up to the people of your nation to care to improve the country so that it is better for ALL Mongolians and not merely for the elite while the rest of the nation is run over by Dutch Disease.
In order for your IAAC to do its job, it needs to be independent of the major parities and willing to treat all to the same standard.
Thus, when I read something that points the finger only at one of the major parities when BOTH are clearly at fault and BOTH have politics that hardly differs, it is partisan blather, no matter how erudite.
When I ask most Mongolians what the difference between the MPP and DP really is, they say in the end there really is no difference for the common citizens with either.
There are high quality individual members of both the MPP and DP, but the parties themselves are mixed bags of a range of people, and there is no need for me to say names of corrupt people when Mongolians know well enough themselves.
There is no need for a foreigner to say who is corrupt. There is a need for Mongolians to concern themselves with a true effort to stop all corruption, and not simply the corruption of the people they don't like this week.
I don't need to dig up anything. I have done my digging. If I don't like what happens in the future, my investments and I can walk away.
Talking and philosophizing and engaging in partisan finger-pointing is very nice and I see you are very skilled at it. However, it is time to start to DO the real work of getting things done. No digging is needed. The information is there and known. It is a question of the WILL to change things for the better.
Jon you are lecturing again and not convincingly. If you need to produce a 1000 word article surely it should be concise and accurate? “As the parties in power for the first two decades of Mongolia's existence, both the DP and MPP have engaged in corruption and I hold neither to a lower standard.”Jon the Democratic Party wasn’t born during the first two decades of Mongolia’s existence as you claim. A simple check on Wikipedia could have set you straight” On December 6, 2000, , 5 political parties- including Mongolian National Democratic Party, Mongolian Social Democratic Party and others- merged and established Democratic Party of Mongolia.”
What about the role of the British in Mongolia? You claim that” Most politicians in Mongolia are closely related to Mongolia’s business elite.”The disgraced Prince Andrew has been to Mongolia several times under the guise of UKTI specifically to influence the Mongolian Government. Rio Tinto Mines was established by the Queens’s financial advisor and runs as a type of defacto British Empire. Your former Ambassador in Mongolia was married to a senior Rio Tinto executive. How about that for being closely related? What about former Secretary of State James Baker’s legal firm working for Ivanhoe and creating a bogus executive role for his son and lending him the Ivanhoe jet to impress the then MPRP. Is that being closely related to? You seem very impressed by Forbes and Hero magazines and their rich lists if you understood the Secrecy Act you would learn that a lot of people’s assets are hidden by law in particular Enkhbayar’s ownership of the Trade and Development Bank and Agricultural Bank. I’m sure that would impress you and make him jump a few rungs on the all important rich list. If your posts weren’t made whilst crowing about your economic credentials I would have dismissed them but your desire to become the most knowledable person on investing in Mongolia is truly worrying. Do investors actually listen and follow you? If so i would be putting the wagons into a circle very quickly. I take offence at being called a partisan finger pointer, your style is very boring, ie. Think of a theme throw in a few clichéd quotes, huff and puff about the injustices that everyone already knows then back off when it comes to digging deeper or naming names. After all you are an investor and you don’t want to tread on anyone’s toes because in your world of IPO’s and hype you talk things up and move on.
The politicians and corruption have been the same for two decades. Elbegdorj was one of the leaders of the movement against communism and Prime Minister in 1998. Wikipedia it.
You want to obsess about party names and blame foreigners for Mongolian problems.
Apparently you don't want to read anything I've written elsewhere and want to insult me about nonsense.
(home blog: http://seekingalpha.com/instab...
articles and blogs: http://seekingalpha.com/instab...
more links on my home blog for interested investors as I have spent a lot of time trying to promote your country as one that would succeed and should be watched)
Apparently you want to blame foreigners like a husband who is cheated on and blames the man who cheated with his wife instead of blaming his wife.
Your politicians have taken bribes from those foreigners. When will the bribery and secrecy stop?
Prime Minister Batbold is #5 on Hero's top 10. 4 of your 10 richest were in the prior government.
Of course Enkhbayar was corrupt, but so are many others. The only reason he was picked on is that he was not in office and was challenging those in office.
I am not lecturing you, I am telling you that if you want Mongolia's GDP in 2013 to drop badly or worse than it did in 2009, the policies currently followed - the corruption, the secrecy, and the xenophobia - will help you greatly toward that.
Jon my reply to you disappeared maybe the UB Post or the San Francisco based Disqus don’t like it? I did read some of your articles, in particular the one where you are kowtowing to MCS Mongolia’s second biggest company. You are very impressed by money and don’t like to upset people who have it. At last you admit that Enkhbayar was corrupt, he still is and he is also allegedly a silent partner with MCS who you heaped so much praise on. Using MCS as an example of green and caring development in UB is unbelievable. The building in Sukhbaatar Square next to the old Culture Palace was rejected several times and it was only after Enkhbayar allegedly became a silent partner that this controversial development went ahead. Before this stalagmite of corruption was built there was a fountain and nice parkland there which was part of the original square design. There is now a small piece of grass out the front of the building and you think that is green development!
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Being accurate is not obsessive Jon. Should we thank you for all yor time you have put in trying to promote Mongolia?Its the foreigners who are offering the bribes and manipulating "aid" thus fueling the corruption. You don't want to comment on ther role of your countrymen in Mongolia?
Jon, glad to find you on a new site, Mongolia is truely interesting. Glad to read your article.
Very interesting article Jon.
Excellent article Jon, very well documented and enlightning.
And utterly simplistic. It'a rant, not an article.
I would like to stop referring to politicians as nationalists and instead call some "nationalists" and others, "a person who believes nationalist policies will be financially beneficial to him personally." But, I need to shorten the second name a little... (APWBNPWBFBTHP - even abbreviated, its too long). Suggestions? Or, should we just assume that 4 out of 5 politicians that claim to be nationalist are financially benefitting from nationalist policies?
Be clear, what is that you want more than the people of Mongolia. Everybody can come up with a list of names. Mongols are not idiots, and you are not a prophet.
Pardon me for caring.
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