WHISTLEBLOWER CAMPAIGN: Is that for real or just a way to tame the opposing? Part 1 - Corruption.

Why do we Mongols want to build a spaceship, but always get a horse carriage instead? Some reflections on the obstacles and bottlenecks we face while adopting the world's best governance practices in legislation.?#mongolia?#mgl?#ulaanbaatar?#governmentrelations?#business?#compliance?#management?#UBcity?#companies?#investmongolia?#investments?#globaleducation?#globaleconomy?#globalgoals?#mongolians?#mongols?#expats #corruption #fightingcorruption #anticorruptionagency #legalstudy #legal #legalresearch #legalpaper #mongolianlaws #transnationalcorporations #corporations #stockexchange #bonds #crime #moneylaundering #AML #compliance

The Government of Mongolia announced a “One-year Whistleblower campaign against CORRUPTION” starting from May 2023. It seems that our Prime Minister is eager to fight corruption but on the other hand, many say it’s only a trick to crush political competitors and the businesses who lobby them. Okay. Let’s see why we are so bad at fighting and controlling Corruption. I started with the last dimension in the Good Governance Indicators because of the recent political and government events that have been occurring in Mongolia. More corrupt the country - less foreign trust, less foreign trust then less international cooperation. No wonder why foreign investors are extra cautious about Mongolia.

First I must remind my readers what the world understands under the term “CORRUPTION”, and then I am going to slowly go through what corruption culture of the Mongols and our understanding of it before analyzing the whistleblower system.

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CORRUPTION

The UN head Kofi Annan once said: “Corruption is an insidious plague that has a wide range of corrosive effects on societies. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life, and allows organized crime, terrorism, and other threats to human security to flourish.”

What is corruption then? We deal with it every day in Mongolia, let me say again – EVERY DAY. Need permission? Find someone who knows the government official who is in charge of that. Need to speed up public services? Invite an official to dinner or karaoke. Need a juicy government contract for bidding? Bribe anyone possible on the Assessment committee. Need a big chunk in a multi-billion dollar deal, go crazy and bribe them all. Is it okay with your integrity? If I'm in the stake then it’s a big fat YES!

I cannot but let myself speculate on this GIGANTIC worldwide issue where in order to get some bloody money one would risk his/her career, reputation, and even their lives. Let me get it straight. Corruption is all about money and power. Wikipedia offers you quite a substantive definition “Corruption is a form of dishonesty or a criminal offense which is undertaken by a person or an organization which is entrusted in a position of authority, in order to acquire illicit benefits or abuse power for one's personal gain.” Any definition in our case would do, just the problem is not the definition but how do one feels about it.

So how do we feel about corruption in Mongolia? Very simple - positively, because we are already used to it. When we need something from those in power, we do not ask lawyers for legal algorithms for the task, the first question we ask is do we know someone (танил х?н) in that organization? Why such a culture of doing business in Mongolia? Mongols love the principle of “monkey see monkey do”. Someone does it so we try to copy them. Who does it? According to a Transparency International study of 2021, every 3 Mongols out of 10 do corrupt, and here is why.

First of all, politicians who are in power appoint the Cabinet of the Government of Mongolia. They would spend billions of US dollars on election campaigns + bribing their own political parties to get the mandate for elections. Yes, you’ve read it right. Political parties are the most profitable business in Mongolia, doing nothing but selling out power to govern the people for hundreds of millions if not billions of US dollars. So, in order to reimburse their election campaign and profit from the power many politicians initiate corruption schemes. Here is where the monkey starts setting corruption standards as if they are saying to people: “You see? I can go corrupt and still get away with it”. I could give you numerous examples with live videos and news but it’s not my agenda for this article. Just to state the biggest ones – so-called among people “Coal theft” for over 20 billion USD by State Owned Enterprises and “Bond Theft” for over 200 million USD in Development Bank of Mongolia.

The latest is a court hearing of squandering the bond investments of the Development Bank of Mongolia. The hearing process took 3 months on plundering the bond money of 200 million USD with conflict of interest, abuse of power, bribery, and corruption of politicians, government officials, risk and assessment committee bank employees, and businesses. Hundreds of millions of US dollar investments through Government bonds were illegally distributed to some businesses, where over 200 million USD investments were proven with a conflict of interest, bribery, and abuse of power. And you know what? Only a total of 22.800 USD collateral fine was awarded by the court of first instance. Two questions I would like to ask here then:

1)?????Do we, the people of Mongolia have to pay those losses from our pocket through taxes like in the case when “Just Group” LLC and their beneficiaries got away with US 120 million in theft, compensated by the Government of Mongolia?

2)?????Do we let it go and set another example that corruption is actually rewarded and one gets away with the fines only?

I’d say YES. There is a high probability that the Government of Mongolia would compensate for all those losses from the budget and the corrupt culture of Mongols would be strengthened even more. Meaning more monkeys would be out spreading out the culture of corruption.

The world is already putting more regulation pressure on corruption and bribery in both sectors: government and private corporations, e.g. Singapore and Great Britain. Our Anti-Corruption Law has no criminal sanctions for bribes between businesses. Although the top management of all State Owned Enterprises in Mongolia submit their income and conflict of interest forms to the Anti Corruption Agency there is still corruption and budget theft going through SOEs which ended up in blowing a whistle and protests against “Coal Theft” in November 2022.

Another scandalous case where my colleague went through hell to get the corruption case held in Switzerland on the former Minister of Finance of Mongolia?- Bayartsogt Sangajav (source - SwissSecrets). The former Minister was sentenced to jail time in Switzerland for money laundering and taking kickbacks of several million USD, which he claimed to have “forgotten” in a Swiss bank account. He was transferred to Mongolia under the legal aid bilateral agreement between the Government of Mongolia and Switzerland, and, sooner was released by Mongolian authorities in 2019. Such cases hugely discredit Mongolia’s reputation in the world as a protector of its own corruptors.

Secondly, many government and public employees will tell you without a blink of an eye how much a bribe one needs to pay in order to solve one’s problem in no time. As they aspire to stay in public service, he/she justifies their corruption with low pay and a lack of realized dreams in their careers. Moreover, they are the ones who would actually freeze the process of any lawful processes one needs for so long, that at last they would be forced to pay bribes to at least get what they are entitled by law.

Several whistleblowers, faced with such injustice, came out with public announcements and got hurt since more pressure from the relevant government offices was put in order to tame the shrews. Most businesses prefer not to blow a whistle and follow the common unwritten rule: to pay bribes instead of getting more attention from government agencies and being bombarded with multiple sanctions, inspections, and even real physical and psychological threats.

Threats are quite common among those who are related to power position holders in Mongolia. Physical and psychological threats can come from anywhere just by saying: “You don’t know who I am? I am …. such a person related to someone in high authorities, so do what I say or prepare to be destroyed” is quite a famous threat in the mouth of many government officials.

One time, it was sad to meet a public official who served in the election campaign and sincerely believed that handing out money and coupons to bribe the voters during the election campaign is justified since the competing candidates might have been doing the same. You’d cry out loud about the law, they would drop deaf. So annoying to see that.

Thirdly, businesses, in order to operate at least some business without pressure, would be on the edge of deciding whether to accept corruption culture or close the door. The right question here would have been – What would be the legal framework to get what we need? But instead, our corruptive culture dictates asking another question such as – Do we know someone (танил х?н) who can expedite the process of getting what we need? Meaning, instead of working on the legal process of obtaining some permits, business meetings start with a question: “Who knows someone in a particular government organization so we would get what we want without any headache?” You need to know someone in that niché, usually persons with the right and in-demand contacts. We call them “Hustlers”(танилтай х?н).

Moreover, it is extremely difficult to compete in a corrupt environment when one business lobbies its people to power so it would push the products bypassing fair market competition and anti-monopoly principles.

So, what is the best way out in the eyes of competing businesses? Yes – Monkey see Monkey do principle. They lobby their own people to power through political parties or push their people to membership in political parties by donating large amounts of bribes. It is an undeniably strange feeling when in the line working with the Ministries and someone would say: “The Head of our Department is representing such and such corporation”. For example, in the Ministry of Energy, people know each other by their lobbying corporations talking like: “Oh, her father is a big boss in MCS” or in the Ministry of Health one gives a clue of someone from Monnos or AsiaFarm Corporation, and this culture is nearly in every Government agency.

This reminds me of old school history class and Adam Smith with his saying that “This (corruption) self-deceit, this (corruption) fatal weakness of mankind, is the source of half the disorders of human life”, and, Kofi Annan saying: “… Corruption is an insidious plague…”.

What about transnational corporations? Corruption and bribery are usually strictly prohibited by the laws of their country of origin. Unfortunately, I’ve seen many managing expats, in order to meet their given promises abroad, would go by saying “Let’s do the Mongolian way”. That is exactly when many lose their temper and cross the threshold of business integrity. Not many are strong enough to say NO, since that would simply ruin their strategies and action plans. Let me remind you of the Justin Capla (former CEO of SouthGobi Sands public mining company) case in 2013, which occurred in Mongolia, where among the tax evasion and squandering of investments, there were also allegations of corruption and bribery.

I remember that year when numerous Mongolian highest officials (President and members of the Mongolia Parliament and Government of Mongolia) began pressuring SouthGobi Recourses Ltd. and its onshore license holder SouthGobi Sands LLC for “not sharing” any monies from their public acquisition deals. The question of those in power that day was exactly as follows: “Why listed on some foreign Stock Exchange SouthGobi mining group is making a billion-dollar deal without obtaining approval from us? They should pay us money from that deal.” Wikipedia wrote about this case: “The aggressive actions of the Mongolian government against SouthGobi succeeded in blocking the deal with Chalco but had the effect of terrifying foreign investors, resulting in a large slump in investment to Mongolia that continued for several years after 2012.” ?

So do you think those who come to power really do not know how the financial world works or do they pretend not to know? I think they know, but they know little that Mongolian trading back-and-forth behavior would not work here. Strings can be bent, but if you go too far they are torn. That is exactly what happened with pressuring SouthGobi Sands. Surely there were other illegalities, but overall Mongolia lost again.?

So beloved learning-by-doing principle of our politicians backfires for Mongolia and the Mongolian people. Without proper knowledge of international trade and finance, we are wild boars with iPhones in the modern world. The idea of taming the world on horseback is a long-time goner, Mongolia has to adapt to modern world realities and fight corruption in real life and not on paper. ?

This is how the world sees our corruptive culture by the Index of Public Integrity (from 10 points we are a little above average):

Here we are confronted with the integrity of the justice system with a score of 3.5 out of 10. We must recall the recent scandal that was associated with a video where a prosecutor, a judge, and an advocate, working on the same multi-million dollar case, were caught in a hotel elevator camera, drinking alcohol and having fun with the prostitutes. No wonder why the judiciary is also prone to corruption. Judges are also people, and there would always be someone among them who dares to take bribes.

In the end, all these facts became available thanks to the whistleblowers. Good or bad but even without legal regulations they manage to contribute to fighting the fight that Government and Anti-Corruption Agency solely cannot keep up.

The government announced a one-year Whistleblower campaign to fight corruption. But is that for real or just another political move? The answer to that question is in Part 2 soon.

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