The UB Post
WILL PRESIDENT BATTULGA’S CALL TO BRING BACK OFFSHORE MONEY WORK?
It has been 13 days since newly elected President Battulga called on politicians, public servants, and their associates to bring money in offshore accounts back to Mongolia. Unsurprisingly, no politicians or public servants have come forward to bring back money embezzled from the Mongolian government into offshore accounts. So the question remains; will the President’s call actually result in embezzled money being brought back into the country?
On July 24, the recently elected President sent a clear message to politicians and public servants in a statement requiring that all offshore money be brought back into the country and deposited into a Mongolian bank.
The President’s statement read, “Some politicians, public servants and their relevant people in Mongolia have been widely criticized for hiding their bribery, illegal profit and dirty money in offshore accounts to avoid taxes. The public media has uncovered news that some of their dirty money has already turned into luxury real estate. There is a list of 42 countries that are considered as offshore financial centers by the International Monetary Fund and the Organization for Economic Cooperation and Development. According to the International Consortium of Investigative Journalists’ report, a total of 49 Mongolian citizens have offshore accounts in these 42 countries.”
The President stated that politicians and public servants who have offshore accounts to avoid taxes, fuel public distrust and harm people’s belief in justice. In his statement, the President detailed about how Mongolia did not have specific laws or regulations on having an offshore account until 2017.
The new law on offshore accounts approved recently requires around 38,000 public officials to declare all of their assets to the Independent Authority Against Corruption (IAAC). In addition, the relatives and business partners of said officials will be prohibited from opening offshore accounts or owning real estate in countries or territories identified by the International Monetary Fund and the Organization for Economic Cooperation and Development as being home to illegal tax shelters.
“The people who refuse to fulfill this requirement and do not transfer their money into a Mongolian bank will be investigated and face legal obligation,” the statement warned.
In a recent meeting with the American Ambassador Jennifer Galt, Kh.Battulga requested the US to support Mongolia in investigating Mongolian assets hidden in the offshore zone. Along with the call, the new President has been eager to show the public of his efforts to bring back offshore money.
The call to bring back Mongolian money stored in offshore accounts, while commendable, will likely not be successful. If however, the President is able to receive full support from the US in investigating offshore accounts connected to Mongolian citizens, he will be more effective in cracking down on offshore accounts.
Right now, politicians and public servants may see the call by the President as an empty threat and rhetoric designed to boost the President’s approval ratings.
Judging by the phrasing of the President in his address to politicians and public servants holding offshore accounts, he only requires that the money be brought back and deposited into a Mongolian bank account. Kh.Battulga is essentially stating that the government will not seize the money brought back from offshore accounts.
Many have criticized President Battulga himself as he has been haunted by claims of offshore accounts attached to his name. The arrests of several of his associates by the IAAC did not help his reputation. An investigation into Kh.Battulga was also launched by the IAAC due to an alleged misappropriation of funds for a new railway during his time as Minister of Roads and Transportation, which has been waved off as a political move before the presidential election.
The 2017 Presidential election saw serious accusations being directed at all three candidates. Ch.Gankhuyag, CEO of ARD Financial Group and a member of the Mongolian People’s Party accused the candidate from the Democratic Party, Kh.Battulga of having an offshore account with 1.1 billion USD in it. The alleged embezzlement of public funds by Kh.Battulga was detailed in Ch.Gankhuyag’s testimony to the Sukhbaatar Police Department.
Ever since the reveal of then Minister of Finance S.Bayartsogt’s offshore account in 2008 and the Panama Papers identifying several Mongolian politicians and businessmen, the Mongolian public has become more aware and frustrated with the issue. Taking advantage of the frustrations of the public, political parties have begun using the issue of offshore accounts as a political tool.
As for the President’s attempts to bring back money in offshore accounts, only time will tell if it was a political move to appease the public or a genuine effort to crack down on embezzlement and corruption.