General Director of Altan Dornod Mongol LLC T.Ganbold

The recent Panama Papers scandal, which exposed Mongolians with offshore accounts, has turned into a hot political topic in Mongolia. With the nearing election, politicians are using the word “offshore” as a tool to wipe out opponents and blame others. During this fierce time when the masses judge and slander people with offshore company shares, there are a few people taking a different approach to the matter. One of them is general director of Altan Dornod Mongol LLC T.Galbold. In the following interview, he clarifies some important things about offshore companies and shares his unique opportunist idea.

The database published by the International Consortium of Investigative Journalists (ICIJ) as part of the Panama Papers investigation is causing a sensation in Mongolia. First of all, can you explain the term “offshore” to our readers? Is having an offshore company considered a crime?

Listening to politicians and looking at articles published by media outlets has made me realize that Mongolians’ understanding about offshore accounts is very poor. Economists and experts are supposed set things straight and provide more accurate assessment. An offshore account isn’t actually a bad word. What’s worse is the fact that having an offshore company is being considered a crime. This is unsubstantiated.

Aren’t people being punished in other countries for offshore account related charges?

We shouldn’t compare ourselves to the legal, economic and social situations of developed countries.

Some political parties announced to not nominate people with offshore accounts. People have been saying that it violates human rights. What do you think of this?

An offshore financial center is actually an economic zone with the most favorable tax environment and high confidentiality and privacy. Companies incorporated in offshore jurisdictions are called offshore company or offshore corporation. There’s no such thing as an “offshore account”.

All banks in any country follow similar legislation and rules. Now here’s the question: why do people use offshore companies? Businessmen use offshore companies because heaps of additional tax isn’t imposed for running joint operations, registering your own active assets after finding an investor, getting a guarantee for your company, and when selling or purchasing a company. In other words, it can be said that opening a company offshore isn’t risky but profitable as offshore financial centers have low-tax jurisdiction.

Mongolia’s tax environment is considered risky. Some experts assess that Mongolia has the most unstable tax environment because a new law is initiated every now and then, sparking talks to increase or decrease taxes. Do you agree with this?

Yes. It could be said that Mongolia’s tax and legal environment isn’t favorable but risky. Bearing in mind the nation’s instability, frequent governance crisis occurrences, and unreliable judicial system, foreign investors register their businesses offshore because they consider it more reliable to resolve any misunderstanding and problem through the Anglo-Saxon Law. This means that even if there’s a misunderstanding, it can be settled justly by the Anglo-Saxon Law through a court trial.

Besides politicians, entrepreneurs are being entangled in the offshore scandal as well. Among many critics, there are people who defend entrepreneurs saying that it’s not wrong to protect their assets from risks. As a businessman, what’s your opinion on this issue?

A politician and an entrepreneur are two different subjects. These two can’t be assessed with the same concept or given the same verdict. It’s possible for a politician to own an account at a foreign bank. It’s not legally wrong but ethically, it is [wrong]. Politicians always promise to develop the nation, create a more favorable tax environment, and improve the economy, and yet, if they hold an account in another country, it would be an ethical error. Even so, it can’t be considered a crime because Mongolian banks aren’t able to protect personal information due to external control, and legislative, judicial and political pressure. The understanding about the inviolability of bank account holders is lacking in Mongolia.


There are 18 provisions that enable access to bank accounts of anyone in Mongolia. Nearly 18 authorized subjects can access an individual’s bank account for information, inspection and seizure in accordance with the Criminal Code, Civil Law, Banking Law, Administrative Law, and other legislations. Since Mongolia has this type of a legal environment, we can’t blame entrepreneurs for establishing a company offshore or for possessing an account in an offshore bank.


No one would save their money in a foreign bank if Mongolia had an inviolable banking system, a good economy, favorable legal and tax system, and a stable political system. Our nation’s extremely inadequate legal environment is leading businessmen to seek other places. Politicians should look at offshore companies from another perspective and make it a major lever for the economy. The opportunity to save trillions of USD of foreigners will open for Mongolia if we can manage to change the banking system so that it provides high confidentiality and privacy to bank account holders.

Are you implying to bring assets of “hidden” overseas companies to Mongolia by providing favorable taxation, banking and finan- cial environment?

Rather than wasting time condemning offshore companies, Mongolians should spend its time more productively and endeavor to make the best taxation, banking and financial environment here. If our nation forms a reliable banking system, stable political and legal environment, and offer low-taxes, foreigners would willingly carry their money here, instead of us taking out loans from other countries and increasing the national debt. By doing this, investment more than that of Oyu Tolgoi and Tavan Tolgoi projects would be drawn into Mongolia. Russia has been attracting incredible amounts of internal and external capital in the past few years through their new De-offshorization Law, passed in 2014. [The law introduces new concepts for Russia’s tax system, specifically tax residency for legal entities, controlled foreign companies, and expansion of Russia’s taxing rights in connection with profit from indirect sales of Russian real estate.]

Are you saying that Mongolia should be developed into an offshore financial center?

I believe that Mongolia should become a center similar to an offshore financial center. We don’t really have a market capable of competing against developed and powerful countries of the world. Everything is lacking at the moment in Mongolia, including the population, economy, market, personnel, and technology. It’s possible to rapidly grow the economy by taking the correct measure and that is to make Mongolia an offshore center of Central Asia before anything else. Only that way, our nation can draw and centralize millions and trillions of USD from around the world.

Last week [May 19 and 20], Heads of Governments of the Member States of the Association of Southeast Asian Nations held the ASEAN-Russian Federation Commemorative Summit in Sochi, Russia. East Asian countries are attracting immense amount of money going to offshore companies that we criticize so much.

For example, Thailand is a country with high economic indicators. It exempts Russian companies from taxes and gives them the same land ownership rights as a Thailand citizen if they invest for more than eight years. Even if investors leave Thailand, they would certainly not be able to cut off the land they acquired and take it with them, neither can they take buildings, facilities lands factories built on those land with them.

As I mentioned before, Mongolia can raise funds equal to or surpassing revenue from Tavan Tolgoi and Oyu Tolgoi projects if we don’t lose time in making a legal reform and provide a stable low-tax jurisdiction. A lot of money will come to Mongolia if banks can protect private personal information of bank account holders and ensure inviolable rights. Take a look at Switzerland for example. Switzerland never had natural resources like Mongolia, but it has become one of the most developed countries in the world by implementing an offshore policy since World War II. Singapore started to run under this policy since 2006 and has been developing since.

Some members of Parliament initiated a law to combat offshore companies and bank accounts. Can you comment on this?

Politicians are becoming more active because the election is nearing. For 26 years, Mongolia has been striving to develop democracy, a free market and become a nation that defends and respects human rights. Yet, it seems that some people want to revert back to communism which violates human rights, and restricts and pressures people through taxes. Looking at some articles published by the media and some politicians’ opinion, I could notice some aspects of communist hysteria, brutality, propaganda and repression.