Parliament votes to transfer Erdenet’s sold stake to state ownership

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A parliamentary session

During the final meeting of Parliament’s fall session, held on Friday, MPs debated a  resolution put forward by Parliament’s Standing Committee on Law (SCL) on the privatization of Erdenet Mining Corporation (EMC).

Mongolian Copper Corporation (MCC) bought 49 percent of EMC and Mongolrostsevetment LLC from the Government of Russia and Russia’s state-owned Rostec Corporation last year.

Following public and political criticism of the sale, a task force led by Head of the SCL Sh.Radnaased studied the matter. After a report on the task force’s findings was made public, the matter became the center of public debate.

The task force found that MCC had paid over 400 million USD to buy the 49 percent stake in EMC through illegally  structured sources and broke a number of laws.

The SCL discussed its findings on January 31 and February 10, and agreed that the sale was in violation of several sections of the Constitution and  laws on Parliament, banking, and more, so they put forward a proposal to transfer the 49 percent stake  from private ownership to state ownership by revoking the first index of Government Resolution No. 330, issued on June 13, 2016.

President Ts.Elbegdorj attended the final fall session while Parliament reviewed the resolution on EMC.

During the session, a number of MPs representing the Mongolian People’s Party blamed the previous Cabinet for allowing the illegal sale, especially former Prime Minister Ch.Saikhanbileg, as Cabinet had issued resolution No. 330 without discussing it  with Parliament.  Some of the MPs underlined that there several people should be brought to justice for being engaged in the sale.

Several MPs asked the task force if the Government of Mongolia could be called to appear in a court of arbitration if privatization was enforced.

Parliamentarian Ts.Nyamdorj said that he hopes Mongolia will not have to appear in an international court of arbitration. He noted that a lot of evidence has been gathered to confirm that a number of laws were broken in finalizing the sale. He pointed out that Mongol Bank has no authority to grant loans to a private company, but Mongol Bank illegally granted a company involved in the sale 360 billion MNT.  He said that the transfer of the 49 percent stake in EMC is the first step that needs to be taken to dismantle this system of stealing from the state.

D.Erdenebat, Democratic Party member and former Minister of Industry under the previous Cabinet, said that Parliament’s resolution to claim the stake sounds like a jury’s  verdict on sentencing, and that it is designed to capture private property, and it is a terrible action being taken against the private sector.  He highlighted that rumors that an international court of arbitration would rule that EMC be required to pay off a loan from Standard Bank should be made clear to the public, and that issues concerning the state’s 51 percent ownership of EMC are  very important.

He reminded the MPs that a letter was sent to Prime Minister J.Erdenebat from the CEO of Rostec Corporation, Sergey Viktorovich Chemezov, on February 9, stating that the 49 percent stake had already been transferred to its new owners in adherence to an agreement between the governments of Mongolia and Russia, and that changes to the agreement was could be harmful.

After MPs spoke about the transfer of the stake to the government, President Ts.Elbegdorj addressed Parliament with his position on the matter. He disagreed with the resolution proposed by the SCL, and emphasized that he wanted an open discussion on the matter bringing all the sides involved together, and that it was  unfortunate that no open discussion was going to take place.

The President pointed out that the resolution could drive away foreign investors and entrepreneurs and that it could further isolate Mongolia.

He added that a lot of state authorities are not adhering to the law and that EMC must follow the law on budget transparency, noting that there should be a focus on  destroying the hidden and illegal business operations of EMC that have been going on for years.

At the end of debate, the majority of MPs in attendance supported the resolution to transfer the 49 percent stake in EMC and Mongolrostsevetment LLC from private ownership to state ownership by negotiating the closing of loans, dividends, and promissory notes of Trade Development Bank that were issued by Mongol Bank and Development Bank of Mongolia.

In making the session’s closing remarks, Speaker of Parliament M.Enkhbold stated that Parliament voted on a number of bills, amendments, and resolutions during its 34 sessions and over 100 meetings of Parliament’s standing committees held during the fall session.

He pointed out that Parliament has worked to focus on fixing the policy failures facing Mongolia in recent years. He underlined that all the state’s authorities have started carrying out a policy of lower spending, and they have also launched important actions to strengthen budget discipline by calculating income and spending with detailed financial assessments.

The Speaker said that Parliament is concentrating on social protection and welfare despite the economic challenges facing Mongolia, and has taken several measures to help benefit  targeted groups. He highlighted that Parliament also made decisions promoting herders and agriculture, as well as focusing on human health.

Speaker M.Enkhbold emphasized that MPs should meet with their constituents to listen to opinions on the laws that were approved during the fall session and other issues, introduce the legislation to voters, and support the implementation of new and amended laws during the break before the beginning of Parliament’s spring session.

1 COMMENT

  1. Shame on the so-called democrats and president Elbegdorj !It is suggested that they should change their names and not let the noble word of democracy be shamed. I am a possible foreign investor. But I’m not scared of the nationalization. I applaud! If a country is full of thieves who steal the wealth of the state and not be punished, that is the most terrible! I’m watching Mongolia for many years, they have been servants of corruption by unscrupulous. The new government has so far seemed to be good. Go ahead and do more correct things!

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