A parliamentary working group established to investigate and regulate the operations of Mongol Bank started their work on February 23.
The working group was established on February 1. MP T.Ayursaikhan is heading the group, whose membership includes MP M.Oyunchimeg, MP Ts.Davaasuren, MP. Kh.Bolorchuluun, MP J.Bat-Erdene, and MP S.Chinzorig.
MP T.Ayursaikhan told journalists on February 23 that the working group had their guidelines approved and that they were starting their investigation.
The working group will draft a resolution based upon the findings of their investigation, and will present the resolution to Parliament’s Economic Standing Committee. The inner workings of Mongol Bank’s operations, such as their regulation of the MNT, their price stabilization program, and other activities will be probed by the working group.
Members of the working group stated that they are aware of reports that the central bank printed eight trillion MNT in notes to manipulate currency in circulation, and will work to verify that the reported number is accurate.
Mongol Bank’s operational deficit will also be investigated. In the past four years, the bank’s deficit has doubled every year. In 2016, the bank reported a deficit of 962 billion MNT. The working group will investigate the reasons for the deficit, as the deficit of the bank puts pressure on the state budget.
“Until 2011, the bank was working profitably. It experienced a deficit in 2010 but was profitable in most years. But in 2012, Mongol Bank began experiencing significant deficit. We will investigate and reach a conclusion,” the working group’s members stated.
The probe, which will be carried out until April 30, will encompass all of the operations of the bank, including commercial loans that were issued that have been alleged to be illegal, the bank’s transparency, and their financial statements.
A few members of the working group made statements regarding their investigation.
“The reason for the economic crisis and hardship can be closely linked to Mongol Bank. The bank diminished the strength of the MNT and increased the exchange rate. In 2012, the USD exchange rate was at 1,450 MNT. Currently, it is around 2,400 MNT. This is a 70 percent increase, leading to a significant decrease in the purchasing power of the MNT. This has increased poverty and led to a 70 percent economic decline.
“Mongol Bank violated laws and issued commercial loans to private businesses. It gave tens of billions of MNT to its workers in the form of apartments and bonuses. This information was concealed but will now be clear. The President of Mongol Bank for the last four years was someone who sat there and said that the exchange rate did not matter to us. The president said that the funding received through a swap agreement was not a loan. In 2014, non-performing loans were at 200 billion MNT; now they are at 900 billion MNT. Businesses cannot pay back their loans. Citizens do not have purchasing power.”
“The working group’s main priority is to determine a correct diagnosis; only then can we decide how to treat the problem. Our country has had to establish a difficult agreement with the International Monetary Fund, increasing taxes and decreasing salaries and welfare.
“Our goal is not a witch hunt; our goal is to expose violations and to amend the Law on Mongol Bank accordingly.”