January 29, 2019 / 8:04 AM / 3 months ago

Mongolia, overseas investigators probe Oyu Tolgoi corruption claims as ex-minister re-arrested

    * Thorough financial investigation under way - official
    * Ex-finance minister was arrested, released last year
    * Five other people also under investigation - official

    By Munkhchimeg Davaasharav and Barbara Lewis
    ULAANBAATAR/LONDON, Jan 29 (Reuters) - Mongolia is working
with overseas investigators to look into claims of corruption at
its giant Oyu Tolgoi copper mine, the country's anti-graft body
said on Tuesday, after the re-arrest of a former minister
suspected of "abuse of power".
    Bayartsogt Sangajav was first arrested last April and
released in June in a probe into 2009 negotiations over the
development of the mine, then owned by Canada's Ivanhoe Mines
and now managed by Anglo-Australian miner Rio Tinto
               . Bayartsogt, a former finance minister, was
among the signatories to the investment agreement, approved by
Mongolia's parliament.             
    Munkhtungalag Tumur, a spokeswoman with the country's
Independent Authority Against Corruption (IAAC), told Reuters it
was now conducting a thorough financial investigation into the
allegations that would be international in scope. She did not
identify with which other countries the IAAC was collaborating. 
    The mine, run by Rio Tinto since 2010, is central to the
firm's push to reduce its reliance on iron ore sales. But the
miner has faced a series of wrangles with the Mongolian
government over tax payments and cost overruns.             
    Expansion plans will make Oyu Tolgoi, located near the
southern border with China, one of the world's biggest copper
mines early in the next decade.    
    "An investigation is ongoing into suspected abuse of power -
that former finance minister Bayartsogt held shares in a foreign
company before the Oyu Tolgoi investment agreement," the head of
investigations at the IAAC, Idertsog Erdene, told a news
conference on Friday.
    Idertsog said authorities were looking into allegations that
the ex-minister, one of six people now being investigated in
relation to the case, "gained a large amount of money by selling
the shares when the prices went up after the signing agreement".
He didn't identify the foreign company.
    Bayartsogt was re-arrested on Jan. 16, according to
Mongolian media reports.
    The former minister, who has previously denied all charges,
is now in custody, according to his assistant, and unavailable
for comment. His assistant and lawyer both declined to comment.
    The 2009 deal gave 34 percent of the Oyu Tolgoi copper-gold
project to the government of Mongolia, with the remainder held
by Ivanhoe, now known as Turquoise Hill Resources         .
Turquoise Hill is now 51 percent-owned by Rio Tinto.
    Turquoise Hill and Rio declined requests to comment. 
    The Swiss Office of the Attorney General (OAG) is also
conducting a separate criminal investigation into a seized bank
account that court documents indicated was used to transfer $10
million to Bayartsogt in September 2008.                
    In an emailed statement, the OAG said it could not discuss
further details with the criminal investigation still ongoing. 
    

 (Additional reporting by John Miller in ZURICH, Nichola
Saminather in TORONTO and Melanie Burton in MELBOURNE
Editing by David Stanway and Kenneth Maxwell)
  
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