We interviewed Tsagaan Puntsag, a shareholder of Achit Ikht LLC, about the events surrounding the past parliamentary election.

Greetings. How is your health? How is the medical treatment you are receiving overseas?

 I’ve come to realize that illness strikes without warning. It seems I have worsened it with my neglect. However, I’m feeling well now and following doctor’s advice and prescription.

Before this year’s parliamentary elections, there was much controversy regarding your company. There were reports of searches at your office, claims that you financed the election, and even leaked Viber chats between you and the former President Elbegdorj Tsakhia. Even water supply and electricity to Achit Ikht LLC’s plant were cut off. What did you make of all these wild events?

 I was utterly stunned to hear such baseless and false information. First of all, I wondered if there is any other country besides Mongolia where the government agencies would provide such a groundless information to its Prime Minister. At the time I dismissed it as merely dirty election PR stunt believing the truth would prevail eventually, as long as I stayed in good health. The phrase, “To a man with a hammer, everything looks like a nail” felt profoundly true at the time.

Mongolians were also buzzing about whether the Viber chat between you and former President Elbegdorj was real or fake. What would you say about that?

 That so-called “Viber chat” is completely fabricated and obviously poorly executed forgery. In Criminal law, there is a forensic science that exists to study and verify evidence of crimes. Ironically, it was ordinary citizens, not official investigators, who had keenly examined the evidence and proved, from multiple angles, that it was fake and posted their findings on social media. Simple glance reveals many glaring errors in timing, location, content, style of writing, making it clear fake.

Moreover, I have an alibi. The content of this so-called chat suggests that it happened before this year’s election, in Mongolia. It is also surprisingly that the chat was “found” on the computer of an employee I don’t know, at the plant I haven’t visited in two years. The truth is, I went abroad for medical treatment  last year and have not been in Mongolia at all this year. I have had no contact whatsoever with former President.

Yet, the police and prosecutors, who are legally obligated to investigate and verify all this, have been unresponsive and continuously delayed any call to conduct a proper investigation. They have unjustifiably refusing to accept our lawyer’s requests and petitions for half a year now.

Could it be that they’ve been so reluctant because the election is over, and the fabricated chat has served its purpose?

It’s hard to tell. The authorities are using that fake chat to claim that Elbegdorj is a shareholder of Achit Ikht LLC, and now, are desperately trying to find evidence to support that narrative.

Five years ago, during President Battulga Khaltmaa’s term, with the instructions of then Minister of Justice, legal authorities have conducted investigation, searched our company and home, and “sniffed” every step I took. This occurred following after the slander and false accusations of two known siblings. After many months of investigation, they concluded that Elbegdorj was not involved, so did not to open a criminal case. I found later that even at that there was a fabricated remittance order from bank branch, located near the Central Square, showing a transfer was made to Elbegdorj as a shareholder. It seems I was mistaken to naively believe that the case had been resolved since the evidence was proven to be fake and the information to be proven false.

Who would be behind such serious evidence forgery and false accusations? Who would pursue this?

An ordinary citizen wouldn’t have the capability to do it , would they have a need.  Creating a fake evidence is considered a felony under the Criminal Code of Mongolia. The same applies in other countries. In one Asian country, the punishment is up to 20 years in prison, and if the victim received capital punishment, then the perpetrator will face the same.

Would law enforcement agencies intentionally create fake evidence? Or would other interested parties create them and then attempt to use the legal system to their advantage?

I hope not. That would be a heinous crime against justice and the rule of law. It is a paradox of society that those with ill intentions often think ahead, act quicker, and work more deviously than well-meaning individuals. However, sooner or later, the truth catches up to them.

During the election, society seemed to understand, or was led to believe, that Elbegdorj had shares in your company.

Suspicions are one thing, but slander is another. This election saw the repetition of the same dark PR and slander. This time around, the police spread the blatant false information asserting that Elbegdorj was a shareholder and owner of our company and that millions of dollars were transferred to him. Yet, they could not prove it. How can something utterly false be proven?

I served the Mongolian state with a sincere heart and best intentions. I believed that the head of state at that time needed me for my knowledge and experience. Later, when I could not agree with some of his views and when I saw that the work was stagnating, I voluntarily resigned a year before his term ended. Since then, we have had no personal relations, did not owe each other anything, and have since gone our separate ways.

However, a fabricated criminal case linking completely separate two individuals has been created, and has now caused many to be prosecuted, persecuted, and have hindered our business activities. I have repeatedly said, like a scratched vinyl record, that Elbegdorj has not an inkling of involvement with our company. I now realize it was my mistake to ignore various false accusations. When I first entered politics, an elder from my local home community advised me: “If you want to go far, don’t turn back and throw stones at every barking dog. There will always be many who will criticize you, and many to praise you. Just focus on doing your work well.” I have adhered to that advice ever since.

During the election campaign, a TV program aired claiming that you and Elbegdorj sold a fake gold license to a South Korean citizen, committed fraud, took bribes, and used it for the election. What is your stance on that?

Again, it’s baseless defamation and fabrications. This case has nothing to do with me. As far as I remember, about five years ago, the Independent Authority Against Corruption of Mongolia investigated these claims made by the supposed South Korean victim. It had occurred to me then that they had identified the offenders, so it’s surprising to me why the case is still not resolved to this day.

Is it true that companies related to you are being investigated for money laundering and tax evasion?

When the tax authorities came, along with the police, we thought they would protect the taxpayers, but instead, they quickly collaborated to link us to criminal cases, fine us, and harass us. However, I hear that most of them regretfully say that these were ordered from above. After a lifetime of honest work and dedication to my country and people, it is truly humiliating to be accused of money laundering and tax evasion. Money laundering is the act of disguising illegal income as legitimate. Our company is engaged in production, and the income from sales is legal, so it must not be considered money laundering.

There has not been even the slightest act of tax evasion. Since 2015, Government of Mongolia and the Mongolian National Chamber of Commerce have been consistently recognizing our company as one of Mongolia’s Top 100 taxpayers, yet, suddenly this year, we are labeled as tax evaders. We have our tax and financial reports audited by third-party international firms every year and   paid our taxes on time.

So, what exactly are you being accused of? Can you give specific examples? 

Let me give you two examples. Nowadays, mining companies and end-users often do not know each other, and even if they do, they are not able to negotiate sales directly, so commodity trading companies act as intermediaries. Mongolia is a member of the World Trade Organization. Therefore, according to the WTO's General Terms of Foreign Trade as well as international practices, trading companies are given price discounts taking into account many factors such as product type, quality, quantity, point of sale, market price trends, financing, transportation, payment terms, insurance, and marketing. This is the golden rule of trade. For our copper cathodes, we provide a price discount of plus-minus of up to 5% from the London Metal Exchange price. The price discount provided by Achit Ikht LLC is average. However, this has been slandered as money laundering and tax evasion, and many people have been now been wronged and prosecuted. If this becomes the norm, all mining companies engaged in foreign trade, including Erdenet Mining Corporation (EMC) and Oyu Tolgoi, shall become criminals tomorrow morning. Where are we heading? Have we lost our common sense?

Recently, the CEO of the London Metal Exchange, who was in Ulaanbaatar on business trip, met the delegates of our company, the only LME member from Mongolia. Upon hearing about the issue regarding trade discounts, he was not only incredulous but also expressed his willingness to help them understand and resolve the issue. If normal operations that comply with global standards are considered crimes, how can this country develop and move further?

Another example. They are accusing us of tax evasion and money laundering for investments made from our after-tax income to Steppe Arena, a project which has fulfilled generations of people's dream and lightened the government’s burden. Once taxes are paid, it is a Constitutional right of citizens to invest and manage their funds and property whether the money is  invested in the Steppe Arena, the Arctic Ocean, or anywhere else in the world. Such blunt infringement on human rights and distortion of the law are unacceptable.

It sounds quite bizarre. We should ask the matter about 34 percent shares of Achit Ikht LLC. Wouldn't all this controversy have been avoided if you had just given your 34% share to the EMC from the beginning? 

To be honest, we tried to hand it from the very beginning, but were unsuccessful. As soon as the plant started trial operation, our company officially requested EMC to obtain 34% of the shares and appoint 2 members to the Board of Directors, fulfilling our contractual obligations. However, after assessing the plant, EMC concluded that the plant had many risks and refused to obtain the shares. Instead, EMC proposed to receive special payment (royalty) from sales revenue as long as the plant produces products. We had to accept the proposal. Besides EMC, even Golomt Bank, which then was financing and held shares in the project, had their doubts in the high-risk project to extract pure copper from off-balance dumps that had been exposed to the elements for decades, and losing their valuable properties. So, they stopped financing. All the biggest businessmen in the country, as well as the Development Bank of Mongolia, refused to do business with us. At last, we took a high-interest loan with stringent terms from a foreign trading company and commissioned the plant after some delay. We even bought back our shares from Golomt Bank, which had failed to fully fulfill its financing obligations, so we made full repayment of our loans and interest ahead of schedule. It's a long story.

Over the years, we have sent 12 official letters to EMC proposing to amend the agreement and work together on the 34 percent share issue. We are still ready to transfer the 34% shares even today, instead of paying royalties from sales revenue. But if one party extends its hand and the other doesn’t, a handshake cannot happen. 

Why is there a delay for such a solvable issue?

The legal environment might have been unclear previously. Now, even though the Sovereign Wealth Fund law has passed, the decision-making process of a state-owned enterprises is complex, and there is a noticeable fear of being blamed and wronged later. Of course everyone sees how the former General Director of the Erdenet JV period, has been accused for the collegial decision made based on the conclusions of a technical working group composed of professionals. 

How long has your plant been halted? I assume the government loses tax revenues when production stops? Let’s say that the chat is fake, then did you transfer millions of dollars or any amount of money to Elbegdorj for the purposes of election? You can tell us now?

You just asked two different questions in one. The plant was shut down for over three months. When production stops, only costs are incurred. Since there was no income, the state lost tax revenues, EMC lost royalties, and employees of the company lost bonuses. The supply contracts were disrupted, and the company's reputation suffered internationally. Foreigners refer to it as a Mongolian company rather than Achit Ikht.

Regarding the latter question, the figure of 13.5 million USD that was allegedly transferred to Elbegdorj now seems to be the total sum of discounts given to the trading company over the past many years. It is disgraceful. I can confidently vow that not a single penny was transferred to Elbegdorj, neither now, nor before.

You then wrote an open letter to President U. Khurelsukh. It reached many people. Did you receive any response? 

During the opening session of the newly formed Parliament, the President U. Khurelsekh addressed the heads of legal organizations, emphasizing that no innocent person should be repressed. His words of defense for private sector felt reassuring as a response to my open letter.

Finally, let me ask you an open question. Why do you think they are trying to implicate you in something? 

I studied law for many years and did a lot of different paperwork. I have a solid understanding of domestic and international law. Additionally, I have collaborated with the World Competitiveness Center for over a decade, researching how countries rise and decline. The controversies and false accusations surrounding me starkly contradict basic human morals and fairness, violate the Constitution and other laws, and harm the country’s progress and development, while tarnishing Mongolia’s global reputation. These and many other adverse consequences are caused by these fictitious and abusive actions.

A government that persecutes its citizens based on fabricated evidence has no place in the 21st century. I’m warning you: as someone who has overseen the activities of the Rehabilitation Commission, that if we do not promptly lock the door on such crude and regressive acts, we are risking repeating the dark history of illegal persecutions and repressions that our small nation endured in the last century.

Mongolia simply needs to develop, progress and become competitive. For this to happen, citizens must live in a safe and peaceful environment, with the freedom to pursue their work and businesses, and to be protected from illegal harassment and actions -in my view as a researcher.

I believe that there are far more people in the Mongolian government who are dedicated to development, human rights and the rule of law, than those who are guided by selfishness and parasitism.

May the eternal blue sky bless Mongolia.

Thank you for the interview. And wish you the best.

Journalist Tsogsuren GANBOLD