March 14, 2018 / 8:23 AM / a year ago

Mongolia anti-graft body probes 2009 Oyu Tolgoi deal

ULAANBAATAR, March 14 (Reuters) - Anti-graft authorities in Mongolia are investigating a 2009 investment pact that kickstarted development at the Oyu Tolgoi copper-gold mine now run by Rio Tinto , which helped open Mongolia to foreign investors.

Turquoise Hill Resources, the Rio-controlled unit that owns a 66-percent stake in the mine, said late on Tuesday it had received a request for financial information to assist an investigation into suspected abuses of power by “authorised officials” when the 2009 pact was negotiated.

There was no indication Oyu Tolgoi was a subject of the investigation, the statement said, without giving details.

A spokesman for the Mongolian government did not immediately respond to a request from Reuters for comment.

The landmark agreement was signed with Robert Friedland’s Ivanhoe Mines, which changed its name to Turquoise Hill Resources in 2012. It has long been controversial in Mongolia, with some politicians accusing the government of handing over too much control over big mining projects to foreign interests.

Lawmakers have made numerous attempts to amend the pact, and the disagreements led to a three-year freeze in construction at a vital underground section of the mine in 2013.

However, analysts said the current investigation may owe more to domestic political infighting, and the growing need of officials to show the public they will no longer ignore widely perceived corruption in government.

Luvsanvandan Sumati of the Mongolian polling organisation Sant Maral Foundation said anti-corruption officials may be flexing their muscles in a bid to win over a sceptical public.

“The majority of the population think, ‘Well, they’re catching tiny fish, while the big fish are left alone,’” said Sumati.

In a survey in March 2017, Sant Maral said that less than 10 percent of respondents viewed the performance of Mongolia’s Independent Agency Against Corruption favourably. Nearly half of respondents said it was “bad” or “very bad”. (Reporting by Terrence Edwards Editing by David Stanway and Clarence Fernandez)

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