By 
Klaus M. Schmidt Flores
by Ligden E from Pexels, 31 January 2025
Even though Mongolia recently adopted a National Action Plan on Business and Human Rights (NAPBHR), cases of corporate fraud, legal repression, and human rights infringements still cast doubt over the nation’s commitment to moral practices within its corporate sector.
Becoming the fourth country within the Asia-Pacific region, Mongolia adopted a National Plan on Business and Human Rights (NAPBHR) in 2023. This plan strives to align national policies with international human rights within the nation’s corporate governance standards (UNDP, 2023). Despite enacting this plan, several indicative instances of fraud, mistreatment of foreign investors, and repression of environmental advocates persist within Mongolia’s business environment, casting further doubt on the nation’s efforts to promote and protect the nation’s future investment environment.
An example of incidents deteriorating investor confidence would be that of Swiss commodities and derivatives trading behemoth, Trafigura, falling victim to a $ 1.1 billion deficit as a result of fraud occurring within its Mongolian fuel supply chain. The said incident is being identified as an effect of fraud, as the manipulation of documentation and financial data by Trafigura’s local partner, Lex Oil, has come to light. Lex Oil has acknowledged this and has taken responsibility for owing over $500 million to Trafigura. Highlighting thus, the inadequate financial supervision and the susceptibility of foreign companies participating in Mongolia’s business environment can fall into (Reuters, 2024).
An additional instance representing a risk international investors face within Mongolia’s opaque legal environment due to their involvement within the national business environment would be that of Australian-British entrepreneur, Mohammed “Mo” Munshi, who has been detained since 2013 over unresolved fraud allegations related to his mining endeavours in Mongolia. After being detained for nearly seven years in a Mongolian prison, Mr. Munshi is appealing to the UN Human Rights Council, alleging unfair imprisonment and claiming he was subjected to torture (The Australian, 2024). A further instance depicting Mongolia’s fragile business environment would be the incarceration of five Mongolian environmental defendants, who are facing criminal charges after criticising the Mongolian iron ore mining company, Altain Khuder, practices. These charges, despite ultimately being dropped, have been marked as strategic lawsuits deterring public participation (SLAPPs), a tactic often utilised to silence critics aiming to shield corporate abuses (Mind the Gap, n.d.).
Despite implementing legislative reforms aiming to improve national human rights protection within the business sector, recent developments and instances coming to light are indicative that there is a current gap between legislation and implementation. In light of the aforementioned, it is evident that instances from billion-dollar fraud to the repression of local activists indicate a need for strong enforcement mechanisms aiming to protect both international and national advocates for ethical corporate compliance.
Sources and further readings:
Reuters. (2024, November 19). Trafigura hunts missing $500 million in Mongolian fuel fraud, trading sources say.
The Australian. (2024, April 9). A decade tradded in Mongolia: Aussie miner begs UN for help.
Mind the Gap. (2020). Mongolian environmental defenders sued by Altain Khuder.
Comments