SouthGobi Sands and Sarah Armstrong: Still No Official Statement from IAAC


It is reported that Sarah Armstrong, the Chief Legal Counsel of SouthGobi Sands (owned by Rio Tinto) was stopped by Mongolian authorities when she was about to catch a flight home in Hong Kong.
Despite much international coverage on this issue for almost a week now, there is still no official statement from Mongolian authorities who had apprehended her – the Independent Authority Against Corruption (IAAC).
The only information we currently have on this situation from the Mongolian side are, as reported by ABC in Australia, statements of the attaché of the Mongolian embassy in Canberra, G. Hantulga.
“Sarah Armstrong was asked not to leave the Mongolia because of the tax issue. Mongolian anti-corruption authority is investigating the case against the South Gobi Sands which operates in Mongolia and Ms. Sarah Armstrong was asked not to leave the country because she might be the witness to the case and she might be, she was thought to be the closest witness to this tax issue case,” G. Hantulga said.

When asked by Sarah Dingle, the reporter, if he has any idea what the nature of the tax dispute is, he replied, “Well the tax issue has been going on several months. The investigation has been going on for several months. It’s a huge number of tax issue [‘a large amount of unpaid tax’, as clarified later]. And they haven’t been paying the tax to Mongolian Tax Authority.

According to Yahoo! Australia, Ms. Sarah Armstrong was released without charge a few hours later but banned indefinitely from leaving the country. A spokesman for Australian Foreign Affairs Minister Bob Carr said the consul-general to Mongolia, David Lawson, was expected to accompany Ms. Armstrong to the second round of questioning.
“We are monitoring it closely as we would any similar circumstance,” the spokesman said. “But it is very early on. It only just happened, so it is not clear whether it is a short or lengthy situation. Obviously for the people concerned, we hope that it is short.”
According to The Australian, a spokesman for Foreign Affairs Minister Bob Carr said that Ms. Armstrong had been detained as a witness and she still had her passport.
“They haven’t taken her passport but they’ve asked her not to leave the country,” he said. “I understand it’s in relation to an investigation they’re doing into someone else, that she might be a witness to or have information of. Who they are is a mystery at this point.”
The spokesman said it had not been established what laws were being used to stop her leaving Mongolia.
Her travel ban comes only weeks after Rio rejected a move by the Mongolian government to recast its investment in the country’s biggest mining project; the copper and gold mine Oyu Tolgoi.
It is the second time in three years Rio Tinto has run into trouble in the region. In 2009, four of its executives, including Australian Stern Hu, were arrested and jailed in China for bribery.
South Gobi Resources’ vice president for external affairs, Dave Bartel, says that SouthGobi Sands does not owe unpaid taxes to the Mongolian Government. “We’ve received no indication from any government agency that there is any issue with tax statements and to our knowledge we’re current on all our taxes,” he said. Mr. Bartel says Sarah Armstrong was the signatory to a formal document lodged with the Mongolian Government in July.
“There was a notice of investment dispute that the company filed against the Mongolian government in July and Sarah was the person who signed that document. It was primarily regarding some pre-mining agreements on licenses that had not been granted. We’d applied for those back in late 2011 and they had not been granted and we felt that the path that we needed to take was to file the notice of investment dispute,” he says.
The parties had six months to resolve it otherwise it would go to court. It is still in the process of resolution.
The Australian reports that “the complaint alleged the Mongolian government tried to seize several hundred million dollars’ worth of coal from SouthGobi Sands, the group’s Mongolian operating company. It also claimed officials asked for bribes – a commonplace event in Mongolia.”
“SouthGobi Resources Ltd notes several recent articles in Mongolian and international media regarding charges against SouthGobi and some of its employees,” spokesman Dave Bartel said in an emailed statement.
“Neither SouthGobi nor any of its employees have been charged with any wrongdoing. SouthGobi continues to co-operate with the Mongolian government agencies, including the Independent Authority Against Corruption, in their ongoing investigations.”
G. Hantulga says that Sarah Armstrong’s case could cost Australian mining interests in Mongolia. “It might cause some problems,” he says. “Last year we have around 140 medium sized companies who were interested in investing in Mongolia. So it might cost, in this case it might cost the interest of Australian mining companies to Mongolia.”

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Posted by on Oct 26 2012. Filed under Opinion. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

1 Comment for “SouthGobi Sands and Sarah Armstrong: Still No Official Statement from IAAC”

  1. The article says: “The spokesman said it had not been established what laws were being used to stop her leaving Mongolia.” Some years ago it was written on a webpage regarding tourism (reached via a British Website) that “if one is involved in any(!) dispute it can happen that one can not leave the country – which in one case was reported to be over a year”. It was understood such: “If, as tourist, one is involved in a car-accident innocently(!), THEN, if there are other things to be investigated (the guilt of the “accident-partner”, his/her insurance-coverage etc.) THEN even the INNOCENT can be held in Mongolia”.
    The article says: Mongolian authrorities say: “As witness”. It might thus be the same legal basis as with above tourist example. E.g. she is not blamed anything.
    My private conclusion: “If, as tourist, one is stolen something, one better never files at authorities because one may be held in Mongolia until the thief is found.” (and one better takes a car with a Mongolian driver – even if it is the own).
    It might be this legal basis.
    A German saying goes: “Other countries – other habits”.

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