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Sh.Batkhuu: Contract with ‘Mongol Gazar’ was my biggest mistake

By B.ANU

Sh.Batkhuu recently spoke to journalists regarding the latest financial headlines. He handed over Khadgalamj Bank to the government, gave up Just Group, and disembodied its subsidiaries. He said he became a citizen several days ago.

-Why did you resign your savings bank to the government? Please, tell us what the situation was when you first created the savings bank and its most recent situation?
-I want to emphasize three things. Khadgalamj Bank was the last state bank to be privatized. The reason the problem became difficult was because people who worked for this bank stole over 14 billion MNT. Considering that, it caused a dispute about privatization and the bank’s operations were stopped for two years. Our company received a request to buy Khadgalamj Bank in late 2008. At this time, the bank had 80 billion MNT in assets. We bought the bank in March 31, 2009. Bank of Mongolia examined this bank in April, 2009. The bank didn’t have its own property and had over 200 employees and 40 branches. After we bought this bank, we put 200 billion in assets and 33 billion MNT towards its statutory fund. Then our company bought Mongol Post bank, which was broke down in 2010. Khadgalamj Bank received 170 billion MNT in assets. Ninety billion MNT of them were nonperforming assets. It had 360 billion MNT assets after Khadgalamj Bank merged with Mongol Post, but 170 billion MNT in assets were nonperforming. Even if we didn’t merge those bank’s statutory funds, 300 billion MNT belonging to depositors and clients would be at risk. Just Group was responsible for handling this situation and didn’t take any support from the government. Mongol Post bank hadn’t any fixed capital. Therefore, we invested 27 billion MNT into the bank’s statutory fund. This is the real history of those two banks. We incurred heavy losses of 170 billion MNT owing to nonperforming assets. Khadgalamj Bank was in charge of uniting those two banks.
-Why did the Bank of Mongolia make this decision?
-The problem was very obvious and open. We took appropriate measures for re-establishing the bank’s operation in order to reduce the government’s burden. Khadgalamj Bank’s assets were increased by 12 times after we took on this bank. We were operating without a profit because we needed to increase our own capital. As a businessman, I invested and raised a high-risk statutory fund. Merging Khadgalamj Bank into State Bank is not because of bankruptcy. Eventually, if a bank cannot make any payments, they announce bankruptcy. But, it is not. Khadgalamj Bank assigned 1.1 trillion MNT in assets to State Bank. Therefore, there’s no risk for depositors and bank customers. We were able to make payments. Because of our operation’s expansions, it needed more investment. It became impossible for our company. Foreign investors didn’t get involved. Hence, Bank of Mongolia made us request to merge Khadgalamj Bank into State Bank in order to make sure our customers and owners of savings capital secure. I accepted this request respectfully. It was not a compulsory measure. It was just a legal measure from Mongol Bank. Khadgalamj Bank isn’t bankrupt due to the inability to make payments. I didn’t take 160 billion MNT from my own bank. It is groundless information.
Our company is implementing the government’s meat and fuel program. The credit period hasn’t expired. This loan isn’t nonperforming. We merged Khadgalamj Bank, which is Mongolia’s best management bank and fully-solvent, with over 3,300 employees and an online system. Khadgalamj Bank is three to four times bigger than State Bank. State Bank received 600 billion MNT in secured credit. I appreciate everyone who worked for Khadgalamj Bank and its leadership.
-How is the financial situation of Just Group’s subsidiaries?
-I became a real “citizen” several days ago. I gave Just Group to Magnai Trade in order to pay back a loan. I disbanded Just Agro, and gave over 11 factories as property of Khadgalamj Bank. I also gave Olon Ovoot to my collaborator, G.Altan. I have been running businesses since 1991. I used to work 11 to14 hours a day. Since today, I feel my stress is decreasing.
-Please tell us about Standard Bank’s loan and guarantee from Erdenet Corp.
-Erdenet Corporation issued a guarantee when we took out a loan from Standard Bank. We paid off this loan. Therefore, Erdenet Corporation didn’t suffer any losses.
-Is it true that you compiled fake signatures when issuing a guarantee from Erdenet Corporation?
-It is true that we contracted a loan with Erdenet Corporation’s guarantee. But we paid off the loan in time.
-How much was your loan?
-At first, we took up to 20 million MNT in loans. Erdenet issued a guarantee for it. We have worked with Erdenet Corporation since 1997. Our company provided many services to Erdenet, such as supplying fuel. They issued a guarantee because we know each other very well.
-Who participated in making a guarantee? Did D. Sugar participate?
-Erdenet Corporation participated. It happened in 2008. D.Sugar only supported it.
-Didn’t they issue a guarantee again afterwards?
-It is true that we were faulty. We didn’t use a previous loan because of this. We used this loan for adding to the statutory fund. Secondly, the Mineral Resource Authority gave Olon Ovoot an “A” license with 13.5 tons in resources. We bought this license from Ts.Myanganbayar. I think it will be a very big problem. The issue of Olon Ovoot will be under investigation by legal organizations.
-How will you pay back the loan from South African Standard Bank?
-It is said that the state is suffering a loss. Actually, I’m responsible for paying back the remaining loan. Our bank’s credit rating was 200 million USD in spring. Within three years, our bank will cost 500 to 600 million USD. It is market rating without any doubt. Now, the Standard Bank loan is 120 million USD.
-Did the state apply any pressure on you? Aren’t you a member of the Mongolian People’s Party?
-I’ve never been a member of any party. A businessman should stay far away from politics. I didn’t receive any pressure from the state.
-What did the government give back to you in place of Khadgalamj Bank?
-The government rescued this bank from a very difficult situation. They saved the bank from danger.
-Why did you buy two banks with very bad assets?
-I was very interested in this business. But I didn’t realize it would be worse after buying both Khadgalamj and Mongol Post banks.
-Do you regret it?
-It’s really regrettable. However, I should rescue the capital of over 900,000 depositors and bank clients. Hence, I met with the Director of the Bank of Mongolia and took a compulsory measure. It should’ve been other investors. But there’s no way, according to banking law.
-Was former Prime Minister, S.Bayar, supporting your business?
-We used to live in 40 Myangat. S.Tumur-Ochir was supporting me. He introduced me to S.Bayar, who was Ambassador to Russia.
-Does your bank relate to Goldman Sachs?
-S.Bayar played the main role in the bankruptcy of Zoos and Anod banks. Mongol Gazar company is the main reason why I took the Olon Ovoot license. This company didn’t pay back its loan. Then I bought the Olon Ovoot license in order to pay the loan.
-Did a contract with Ts.Myanganbayar lead to this situation?
-My biggest mistake was a contact with Mongol Gazar.
-Will you carry all the responsibility for this after all?
-Someone who made a mistake should carry his responsibility. Standard Bank authorities are coming to Mongolia to meet with Mongolia’s banking authorities. I will also meet them. I hope its progress will emerge.
-Are you being investigated by the Independent Authority Against Corruption?
-No. But I’m forbidden to travel abroad.
-It is said that citizens took their money from Khadgalamj Bank. Is this true?
-I asked the Bank of Mongolia. Operation of the bank is normal. You do not need to worry about that.
-All of your businesses are ruined. What do you plan to do?
-I got up at 9:00 am. I used to work for long hours every day. I will relax. Then I will pay back the loan. It is unsuitable to be in business as the director of a bank. Business is too risky.

Short URL: http://ubpost.mongolnews.mn/?p=5208

Posted by on Jul 28 2013. Filed under Топ мэдээ. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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