Mongolia convicts 2 Filipino mining execs of tax evasion | Global News

Mongolia convicts 2 Filipino mining execs of tax evasion

/ 06:35 AM February 01, 2015

ULAN BATOR—A Mongolian court on Friday found three former executives of a foreign-owned mining company—who included two Filipinos—guilty of tax evasion and sentenced them to more than five years each in prison, prosecutors said.

The court in this Mongolian capital delivered the guilty verdicts and prison terms on Philippine nationals Hilarion Cajucom and Cristobal David and Justin Kapla, a US citizen, according to a statement from the Capital City’s Attorney’s Office.


Kapla and David received sentences of five years and 10 months each, while Cajucom got five years and six months, it said. There was no immediate word of an appeal.

The verdict is likely to send a chilling message to foreign investors in Mongolia, where the once high-flying economy has been badly hit by a collapse in foreign investment and in commodity prices.


Mongolia, for decades a tightly-controlled Soviet satellite, shook off communism a quarter century ago but has struggled to cash in on its rich natural bounty amid political disputes and resource nationalism.

The three were all former executives of mining company SouthGobi Sands, a Mongolia-registered but foreign-controlled business that operates the Ovoot Tolgoi coal mine, which extracts and sells the resource to customers in China.

SouthGobi Sands is 100-percent owned by Toronto- and Hong Kong-listed SouthGobi Resources, according to the SouthGobi Resources website.

Canada’s Turquoise Hill Resources, majority owned by British-Australian multinational Rio Tinto, owns a major stake in SouthGobi Resources, the website said.

SouthGobi Sands was fined 35.3 billion tugriks ($18.2 million, P800 million) “to compensate for loss from the state,” the prosecutors’ statement said.

SouthGobi Resources has denied wrongdoing.

Kapla, a former president and executive director of SouthGobi Sands, Cajucom, and David had been forbidden from leaving Mongolia for more than two years amid suspicions the company had failed to pay sufficient taxes.


In November, the Office of the United Nations High Commissioner for Human Rights registered a claim against the Mongolian state on Kapla’s behalf.


Communication issues

The US Embassy in Ulan Bator swiftly issued a statement after the trial, saying it was marred by communication issues.

“Several embassy officials attended the trial, including Ambassador Piper Campbell, and noted that there were interpretation problems during the trial,” the statement said.

“Because of these problems, the defendants stated during the trial that they could not understand the interpretation, nor could they express themselves clearly.”

The statement said the length of the case and the exit ban had led to “enormous hardship” for Kapla and that the embassy “will continue to monitor the situation closely.”

The Great Hural, Mongolia’s parliament, voted in November to dismiss the previous prime minister after he was accused of cronyism and failing to address growing economic problems. A new government has been formed.

The landlocked country wedged between giants China and Russia enjoyed world-beating economic growth in recent years, peaking at 17.5 percent in 2011 on the back of a boom in exports of resources, mainly coal, copper and iron ore.

But a new foreign investment law put off investors and economic expansion slowed to 5.3 percent in the first half of last year, while the country faces rising inflation and a falling currency.

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TAGS: Mining, Mongolia, Overseas Filipino workers, Tax Evasion
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