The president of Mongolia on Thursday pardoned an American and two Filipinos who had been sentenced to more than five years in prison on tax-evasion charges involving their former employer, the mining company SouthGobi Resources.
The case has been closely watched in Mongolia and abroad as the resource-rich country tries to rekindle foreign interest in mining projects. Restrictions on foreign investment and prosecution of cases such the one involving SouthGobi have prompted a number of overseas mining companies to adopt a more cautious approach toward doing business in the country.
The three had been barred from leaving Mongolia for several years leading up to their trial in January, and the U.S. Embassy, the American Chamber of Commerce in the Mongolian capital of Ulan Bator and other groups had raised concerns about the fairness of the judicial proceedings.
The three -- American Justin Kapla and Philippine citizens Cristobal David and Hilarion Cajucom Jr. -- were released from detention Thursday following the pardon by President Tsakhiagiin Elbegdorj. They had been sentenced to terms of more than five years in prison.
“We appreciate President Elbegdorj’s action,” the U.S. Embassy in Ulan Bator said in a statement, adding that Kapla was now free to return to the United States if he chose to do so. “The trial proceedings, as well as his subsequent detention, in addition to the prolonged exit ban, caused enormous hardship for Mr. Kapla.” Kapla has a wife and two children in Mongolia.
In addition to the prison terms for the three men, their former employer, SouthGobi Resources, was handed a civil fine of 35 billion Mongolian tugrik, or about $18 million. The company, which is listed on stock exchanges in Toronto and Hong Kong, is appealing.
SouthGobi said in a statement last week that it “firmly rejects” the court’s verdict and would continue to “vigorously defend itself.”
To secure a pardon, the three former employees had elected not to pursue an appeal. Though that means their convictions now will technically stand, SouthGobi said it “continues to believe they have demonstrated their innocence throughout the investigation and court process.” The three, the company added, had faced “extraordinary and unjust hardships.”
Mongolian authorities began investigating SouthGobi, which mines a coal deposit called Ovoot Tolgoi in the Gobi Desert near the Chinese border, after the company accepted an offer from Chinese state-owned Aluminum Corp. of China to buy a majority stake in 2012. The deal was met with resistance in Mongolia, where distrust of its southern neighbor runs high.
In the wake of the bid, Mongolia adopted new rules on foreign investment that effectively blocked the deal.
Jackson Cox, head of the American Chamber of Commerce, who had called for the U.S. to reconsider a new package of aid and development assistance to Mongolia in the wake of the convictions, hailed the pardons as a positive development. “We’re very happy,” he said in a phone interview Thursday.
But the chamber noted that “many others remain subject to travel bans and international business executives are reluctant to travel and do business in Mongolia.”
Added the U.S. Embassy: “We hope that in the future, the Mongolian authorities will conduct such cases through a fair and transparent process, in full accordance with Mongolian law.”
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