Munkhbayar’s company, INAKIS, is helping to solve the extreme air pollution problems in the outskirts of Mongolia’s capital, Ulaanbaatar, caused by burning rubber and tyres. The company does this by converting tyres into rubber plates and toys using environmentally friendly technology. It can currently recycle 150 tyres per hour, but if they had the money to expand their operation, the owner says they could provide all the rubber products in Mongolia using recycled material. However, corruption has so far prevented this increase in capacity. His repeated applications for a loan from Mongolia’s Small and Medium Enterprise (SME) Development Fund have been unsuccessful, while many politicians have been using the fund to enrich themselves.
In November 2018, the media company IKON.MN reported that 110 out of 132 companies that received a low-interest loan from the SME fund were owned by politicians or their relatives. Nearly two thirds of the 74 members of parliament and three out of 16 cabinet ministers, including the prime minister’s younger brother, were using the fund to finance their companies.
IKON.MN was able to uncover this wrongdoing through an updated right to information law. The law requires government bodies, including funds, to make all information transparent. It also requires all companies to publicly reveal their owners and financial stakeholders. This allowed the media company to find out which companies received loans at which interest rates, and who owned them.
The loans scandal set off a political chain reaction. The Mongolian National Chamber of Commerce and Industry announced that its 3,500-plus member companies would not pay tax until the loans were repaid. The guilty politicians were held accountable and public oversight of government finances has been strengthened. Control measures have been put in place to make the management of the funds more transparent and accountable, with some funds even having been closed. Parliament also tried to oust Prime Minister Ukhnaa Khurelsukh’s government, but he survived a vote of no confidence.
“The implementation of the laws for open data and the right to information are instrumental in revealing game-changing evidence on institutional corruption in Mongolia.” Batbayar Ochirbat, Executive Director of Transparency International Mongolia
Members of parliament were divided into those who had received loans from the SME fund and those who had not. At least five officials involved in the scandal resigned.
In the aftermath of this scandal, Mongolian government activities are under more scrutiny than ever. Two other funds were investigated earlier this year. After potential conflicts of interest were found, they were merged with the SME fund into a single fund, which officials were reforming to make more transparent.
Many ordinary Mongolians are also putting pressure on their government. Citizens are using social media and protests to push for justice and accountability. This includes the country’s youth. One group of university students formed their own media company to inform and encourage young Mongolians to engage with politics. Their campaign, known as Бид Уучлахгүй (We Will Not Forgive), earned them Transparency International Mongolia’s Youth Anti-Corruption Award in 2018.
The government continues to respond slowly to their demands, but Mongolia’s people are speeding ahead with the support of a strong right to information law.
This blog post is an extract from Transparency International’s publication, Real Lives, Real Stories: The Power Of Information In Asia Pacific. It contains stories of citizens from ten countries across the Asia Pacific region who have used their right to information to demand accountability from their governments. Read the other stories.
We would like to thank Transparency International Mongolia for writing and sharing this story.