Friday, May 23, 2014

Minnesota Media Fails Hometown Man In Mongolia

It is a reasonable hope for citizens of any country that if they are working or traveling abroad and get into trouble, they will get help from their home country. For American Justin Kapla, he was able to engender a brief moment of support from his hometown local Minnesota media three months into his now 19 month exit ban from Mongolia, but then the local Minnesota media dropped his story. As a member of the media that has tried to shed light on his story and also someone that holds a concern that fellow members of the media would cover a story about me if I were ever in trouble, it has been disturbing to watch local Minnesota media let Mr. Kapla dangle without coverage in Mongolia even while local members of the United States Congress make the public aware they are working on his case.

Last week, a judge in Mongolia said the government’s case against Mr. Kapla and two colleagues from their work at SouthGobi Sands, a wholly owned Mongolian subsidiary of internationally listed SouthGobi Resources, was insufficient and through the case out of court (temporarily). However, Mr. Kapla and his two Filipino colleagues (Hilarion Cajucom Jr. and Cristobal David) remain under an exit ban from Mongolia. The exit ban allows the men to live in Mongolia, but restrains them from travel beyond Mongolia indefinitely.

While Messrs. Kapla, Cajucom and David have been detained in excess of a year and a half for this case, another colleague from the same company, attorney Sarah Armstrong, was released from her own exit ban – that began at the same time as their exit bans for the same case – in December 2012. Ms. Armstrong was home in Australia for Christmas 2012 while Messrs. Kapla, Cajucom and David missed seeing their families in Minnesota and the Philippines for the last two Christmases.

Mongolia is a country with a ripe rumor mill and colleagues in Mongolia have passed on every positive and negative rumor going around Mongolia’s capital of Ulaanbaatar about Ms. Armstrong, Mr. Kapla, Mr. Cajucom and Mr. David over the years. The nastiest rumors over the years related to SouthGobi have been about Ms. Armstrong, Mr. Kapla and SouthGobi’s former CEO Alex Molyneux (who left the company and Mongolia prior to the exit bans being put in place). Such rumors are nothing to publish and likely false. Rumors in Mongolia need to be taken with a grain of salt as I’ve heard local gossip transform an elevator that was stuck with a few people in it for a couple of hours into an elevator that suddenly dropped 12 stories to a crash (the person recounting the exaggerated story noted “it was lucky there was no one in it”) – this transformation took about 5 days in the local gossip mill.

It is important to understand that gossip in Mongolia easily rivals gossip in the United Kingdom and the United States tabloids. This gossip can and does impact public sentiment regardless of fact or truth. In the case of SouthGobi, from the time of my first trip to Mongolia in September 2011 forward, broad sentiment among brokerages based in Mongolia has been negative on investment in SouthGobi Resources while the share price of the company has descended from a price of $16.71 on February 28, 2011, to a price of 59 cents on May 21, 2014. Rumors as to why sentiment on the company is negative are expansive and include the absurd notion that locally operated Mongolian coal companies were so offended by the arrogance of some things SouthGobi did – particularly at one fairy tale meeting of coal companies and government officials – that they vowed to bankrupt SouthGobi even if it meant bringing their own coal companies to the brink of bankruptcy as well. It isn’t sensible, it is gossip.

What seems to have been the key difference between Ms. Armstrong’s situation and Mr. Kapla’s situation then is not the level of noise or gossip. What was different is that Ms. Armstrong’s Australian media cared to report her story. Coverage of her story began on October 24, 2012, in Australia’s Herald Sun – the nation’s largest newspaper by circulation – among others and continued apace regularly in Australian papers, radio and television. On October 30, 2012, Mark Schliebs and Michael Sainsbury (the latter of which reportedly flew from Australia to Mongolia specifically to cover the story), were giving Ms. Armstrong’s story thorough coverage in The Australian, the second most read on-line source of news in Australia. By December 2, 2012, the Brisbane Times was already counting the days Ms. Armstrong had been held and questioning if Ms. Armstrong would be home for Christmas. Australia’s ABC radio covered Ms. Armstrong’s story repeatedly including a brief interview with myself on December 4, 2012. While Ms. Armstrong’s Australian government officials worked in-kind for her release, the constant stream of negative publicity for Mongolia from the Australian press seems to have eventually been unwelcome enough that she was released from her exit ban on Christmas Day 2012 while the investigation and case against SouthGobi continues still today despite the judge’s recent ruling.

As of May 22, 2014, sources have stated that the judge’s recent ruling in the case that there was “incomplete and insufficient evidence” will not be appealed. Instead, the prosecutor for the government of Mongolia “has decided to re-investigate in an attempt to correct some of the issues with the judge’s current ruling. The prosecutor has 30 days to complete this task.” Thus, the civil case, the criminal case and the exit bans on Messrs. Kapla, Cajucom and David remain in place. Their former employer SouthGobi Sands is a co-defendant alongside them under Mongolian Law.

I became aware that Mr. Kapla was detained for the same case as Sarah Armstrong only in January 2013. I reported the story first on Seeking Alpha in January 2013 and it was subsequently picked up by the Associated Press in Minnesota and then both of the major local newspapers – the Minnesota Star Tribune and the St. Paul Pioneer Press – reprinted the Associated Press story. Unfortunately for Mr. Kapla, this reporting from 16 months ago was the first and last time his story was reported in Minnesota. A year later in January 2014, I queried a journalist in Minnesota why they were not continuing to cover his story and was told there were “no plans” to write another story about Mr. Kapla despite the offices of Senator Franken, Senator Klobuchar and Congresswoman Bachmann all going on the record in support of Mr. Kapla in December 2013. I asked this journalist, “How long does [Mr. Kapla] have to be detained for it to be a story worth covering?” At the other end of the phone, there was no response.

Mr. Kapla’s case has recently received excellent coverage from Terrence Edwards in Business News Europe and from Michael Kohn and Chris Donville on Bloomberg, while the local Minnesota media has quite questionably failed to cover Mr. Kapla’s story. In order for Mr. Kapla’s story to have any chance of awareness in the national American media, his story would first likely need some modicum of attention from the local Minnesota media. Mr. Kapla has both his parents, a 102 year-old grandfather, nephews and nieces in Minnesota. He attended high school locally and does not lack for connections to his native American state. With Mr. Kapla proximate to his release from his exit ban, more intense media coverage of his story (as well as that of Mr. Cajucom and Mr. David’s story in the Philippines) would likely help secure the end of his lengthy exit ban and certainly could do no harm.

To understand Mongolia’s exit ban policies better, Terrence Edwards investigative report on Arrested Developments In Mongolia is recommended.

For more detail on Mongolia’s use of exit bans, see the United States State Department Investment Climate Report on Mongolia, page 16, under the heading “Concerns over Exit Visas.”

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