Fluor FLR 0%, a company based in Irving, Texas USA, has reportedly removed all foreign personnel from Mongolia rapidly at the first hint that the government of Mongolia may have a tax inquiry for the company.
A local person reports, “The Fluor case is very tight lipped, nobody is saying anything. Fluor got their people out of here at the first hint of a tax issue.” ’Mogi’ Munkdhul Badral, the founder and CEO of Mongolia news aggregator, noted Fluor’s departure on Twitter TWTR -0.26% earlier today as well: “Fluor has reportedly packed up and left Mongolia after declaring Sainshand [industrial park] project unfeasible for fear of staff getting banned from leaving.”
The U.S. State Department’s annual Investment Climate Report on Mongolia consistently highlights Mongolia’s exit visa ban policy – of being able to indefinitely detain foreigners in the country – as a cause for concern. The most notable current example of the use of Mongolia’s exit visa ban is American Justin Kapla’s situation, as well as the situation of his former Philippine colleagues Hilarion Cajucom, Jr. and Cristobal David.
Messrs. Kapla, Cajucom and David have now been detained under exit ban for approximately two and a half years. They may live and work in Mongolia but are unable to depart the country while under investigation for corporate tax evasion charges from their prior posts with SouthGobi Resources. Two times this year Mongolian courts have ruled that Mongolia’s prosecutors had insufficient evidence against the men, yet they are still detained.
Under the practice of the law in Mongolia, the ruling of the judges that there is insufficient evidence against the men only results in the case being returned to the prosecutor for “30 days” to resubmit evidence. However, the prosecutor can be granted extensions on these 30 days and there is no double jeopardy laws in Mongolia that prevent people from being prosecuted multiple times for the same accusation.
The most recent ruling that there was insufficient evidence against Mr. Kapla and his former colleagues (the complete nine page English translation of which is here) occurred on August 26, 2014. However, as the ruling was only officially delivered to the prosecutor’s office on September 17, 2014, sources believe that the prosecutor’s 30 day time limit (which can be extended) therefore runs until October 16, 2014.
In light of the circumstances faced by Messrs. Kapla, Cajucom and David, as well as many lesser known cases, it is quite understandable why international firms operating in Mongolia would pull all personnel from the country rapidly at the first hint of any legal matter. Indeed, it is a credit to those companies’ concern for their employees’ freedom and safety that they would take precautionary measures for their staff rather than risk their being put into an indefinite exit ban that denies them the right to travel home to see their families. The government of Mongolia may wish to reconsider this legal limbo as it discourages businesses from operating in the country when, instead of potential corporate fines for perceived legal improprieties, local personnel risk individual liability as well as a stake in corporate liability by working in Mongolia.
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