Minister Claims U.S. Paid MP Bribes

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000382

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR FOR WINELAND
DEPT OF COMMERCE FOR ZHEN GONG CROSS
MILLENNIUM CHALLENGE CORP FOR JIM HALLMARK

E.O. 12958: N/A
TAGS: EAID ETRD EINV PREL PGOV PINR MG US
SUBJECT: Minister Claims U.S. Paid MP Bribes


SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET
DISTRIBUTION.

Ref: A) ULAANBAATAR 380, B) ULAANBAATAR 163


1. (SBU) SUMMARY AND COMMENT: Over the last week,
Minister of Industry and Trade Jargalsaikhan appears to
have made claims to different audiences (including the
Cabinet and foreign mining company representatives)
that USAID had paid several hundred thousand dollars to
an MP for anti-corruption efforts, and that these
payments amount to bribes. In McCarthyesque fashion,
he has reportedly said he has proof of two payments of
US$120,000 and US$250,000. MP S. Oyun has vigorously
denied the claims, and, with multiple newspapers and
electronic media repeating the falsehoods, the Embassy
issued a statement on May 16 underlining that they are
absolutely without any factual basis. Oyun, the leader
of the small Civic Will Party (a key Embassy contact
and the sister of murdered democracy movement leader S.
Zorig),has publicly opined that Jargalsaikhan's
reported statements reflect his personal animus toward
her and are an effort to discredit her as she pushes
for Parliament to enact effective anti-corruption
legislation. It's an open question whether MPRP Prime
Minister Enkhbold has the means or will to control the
mercurial and garrulous Jargalsaikhan, a minor party
leader rewarded with a Cabinet seat in exchange for
supporting the new MPRP-led government in January.
With Jargalsaikhan having made the scurrilous
allegations, some other politicians may be happy enough
to give them publicity, since Oyun attracts jealous
sniping for her "Ms. Clean" image. The allegations
also distract attention away from last Friday's
surprise, sudden enactment by the Parliament of a
minerals windfall profits law and mineral law changes
currently under discussion. END SUMMARY AND COMMENT.


2. (SBU) According to a reliable source, Minister of
Industry and Trade Jargalsaikhan asserted on May 16 that
USAID had paid a bribe to Member of Parliament S. Oyun. The
comment was made during a closed door two-hour meeting with
foreign mining company representatives. According to the
source, during the meeting Jargalsaikhan ranted at length on
a large number of topics, and his comments often did not
make logical sense. The Minister claimed that U.S. Embassy
officers are "Bolsheviks" helping the poor, adding that that
many others are also Bolsheviks, including other MPs.
Jargalsaikhan complained that the U.S. is creating anti-
corruption programs, but then hastened to note that he isn't
"for" corruption. The Minister said that USAID had funded
Oyun under these programs, and asserted that this
constituted a "bribe" to her. In other comments,
Jargalsaikhan alleged that President Bush and the Embassy
favor Democratic Party head Elbegdorj (who was Prime
Minister until January) when it was then MPRP Prime Minister
Enkhbayar who signed Mongolia up for the Coalition of the
Willing in 2003.


3. (SBU) Jargalsaikhan's statements were not the first
mention of such payments. On May 11, a published
report in the inside pages of the MPRP party newspaper
"Unen" reported that Jargalsaikhan had said during the
May 10 Cabinet meeting that USAID had paid Oyun a
bribe. The article claimed that the Minister, who had
just returned from a trip to the U.S., asserted that he
had proof that Oyun had received a total of $370,000
from the USG for anti-corruption programs, and went on
to describe the payments as a bribe. On May 11, Oyun
held a press conference and vigorously denied that she
received any such money. She commented that
Jargalsaikhan was still angry with her over aborted
efforts after the 2000 election to merge the Republican
Party he heads with the Civic Will Party which Oyun
heads. Oyun also told reporters that she intended to
file a court action in response to the comments, and
that she had asked for the official Cabinet record to
see what exactly had been said. Oyun opined that the
comments may also be a renewed effort to try to damage
her reputation as she pushes for anti-corruption

ULAANBAATA 00000382 002 OF 002


legislation. (NOTE: Due to broad immunities afforded
Members of Parliament, Jargalsaikhan is largely beyond
legal reach. This status protects him from a mid-90's
default on a US$14 million loan from a Japanese firm,
Marubeni. See Ref B for bio and background.)


4. (SBU) After carefully reviewing all files and
programs and after double-checking directly with Oyun
herself, the Embassy, on May 16, issued a press
statement stating that claims of USG funding of Oyun
for anti-corruption programs are absolutely without
factual basis. The statement came after "Unen" and the
pro-government "Zuunii Medee" ran lengthy, similar
articles in their May 16 editions which described the
purported payments and asserted they amounted to
bribes. The articles quoted unnamed sources as saying
that when Minister Jargalsaikhan was in the U.S.
recently to meet with the Millennium Challenge
Corporation (MCC) regarding Millennium Challenge
Account assistance to Mongolia, he was told by the MCC
that MP Oyun had taken a total of US$400,000 from USAID
for an anti-corruption project and law drafting.
(Note: Post understands Jargalsaikhan did not meet with
MCC on the trip, which was a "private" trip.) The
articles went on to raise questions about a tourist
camp purportedly owned by Oyun's husband, and said that
Jargalsaikhan had suggested that money from the
supposed USAID grants was used to build it. On May 17,
the Embassy's statement was printed without comment in
Zuunii Medee and in other newspapers.


5. (SBU) After an unrelated meeting on May 17, Oyun
told DCM and Poloff that she was uncertain who else
other than Jargalsaikhan might be behind the spread in
the newspapers of the allegations. She noted that her
relations with the MPRP had been tolerable until
January, since she had a working relationship with the
Grand Coalition government. Since the MPRP had pulled
down that government, however, there had been
occasional nasty comments from MPRP quarters, which she
had ignored. She commented that she is waiting to see
whether the media flurry over Jargalsaikhan's "bribery"
allegations dies down; if they did, she would not press
forward with her related court action.

SLUTZ