Mongolia anti-graft agency arrests two prime ministers amid mine probe

ULAANBAATAR, April 11 (Reuters) - Mongolia’s anti-graft agency has arrested two former prime ministers as part of an investigation into suspected misuse of power by officials during two rounds of negotiations involving a big copper-gold mine, it said on Wednesday.

Mongolia’s Independent Agency against Corruption is investigating a 2009 agreement to develop the Oyu Tolgoi mine, signed by the government with Canadian investor Ivanhoe Mines and Rio Tinto, as well as an underground mine development and investment plan agreed in 2015 to expand the project.

In connection with the investigation, on Tuesday the agency detained Bayar Sanj, prime minister when the original 2009 investment deal was signed, as well as Saikhanbileg Chimed, prime minister when the expansion agreement was sealed in 2015, it said in a statement.

The prosecutor’s office in the capital, Ulaanbaatar, has applied to extend a period of detention, a spokeswoman said in a televised briefing. According to Mongolian law, prosecutors need to apply to a court to hold suspects for more than 48 hours.

Reuters was unable to reach either Bayar or Saikhanbileg on Wednesday. Their lawyers were also not available for comment.

Mongolia’s anti-corruption body has already arrested the former finance minister Bayartsogt Sangajav, one of three government ministers to sign the original 2009 investment deal. He has denied any wrongdoing.

The deal, approved by Mongolian parliament, was also signed by the then mining and energy minister and the then minister of the environment.

The Swiss Office of the Attorney General is conducting a criminal investigation into a seized bank account that court documents indicated was used to transfer $10 million to Bayartsogt in September 2008.

Swiss prosecutors confirmed at the end of last month that they were checking whether “questionable payments” made to Bayartsogt were linked to the Oyu Tolgoi mining project, adding that Rio Tinto itself was “not an accused”.

As a result of the 2009 agreement, Ivanhoe Mines held 66 percent of the Oyu Tolgoi project, with the Mongolian government holding the remainder. Ivanhoe changed its name to Turquoise Hill Resources in 2012 after Rio Tinto became its majority stakeholder. (Reporting by Munkhchimeg Davaasharav Writing by David Stanway Editing by Robert Birsel)