The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Aeschylus, your suggestion of targeting those thinking of investing in Mongolia is spot on. In the upcoming election (28 June) both principal parties will be burnishing their credentials on improving investment into the country. The need to do so is highlighted in the latest World Bank report. The current government recently held a major event in Mongolia where Rio Tinto, of all companies, extolled the virtues of investing in the country (RT have had years of turbulence trying to manage a corrosive Mongolian investment climate!). One can only speculate on why RT spoke in defence of the country. There are multiple foreign investors tied up in legal proceedings or utilising other mechanisms to try and get redress from the way that they have been treated in Mongolia . The Mongolian courts cannot be trusted to be impartial (read the US State Department report on Human Rights etc) and to deal fairly with foreign companies with grievances. Yet foreign organisations are being lured into investing in a country that they are almost universally incapable of managing levels of corruption (again see the US report) and the consequences which stem from this. MATD I fear is a victim of this environment. The way to get the Mongolian authorities to listen and act on concerns is to dissuade those thinking of investing in the country by bringing to their attention the myriad pitfalls of investing. Anyone who has any potential media connections could do worse than flag this up.
Bluechipz, you suggest that the hold up is all down to the Governor. With substantial experience of the market I think it is a little more nuanced than this. The hold up is down to those working with the Governor to delay the project. The fact that the MG has not resolved this ( rest assure it could be resolved tomorrow if they wanted it to be so) suggests influential parties are behind this continued delay. Until those parties get what they want this will not be resolved. Corruption is rife in Mongolia and the most senior are the most adept at holding businesses to ransom. As I have said repeatedly this will come good, but it increasingly looks like it will be for those pulling the strings and not for private investors.
ICblue, this issue has been raised over the last year or so, suggest you check posting history for me and others. Bowley has the best insights into this country, but as expected he is derided by the ignorant and desperate. There is little point in opening up a debate on this with those who are never willing to listen. If you doubt fine.
Manxkippers,
This is NOT good news! Having to drag the Ambassador to meetings signifies problems.
Good news is when the Ambassador is invited to cut the ribbon on production commencement, not when having to attend meetings to fight MATDās corner due to ongoing holdups, which are almost certainly due to corruption!
ShortShrift, you present reasoned views and arguments. The bureaucracy here is legendary for its tardiness and I have no doubts this is part of the equation. It is not I believe the full answer and cannot explain the length of delays. If it were I would not worry. Where corruption creeps in ( it is as you know endemic in Mongolia) it needs more than keeping fingers crossed. As I have said before. This project WILL come good but unless the corruption element is swept away the benefit will not be accrued by the PIs but by those who have unlawfully achieved interests in the business and its development.
ShortShrift, companies like MATD cannot deal with this alone. They need the support of the British Government, through the British Embassy. The British Government has a policy of limited support for new O&G development overseas, but this has exceptions, including where a British company is experiencing difficulties of this type. The problem however seems that the Foreign Office may not be interpreting and applying the legislation this way and are not therefore giving their total/full support to dealing with the matter. If they did I am sure (I am aware of similar cases in the past) that it could be resolved in reasonable time. There have been multiple Ministerial visits, Trade envoy visits, Regional trade and investment visits etc where this issue could have been raised at the highest levels (Prime Minister President etc included). I have seen no discussion or evidence of this). The 60th Anniversary of Diplomatic Relations was just celebrated. This would have provided a perfect opportunity to press the case for Petro Matad. I heard no mention. I am told that the Embassy has said it will no longer answer enquiries as to what support it is providing. I would suggest that all investors press the case with Petro Matad, the Embassy and even their MPs who have an interest and responsibility in ensuring that British Companies are not disadvantaged. I have made representations, but an odd voice in the wind has very little impact.
RG27, This is the reality. Corruption is at the root of these delays. Until this is addressed (either by acquiescing or dealing effectively with this challenge) the project will not progress. In either case PIs stand to lose out the longer that this drags on. The management are aware of this but appear incapable of rising to the challenge.
Not idiots Manro but experts in exaction. This is common practice in Mongolia for a very good reason; it fill pockets! Corruption and extortion tend to dominate many business deals/enterprises in Mongolia. MATD is a case in point. The difference here however is that unlike many they have been incapable of dealing with these issues effectively and in reasonable time. The question is when will an accommodation be reached.
Thornogson, identification of corruption by the general public in such cases as the Tavan Tolgoi and public procurement projects is an essential element in getting the issues into the open, getting them resolved and preventing them from continuing to blight the projects. Wittingly or ignorantly ridiculing or denying the presence of corruption simply helps to cover it up and helps it to flourish and remain unresolved. This is the case with MATD. I am sure that WOS and his followers truly believe that their rejection of the presence of corruption is benefiting MATD, in which case I cannot criticise their motivations. In reality however it is preventing the issue from being broadly exposed and therefore being dealt with. Efforts to broadcast the corruption besetting MATD can only be beneficial in a culture where corruption flourishes if not exposed.
Nice try WOS I have given you the source, now itās up to you and your naysayer cohort. I am not in the game of spoon feeding. If you donāt wish to follow up so be it. I couldnāt give a fig for your investment here. It is mine I am trying to protect and it will not be achieved through pretending all is well when clearly it is not!
WOS, It is your failure to engage with the source of the information that is exposed. Why not do so? What do you fear? Maybe hearing the truth? As I have said, if she proves me wrong I am more than happy to accept it. The problem seems to be your hiding from the truth. Readers of this bb will make their own minds up. If they are content to blindly soak up your diatribes and pass up an opportunity to confirm the true position here then so be it. One can lead a horse to water ā¦..
WOS I have given you the source. If you are afraid to engage because of what you might learn so be it. If you engage and are told that I am wrong then I will eat humble pie. It seems to me that you want to avoid asking the question. If so there is little more that I can do. Continue to peddle your āopinionsā irrespective of how ignorant they may be. The choice is yours.
WOS it is pointless me trying to answer your questions as you will simply come up with attempts to undermine what I have to say. Therefore I suggest that you address your question to the Vice Minister of Justice. She is the source of the information and NOT Bowley as you keep suggesting. If you want to challenge her then be my guest.
WOS, it is very easy to discredit those whose predictions are wrong (Bowley) . This being the case you should look very closely in the mirror. I donāt recall many of your predictions being borne out and I am sure you wouldnāt wish to be considered a hypocrite by those reading this bb!
WOS. This project WILL come good. There is no dispute over this. The only question is who will be the beneficiaries and will PIs derive benefit. If the corruption against MATD is not addressed (see Dozzawba post) then PIs will be the losers. The Government and country will still derive expected benefits but in place of (mainly non-Mongolian) PIs will be those looking through corruption to gain an interest. This will be a win-win for Mongolia. Your and other investor efforts will be best served highlighting the corruption to a point where the govt must take action (as with the removal of the UB Mayor) in the absence of this we (PIs) will all lose out.