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  • Writer's pictureAmar Adiya

Unveiling the Path to Preventing Conflict of Interests

Mongolia is on the verge of a groundbreaking legal transformation aimed at establishing the integrity of its public service and preventing conflict of interests.

Proposed amendments to the law on the regulation of public and private interests, as well as the prevention of conflict of interest in public service, seek to restrict high-ranking politicians and senior officials from engaging in business ventures with the government. To ensure the effectiveness of this law, robust oversight measures are imperative.

Conflict of interests

Since its establishment in 2006, the anti-corruption agency has been striving to address conflicts of interest among politicians that not only erode public trust but also undermine effective governance.

In December 2022, public outrage reached its peak, manifesting in a significant demonstration in Ulaanbaatar's main square.

In response, Prime Minister Luvsannamsrain Oyun-Erdene launched an ambitious anti-corruption campaign earlier this year, encompassing operations such as "whistleblow" to expose corruption crimes, "wipe-out" to remove "parasites" from public offices, and to bring back overseas escapees. This comprehensive campaign also aims to recover illegal funds hidden offshore.

As part of Oyun-Erdene's anti-corruption campaign, the proposed law imposes restrictions on high-ranking government officials, such as the President, Parliament Speaker, Prime Minister, Members of Parliament, cabinet ministers, provincial Governors, and their close associates. These restrictions specifically prohibit their involvement in government-funded purchases and prevent them from applying for concessional loans, grants, or guarantees. This ban will create a clear separation between the realms of business and politics on paper. Additionally, the law also requires the spouses of these officials to relinquish their positions in public office.

The prohibition clauses extend beyond these officials to encompass political party chairpersons with seats in the parliament, members of the Constitutional Court and Supreme Court, the State Prosecutor General, members of the Civil Service Council, heads and deputies of various agencies such as the Bank of Mongolia, General Election Committee, Anti-Corruption Agency, and more.

The new law seeks to eliminate any unfair advantages or preferential treatment that politicians and senior officials may receive due to their business interests in government projects or financial support.

However, the successful passage and enactment of the proposed law face several challenges, which have the potential to result in significant political consequences. These challenges primarily stem from resistance by vested interests, concerns regarding the effective enforcement of the law, and the necessity of implementing education and awareness programs.

Enacting this law would inevitably have a direct impact on the existing cabinet, as a number of ministers are actively involved in business activities. This involvement ranges from holding positions within their own companies to maintaining close affiliations with various enterprises.

Notably, ministers responsible for culture, foreign affairs, energy, and mining are extensively engaged in a diverse range of business activities. Their activities span across different sectors, including printing, construction, farming, and service industries.

The new law also has significant implications for upcoming elections, as those affected will need to decide between continuing in politics or focusing solely on their businesses. Furthermore, the law extends its reach to immediate family members, prohibiting them from holding senior positions in public offices or being employed by state-owned enterprises.

While the proposed law may garner public support, it is important to acknowledge the potential for evasion and abuse. It is necessary to recognize that Mongolia is a closely interconnected and relatively small community where the boundaries between private and public interests have historically been ambiguous or even violated.

To effectively address the challenges and prevent conflicts of interest from persisting, it maybe imperative to establish rigorous monitoring of beneficial ownership. Efforts should be made to ensure individuals cannot hide behind proxy shareholders or covert arrangements, necessitating effective monitoring mechanisms.

To enhance transparency, the government should improve the collection, storage, verification, and public disclosure of beneficial ownership information among other measures. Establishing specific measures such as stakeholder mapping, analyzing data collection processes, and creating asset registers will fortify the transparency and accountability of the public service.

Mongolia has had financial disclosure systems for public officeholders in place for 16 years, but they have often fallen short of their potential.

The disclosure reporting faces challenges such as cumbersome filing procedures, gaps in the disclosure forms, and a lack of transparency and enforcement. These shortcomings must be rectified to enhance the effectiveness of the law and ensure its intended impact on promoting transparency and accountability.

Drawing lessons from these challenges, Mongolia has the opportunity to develop comprehensive strategies that will help effectively deter conflicts of interest. Implementing a proactive approach that includes the detection of beneficial owners is crucial for establishing a governance system that prioritizes integrity and reinstates public trust. Nonetheless, it is vital to acknowledge and address the potential risks of evasion and abuse within such a system.


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