VZCZCXRO7478
PP RUEHGH RUEHLMC
DE RUEHUM #0382/01 1370734
ZNR UUUUU ZZH
P 170734Z MAY 06
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC PRIORITY 9893
INFO RUEHUL/AMEMBASSY SEOUL 2244
RUEHBJ/AMEMBASSY BEIJING 4982
RUEHOT/AMEMBASSY OTTAWA 0314
RUEHGH/AMCONSUL SHANGHAI 0012
RUEHHK/AMCONSUL HONG KONG 0746
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC 0261

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