VZCZCXRO1051
PP RUEHLMC
DE RUEHUM #0469/01 1670638
ZNR UUUUU ZZH
P 160638Z JUN 06
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC PRIORITY 0023
INFO RUEHUL/AMEMBASSY SEOUL 2308
RUEHBJ/AMEMBASSY BEIJING 5069
RUEHOT/AMEMBASSY OTTAWA 0326
RUEHMO/AMEMBASSY MOSCOW 1525
RUCPODC/USDOC WASHDC 1057
RUEATRS/DEPT OF TREASURY WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC 0299
RHHMUNA/USPACOM HONOLULU HI
RUEKJCS/SECDEF WASHDC

UNCLAS SECTION 01 OF 02 ULAANBAATAR 000469 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV EMIN EINV CASC MG
SUBJECT: Financial Regulator's Murder Distracts Focus 
from Foreign Mine Standoff 
 
Ref:  Ulaanbaatar 461 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET 
DISTRIBUTION. 
 
¶1.  (SBU) SUMMARY:  Boroo Gold re-started operations on 
the afternoon of June 16 after police moved protesters 
away from the mine site.  The government's attention to 
the Boroo situation -- including the key role of the 
Health Minister and Member of Parliament  Gundalai in 
the protests -- was diverted by the murder of D. 
Badraa, the 32-year old head of the new Nonbank 
Financial Regulatory Commission.  Badraa, a rising and 
active member of the MPRP Youth wing, was stabbed to 
death the morning of June 15.  An Ulaanbaatar City 
Hural (council) member who is the head of a reportedly 
bankrupt savings and loan was arrested on the spot. 
The government will have to decide next week what to 
do, if anything, about Gundalai's behavior.  Post 
believes if it hesitates to act, Mongolia's reputation 
among foreign investors will be further tarnished.  END 
SUMMARY. 
 
Boroo Gold Resumes Operations 
----------------------------- 
 
¶2.  (SBU) Boroo Gold began operations again at 2:00 PM 
on June 16.  Additional police arrived at the site late 
on June 15, and met with Boroo Gold the next morning to 
coordinate action to remove the protesters from Boroo's 
property and allow the safe resumption of operations. 
Protesters have now been relocated off the mine 
property.  An official in the President's Office asked 
to meet with Boroo Gold the late afternoon of June 16 
to review the situation. 
 
¶3.  (SBU) Reftel noted that the DCM had contacted the 
PM's Office and MFA on June 15 to ask for assurances 
that the safety of Americans at the Boroo Gold site 
would be protected.  According to Boroo officials, 
there are 8-10 American employees and 5 American 
dependents at the mine.  There are no reports of any 
injuries among Boroo employees. 
 
Brutal Murder Shocks, Distracts Government 
------------------------------------------ 
 
¶4.  (SBU) The brutal murder on June 15 of D. Badraa, 
the head of the new Nonbank Financial Regulatory 
Commission (NBFRC), distracted the attention of 
government officials from the situation at the mine. 
Badraa was stabbed three times as he arrived for work 
in the morning.  He died in the early afternoon. 
Police apprehended at the scene Ts. Tumengerel, an 
Ulaanbaatar City Hural member who is the head of the 
"Ger District Building" savings and loan, along with a 
clerk of the company.  The two men were being beaten by 
a crowd of onlookers when police arrived. 
 
¶5.  (SBU) The 32-year old Badraa became the head of the 
NBFRC when it began operations in January.  On June 13, 
he briefed a special Cabinet session regarding the 
NBFRC's initial audit of the previously unregulated 
sector.  On June 15, Chief of Police Sandag-Ochir noted 
to reporters that the 15 bankrupt institutions 
discussed in Badraa's report had lost over 32 billion 
MT ($26 million) from 6400 depositors.  While Sandag- 
Ochir said that Tumengerel's institution had not been 
among those discussed in the report, other press 
stories indicate Badraa had stated there were serious 
violations at this savings and loan.  (Comment: 
Reporters in Mongolia frequently file stories without 
fact checking -- and often appear to make up stories 
out of whole cloth.  It is entirely possible that 
Tumengerel was enraged by a press story reporting 
something Badraa never said at the Cabinet session.) 
 
¶6.  (SBU) The Economic and Commercial section was 
beginning to develop ties with Badraa and his agency in 
our anti-corruption and anti-money laundering efforts. 
Badraa's brother, D. Zorigt, the head of the Ministry 
of Industry and Trade's Policy and Strategic Planning 
 
ULAANBAATA 00000469  002 OF 002 
 
 
Department, is a frequent interlocutor.  Badraa was a 
rising figure in the MPRP Youth wing and well regarded 
by a wide range of people as a bright and committed 
civil servant.  Embassy contacts were shaken by the 
death and many were involved in planning a large 
funeral on Monday. 
 
Gundalai: Consequences Delayed 
------------------------------ 
 
¶7.  (SBU) With the government focused on Badraa's 
murder and funeral, Health Minister Gundalai's conduct 
in the Boroo Gold situation has become a side show for 
the moment.  At a June 15 press conference held by the 
Police Chief and the Minister of Justice (which largely 
focused on the murder, but also mixed in some questions 
about the Boroo situation), the Minister of Justice and 
Home Affairs said that the government would have to 
draw conclusions about Gundalai's behavior, and if 
crimes were proven, then assess his responsibility. 
However, he said Gundalai had not responded to numerous 
phone calls by the Government Secretariat to attend an 
emergency Cabinet meeting and, since he was not 
present, his conduct was not discussed.  On June 16, 
MPRP caucus head Idevkhten told the Embassy that a 
press report that Gundalai's dismissal had been 
proposed the previous day was untrue; the subject had 
not come up. 
 
¶8.  (SBU) While the government was meeting to deal with 
the Badraa stabbing Thursday morning, Gundalai remained 
at the Boroo Gold site.  According to Boroo Gold, an 
official in the Prime Minister's Office told it near 
mid-day that the PM was working through official 
channels to get Gundalai to return the 70 miles to 
Ulaanbaatar.  Gundalai did leave the mine site at 2:00 
PM on June 15 (other protesters remained), and held a 
press conference immediately upon his return to the 
capital.  (NOTE:  DCM observed Gundalai mid-day June 16 
at a UNDP-sponsored community development event in 
Ulaanbaatar attended by the Prime Minister.)  Gundalai 
and other protesters repeated claims that the death of 
a 60-year old protester had occurred after Boroo 
security guards used stun guns.  (Note: At the press 
conference on Badraa's murder, Police Chief Sandag- 
Ochir said that final results were not in, but the man 
had been in poor health, and had become short of breath 
and distressed while protesters were climbing out of a 
mine pit they had broken into.)  At its own press 
conference in the morning, Boroo Gold officials 
condemned threats to mine personnel by Gundalai and 
other protesters, and said the protester had apparently 
died of a heart attack. 
 
Comment: Stay Tuned Next Week 
----------------------------- 
 
¶9.  (SBU) We believe the Government will take up 
Gundalai's behavior only after Badraa's Monday funeral. 
One likely occasion is the regular Cabinet meeting on 
Wednesday.  If a decision were made to remove Gundalai, 
the opportunity might be taken to make other changes in 
the coalition government.  Minister of Industry and 
Trade Jargalsaikhan is another loose cannon in the 
Cabinet.  If made, those changes would not imperil the 
MPRP-led government.  Both Gundalai and Jargalsaikhan 
are their parties' only MPs.  The MPRP has 38 MPs (out 
of 76 total including one vacant seat) on its own, and 
expelling Gundalai and Jargalsaikhan would leave two 
other parties with eight MPs as partners -- plus the 
option of bringing in the many Democratic Party MPs who 
tried to join the new government in late January.  The 
latter plan likely would have the happy side effect for 
the MPRP of further splitting the Democrats.  If the 
government fails to act against Gundalai or dithers too 
long, then post believes Mongolia's already-wavering 
reputation among foreign investors will suffer a 
further blow. 
 
SLUTZ