Kleptocracy in Mongolia: Deutsche Bank As Batbold’s Enabler

To the left is a document showing how Deutsche Bank helped Mongolian politician Sukhbaatar Batbold hide assets offshore (full-size copy here). Written by Deutsche Bank executives in Hong Kong, it asks the bank’s Guernsey Island office to “establish and manage the offshore trust structure The Quantum Lake Trust on [Batbold’s] behalf.” The authors assure their Guernsey colleagues that there no reason to be suspicious about the request:

“We are unaware of any activities in which the above client [Batbold] engages which leads us to suspect that the client is involved in money laundering.” In fact, on the day the letter was written Batbold was a Member of Parliament and between 2004 and 2006 was Cabinet Minister of Trade and Industry (here). In money laundering terms he was a “politically exposed person.” As a consequence, Deutsche Bank was required to scrutinize his past activities before creating the trust and to closely monitor all future transactions with the bank or the trust to ensure they were lawful. There is no evidence Deutsche Bank ever conducted what the money laundering law terms this “enhanced due diligence.”

Two weeks ago Batbold denied ever having “any open or hidden accounts, money, apartments or property in the offshore zone” (here), but as the letter and other documents made public last Friday show, he is at least prevaricating if not lying. He has or has had numerous accounts and properties offshore. Batbold’s representative ducked questions GAB has asked (here) about the trust and Batbold’s offshore properties, issuing a short, blanket denial reprinted below.

The documents were disclosed in a filing in federal court February 12. Three agencies of the Mongolian government there ask the court to order JPMorgan Chase Bank to produce records they believe will help establish how much Batbold and his accomplices have stolen from the government through their corrupt activities. The Deutsche Bank Hong Kong letter is one of several documents that constitute exhibit seven to the affidavit of British lawyer Sarah Walker submitted in support of the request. The others are emails sent July 14-15, 2015, between a Deutsche Bank employee in the Guernsey trust division and an employee of Trident Trust.

Trident is a British firm renowned for its expertise in setting up offshore corporations and trusts that can disguise an asset owner’s identity, and Deutsche Bank was asking Trident to undertake an action involving Premier Edge Ltd, a BVI company that owned apartments in London.To comply with Trident’s obligations under the anti-money laundering laws, the Trident employee asked Deutsche Bank to send certified copies of the passports of the beneficial owners of Premier Edge (page 8 of exhibit 7). In response, Deutsche Bank provided one passport, that pictured below —

page 9 of exhibit 7

In the email to which Batbold’s passport is attached, the Deutsche Bank employee stressed that the fact Batbold owned Premier Edge was not to be shared with anyone without Batbold’s approval, writing that “this client has high confidentiality requirements” (page 2 of exhibit 7).

(The authenticity of Batbold’s passport is certified by two Deutsche Bank employees in their capacity as directors of Regula Limited. Regula is a shell company created by Deutsche Bank. The International Consortium of Independent Journalists reports that it has been implicated in Deutsch Bank’s money laundering activities.)

Upon discovering the documents in the court filing, GAB wrote Batbold’s representative to ask if the passport pictured above was indeed Batbold’s, if Batbold had in fact created the Quantum Lake Trust, whether he was the beneficial owner of Premier Edge, whether Premier Edge owned two luxury London flats, and whether he had “high confidentiality requirements” concerning his asset ownership. The representative’s answer is below:

“This is part of an ongoing political campaign to smear Mr Batbold’s well-earned reputation internationally and in Mongolia. As it has been stated before neither Mr Batbold nor anyone affiliated to him owns the apartments in question. As required by Mongolian law, he has no offshore assets either. As you seem little interested in presenting any accuracy or balance regarding Mr Batbold, we will conclude this exchange by stressing that Mr. Batbold will continue to vigorously fight the smear campaign as he has successfully done in the New York court.”

Earlier posts recounting a case in a New York state court where allegations of Batbold’s corruption can be found are here, here, here, and here.

Editor’s note. This post initially stated Batbold was Chief of the Mongolian Cabinet Secretariat at the time he asked Deutsche Bank to establish an offshore trust for him. As a reader noted in a comment, it was Sunduin Batbold not Sukhbaatar Batbold that was the secretariat chief. Sukhbaatar was a senior member of Parliament and according to Wikipedia was or had just been Minister Trade and Industry at the time he requested formation of an offshore trust.

8 thoughts on “Kleptocracy in Mongolia: Deutsche Bank As Batbold’s Enabler

  1. Richard you are making simple mistakes that make you look bad and hurt this blog.
    Everyone in Mongolia will tell you that the Batbold who was chief of cabinet in 2006 was Sunduin not Sukhbaatar. You must have been able to check this, so why are you getting it wrong?
    The law against offshore assets started in 2017 so if Sukhbaatar did have a trust before then it was legal. We know he is a rich man.
    President Battulga has offshore assets in Singapore illegally after 2017 we hope you will ever investigate that?

    • Thanks for catching the error. The Wikipedia entry for Batbold (Sukhbaatar that is) reports he was was elected to parliament in 2004 and became Cabinet Minister of Trade and Industry between 2004 and 2006. I had assumed he had moved up in the cabinet reshuffle in early 2006. There are reports he was Deputy Foreign Minister at sometime during this period. Is that correct?

      As a cabinet member or indeed even as an MP, he would have still been a politically exposed person at the time he had the trust formed, and Deutsche Bank would still have been required to conduct enhanced due diligence before creating it. Indeed, it might make the omission that more egregious given the responsibilities he would have had as head of the trade and industry ministry.

      I wasn’t aware of a special law on reporting offshore assets. I do know the law from 2006 required officials to report their assets wherever located, and according to the papers filed in the federal court, Batbold did not disclose the trust or his ownership of Premier Edge. Is that correct?

      GAB reports on investigations carried out by credible entities. In the Batbod case the government of Mongolia. Do let GAB know of any credible investigation of Battulga.

  2. Pingback: OTHER THINGS YOU MAY HAVE MISSED – FEBRUARY 20 – raytodd.blog

  3. The IAAC which is one of Mongolia’s 4 investigative units was set up as a requirement by the Americans before the Millenium Challenge $383 million USD would be paid. They require all public officials to make an annual statement of their assets .

    • The World Bank claims it was responsible for requiring Mongolian officials to declare their income and assets each year. It reports that this requirement was one of the main outputs of its Governance Assistance Program —

      “The government’s system for IADs was established by the Anticorruption Law of
      2006. The IAAC was set up to run the system of collecting and analyzing IADs
      and to impose sanctions for noncompliance. In 2012, 99.9 percent of 41,000 public officials declared their property and income to the IAAC. The GAP supported various training and capacity building activities for the IAAC staff to enhance the ability to conduct ongoing monitoring and analysis of the declarations.” http://documents1.worldbank.org/curated/en/938151583969268984/pdf/Mongolia-Governance-Assistance-Project.pdf

  4. I can’t agree with that comment from the World Bank .I would like to send you some articles I wrote about the Iaac and the “death” of it’s head in Australia. Could you give me an email address to send the articles?

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