U.S. Should Suspend Mongolia Aid After Kapla Jailed, Says AmCham

The U.S. should suspend talks to give economic aid to Mongolia following the imprisonment of U.S. citizen Justin Kapla, the American Chamber of Commerce in Ulaanbaatar said today.

A suspension would be the first direct financial impact felt in Mongolia after a court sentenced Kapla, a native of Elk River, Minnesota, and two Philippine nationals to between five and six years in prison on the charge of tax evasion. The case has drawn condemnation from foreign observers and members of the Mongolian government.

The Millennium Challenge Corporation, a U.S. foreign aid agency, gave Mongolia $285 million over five years in a first agreement that concluded in September 2013. The MCC forms “partnerships with some of the world’s poorest countries, but only those committed to good governance, economic freedom, and investments in their citizens,” according to its website.

The suspension of talks on a second round of aid should commence immediately, said AmCham Chairman Jackson Cox. Mongolia’s gross domestic product was $11.5 billion in 2013, according to the World Bank.

The “award requires that certain thresholds toward transparency and justice and corruption are met,” Cox said by phone. “As long as a U.S. citizen sits in a Mongolian prison based on a flawed trial there should absolutely be an immediate suspension on the negotiations.”

Tax Evasion

U.S. ambassador to Mongolia, Piper Anne Wind Campbell, who attended the court case that ended Friday, said there were interpreting problems at the trial. Oyungerel Tsedevdamba, a Mongolian member of parliament, called the sentencing “too unjust and unbelievable.” The prosecutor, G. Gereltuya, declined to comment on the outcome when reached by phone today.

Kapla, Hilarion Cajucom Jr and Cristobal David, all former employees of SouthGobi Resources Ltd., have been detained in the country since an investigation into the company began in 2012. SouthGobi has denied the claims of tax evasion and said today there was “a complete lack of evidence to support this harsh verdict,” promising an immediate appeal against the court’s decision.

Paul Thomas, Public Affairs Officer for the U.S. embassy in Ulaanbaatar, declined to comment on whether the U.S. had considered suspending aid negotiations.

Munkhtur Tserendoo, spokesman for Prime Minister Saikhanbileg Chimed, declined to comment on the matter when asked by phone. A call to Minister of Foreign Affairs Purevsuren Lundeg went unanswered.

Philippine foreign affairs spokesman Charles Jose said the government is studying the implications of the case and will comment in due course.

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