Mongolian president to pardon jailed foreign miners

ULAN BATOR - Mongolian President Tsakhiagiin Elbegdorj will pardon three foreign mining executives including an American jailed on tax evasion charges, media reports and aides said Wednesday, as he seeks to encourage overseas investment in the vital sector.

US citizen Justin Kapla and Filipinos Hilarion Cajucom and Cristobal David were each sentenced to more than five years late last month and have since been in a maximum-security prison.

Sprawling and sparsely-populated Mongolia enjoyed world-leading economic growth in recent years -- peaking at 17.5 per cent in 2011 -- on the back of a minerals boom exemplified by the giant copper and gold Oyu Tolgoi mine, operated by Anglo-Australian resources giant Rio Tinto.

But that expansion has slumped to troubling levels, as rising resource nationalism, a global resources bust and an increasingly stringent investment environment led many foreign firms to abandon the country, and the three foreigners' jailing sent a chill through potential investors.

Foreign direct investment into Mongolia dropped 74 per cent last year.

The trio's pardon letters are to be finalised by Sunday, reputable online news site reported Wednesday, citing sources in the president's office.

"According to Mongolian law, the president has the right to pardon whomever he so choses," human rights and legal policy advisor to the president Chadraabal Unurbayar said in a statement released to the media.

"In this case, these people are just first-time offenders, and the case is just tax-evasion, so they have the full right to request a pardon from the president," Unurbayar said.

The president on Wednesday pardoned three Mongolian citizens serving time for tax evasion, according to his website, in a move seen as seeking to avoid accusations of bias toward foreigners.

The charges stem from a 2011 tax dispute with their former employer, coal miner SouthGobi Sands, that dragged on for years before the three were indicted in 2014.

SouthGobi Sands' parent company, Toronto- and Hong Kong-listed SouthGobi Resources, filed an appeal against the verdict on February 18.

Days earlier, the three jailed foreigners penned hand-written letters to the president asking for pardons and to be allowed to leave the country.

Before entering prison, Kapla, Cajucom and David had been banned from leaving Mongolia for nearly three years.