The half-brother of ousted UK Prime Minister Boris Johnson says he will bring a $50mn lawsuit against Mongolia to try to recover an investment into a mining project that went horribly wrong.
As followed by bne IntelliNews, Maximilian Johnson, who works for the Hong Kong-based fund GRF2, invested $19mn along with several other big investors into the Zasag Chandmani multi-metal mine, but claim the mine’s owner, Buyantogtokh Dashdeleg, and two other senior managers at the mine, the CEO, Erdenebatkhaan, and the CFO, Tsend-Ayush of the project company Zasag Chandmani Mines, ran off with most of the money.
Initially Johnson and GRF2 took the case to the local authorities and arrest warrants were issued for the men and their passports were confiscated. However, in 2019 Dashdeleg appealed to a regional court that overturned the arrest warrant and he immediately skipped town and is now believed to be in the US.
The investigation has lain fallow since then, spurring Johnson to action. Johnson sent a notice of dispute to the Mongolian authorities on July 27 under the terms of the country’s bilateral investment treaty signed between the UK and Malaysia. The case is being brought by the Malaysia-based GRF Paragon, part of the fund’s group of holdings, Global Arbitration Review reports. The investors are represented by Signature Litigation in London.
Johnson has had a colourful career and came to Mongolia by way of Hong Kong. Born in Brussels where his father was working for the European Commission, he studied Russian at Oxford and ended up as a metals trader in Hong Kong for five years. He also did a stint at Goldman Sachs, where he got to know Simon Murray, the former head of investment company Hutchison Whampoa and commodity trader Glencore. Murray hired Johnson to work on mining investment projects in Mongolia due to his Russian skills and experience in the metals business.
GRF2 invested $19mn into the Zasag Chandmani Mines project between 2016 and 2018 via a series of loans to local companies, along with several other larger funds, but relations deteriorated and the funds soon started to demand their money back. Johnson took the case to the local economic crimes and fraud squad, which opened an investigation, and initially it looked like they would take action, until Dashdeleg skipped town.
Since then, the investors say Mongolian authorities have shown “prevarication, evasiveness and manifest inactivity”, while the criminal case has been “played like a ping pong ball” between different authorities, Global Arbitration Review reports. The Mongolian Investigation Bureau closed the investigation in 2021 confirming that fraud had occurred and recommended the case be transferred to court. However, despite a Mongolian legal requirement that the case be transferred within one month, a court was never assigned and the case has been in limbo ever since.
The public prosecutor sought to return the case to the investigation bureau on the basis that the witnesses were outside Mongolian jurisdiction and told the investors they would have to wait for Dashdeleg to return to Mongolia before the case could proceed. However, the public prosecutor’s office refused to reopen the case so the public prosecutor eventually issued indictments against the two other executives and the mine itself in February this year.
The indictments were never served and were withheld by the prosecutor in June as the prosecutor attempted to return the case to the investigations bureau again for further investigation. The investors have called the prosecutor’s actions a “blatant denial of justice” which contravenes Mongolia’s obligations under the investment treaty with Malaysia.
Dashdeleg has denied the fraud allegations. He told London’s Financial Times in November that the criminal complaint against him was spurious and that Johnson was trying to wrest control of the mine from him. Dashdeleg also said that he had left Mongolia for a medical procedure.