Coal miners jailed for Mongolia tax evasion seek pardon

Earlier this month, three ex-employees of SouthGobi Resources, a coal producer owned Turquoise Hill (TSE, NYSE:TRQ), were found guilty of tax evasion by a Mongolian court. Under Mongolian law, tax and other disputes are pursued in courts under the criminal code.

US citizen Justin Kapla and two Philippine nationals, Hilarion Cajucom Jr and Cristobal David, each received jail sentences of between five and six years, while the company was fined 35 billion tugrik ($18 million) for tax evasion. Money laundering charges of some 200 billion tugrik were dropped. SouthGobi said earlier if the tax verdict stands it may have to file for bankruptcy.

Turquoise Hill has denied the charges against it and its employees, who have been the subject of a travel ban since 2012, but only formally charged in May last year. SouthGobi president and CEO Enkh-Amagalan said there was a "complete lack of evidence to support such a harsh verdict." They will begin serving their terms immediately according to a court spokesperson.

SouthGobi understands their rationale for requesting a pardon, but continues to believe they have demonstrated their innocence throughout the investigation and court process

Last week SouthGobi issued a statement that it has learned that Kapla, Cajucom and David have requested pardons from the President of Mongolia Ts. Elbegdorj which, if granted, "would allow them to be released from prison and leave the country."

The Company understands that, as a condition of the potential pardon and whilst in a detention center in Mongolia, the three individuals were asked by the relevant authorities to elect in writing not to exercise their right to appeal. The Company supports its three former employees who are facing extraordinary and unjust hardships and understands their rationale for requesting a pardon. However, the Company continues to believe they have demonstrated their innocence throughout the investigation and court process.

Over the weekend Dale Choi of Independent Mongolian Metal & Mining Research who is based in Ulaanbaatar issued an appeal on "humanitarian grounds" to have the SGQ–3 freed coinciding with Tsagaan Sar (White Moon) celebration of the Lunar New Year in the country.