Tag Archives: Criminal Law

New Liabilities for those who Advise Mongolia CEOs



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Parliament has recently passed a bill to amend the Mongolia Criminal Code. The Amendments will create new liabilities for adviser’s of corporate CEOs, whose actions result in offenses such as money laundering, terrorism, bribery, environmental abuse, actions that threaten the nation’s economic security, or the abuse of state property.

Under previous law, only the CEO his or herself could be held liable in such cases. The amendments will hold those around the CEO, who advised or pressured a certain course of action to also take responsibility.

These changes will apply not only to private corporations, but also to state owned enterprises. It is interesting to note that while the Criminal Code previously contained over 80 items imposing certain legal liabilities on legal entities such as companies, the amended Code now has less than 30.

This is in general expected to make it easier to establish and operate a new company in Mongolia. The intention of the law appears to be to make it easier for companies to do business by providing more free dome of operation, while at the same time increasing liability for offenses at the top levels.

Human Rights Development in Mongolia



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Mongolia Foreign Affairs Minister Ts.Munkh-Orgil recently spoke at the United Nations Human Rights Council where he presented the current human rights policies and measures undertaken by the Government of Mongolia.

Human rights are essential values enshrined in the Constitution of Mongolia, which was one of the original countries to implement the Millennium Development Goal Number 9 as a national plan to improve human rights and promote democratic government.

The Mongolian government’s 2016-2020 action plan places a great priority on continued legal reforms based on the preservation of human rights. Mongolia is working toward elimination of the death penalty, and amending the criminal law and other laws to protect the rights of children and the elderly, as well to protect against domestic violence; combat human trafficking; enhance the transparency, accountability, and independence of the judiciary; and fight corruption in the public sector.

Mongolia’s commitment to democracy and fairness is a major positive point for many foreign businesses and NGOs operating in Mongolia. As the first international law firm established in the country, LehmanLaw Mongolia is excited to see continued progress and development in this area among many others in Mongolian law and society.

Basics of Corruption Prohibitions for Mongolian Officials



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Following on our previous discussion of Mongolia’s Anti-Corruption Law, today we will take a closer look at restrictions in the law on Mongolian officials. The law applies to:

  • Political, and administrative officials;
  • State or locally-owned legal entity’s management;The Chairperson of the National Council;
  • The General Director of public radio and television;
  • Management of NGOs performing work on behalf of the government;  and
  • Electoral candidates.

 These officials are prohibited from engaging in the following activities:

  • Exerting pressure on, intervening in or influencing civil servants in the course of duty;
  • Giving or offering to give rewards to others or to intermediaries;
  • Illegally granting or promising to grant preferences to any individual or to a legal entity;
  • Illegally limiting the lawful rights of others in the course of duty;
  • Misusing official budget or donated funds;
  • Requiring others to provide rewards in connection to the officials performance of duty;
  • Misusing or exceeding such official’s power or position;
  • Using official position to acquire property, or enjoying preferential or privileged  rights; and
  • Unjust enrichment.

Top government officials are required to to prepare and file an accurate and true declaration of income. The declarers must submit their declaration within 30 days of their election or appointment to office. An annual declaration is due on February 15 of each year during the period of public service.

Where an official is unable to “explain” assets or income in excess of 6 month’s salary, such earnings may be declared illegal unjust enrichment.

Introduction to Mongolia Anti-Corruption Law



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For Multinational Companies Anti-Corruption policies and legal compliance is a major priority.  The Anti-Corruption law of Mongolia was enacted by the Parliament on 6 July 2006 and has since been amended several times.

The Law regulates the activities of political and governmental officials, officers and managers of state or local government owned entities, electoral candidates, and officials of some other organizations with an operational relationship with the government.

Certain specific officials are prohibited from corrupt activities listed in the law, and are additionally required to officially declare assets and income.

In addition to receiving bribes, the law penalizes giving bribes, or acting as an intermediary.

The law also outlines and regulates the structure, role and operational principles of the Mongolia Anti-Corruption Agency.

We will follow up over the next several days with a series of blog posts with more detail on this important topic.

Mongolia Set to Make Domestic Violence a Criminal Offense



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The Mongolia Law on Domestic Violence and Abuse was approved in 2004. However, the rate of domestic violence has not decreased. Unfortunately, rates of murder and the involvement of children in domestic violence have increased. As of the 1st half of this year, 764 cases of domestic violence have been reported, an increase of 30.4% from last year.  From 2010 through 2016, 95 people have lost their lives due to domestic violence. Research conducted by NGOs reveals that the level of unreported domestic violence could be 5 times higher than the official reported number.

The Law on Domestic Abuse and Violence had been revised and amended after 12 years. The revised edition was expected to be come into force on September 1, 2016 along with amendments to the Criminal Code, but was delayed. The decision to delay the law faced strong resistance by social groups seeking to protect thousands of women, children and elderly. As a result of social opposition, the government decided again to present the revised edition of the Law on Domestic Abuse and Violence to the Parliament on September 09, 2016.

The draft law was created with the goal to make domestic abuse a criminal offense and to allow for appropriate punishments for the promotion of safety for victims and prevention of the recurrence of domestic violence. Under previous laws, domestic abuse had been considered a minor offense punishable by a fine. If the revised edition is approved, domestic abuse will be a raised to be criminal offense. The revised edition of the Law on Domestic Violence and Abuse will include a punishment of 1-3 months of imprisonment for domestic violence, 3-24 months of imprisonment for torture. Under the new law, a neighbor will be legally responsible to report domestic violence to the police if they are aware of it.

The revised edition of the Law on Domestic Violence and Abuse is expected to be enacted at the beginning of the Parliament’s fall session this year.

Even in Jail, There’s No Place Like Home



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The number of Mongolians studying, working and travelling for business purposes abroad has steadily increased since 1990. As Mongolia’s relations with foreign countries around the world expand, so have the numbers of Mongolians traveling abroad. Unfortunately, this also means the number of Mongolians convicted of crimes abroad has also increased. Currently there are a total of 130 Mongolian citizens now serving jail time in foreign countries. These individuals face many difficulties such as the language barrier, extreme climates, and different qualities and preferences for food. Additionally, due to distance, these inmates have very limited opportunity to meet with family which may visit.

The Mongolian Government making efforts at bringing some small relieve to these convicts of criminal offences abroad, but expanding opportunities for them to serve sentences in their home country.

In the last years, Mongolia ratified the international Convention on the Transfer of Sentenced Persons, established in Strasbourg on March 21, 1983. It has been ratified by 65 countries, including every country of the Council of Europe (except Monaco), in addition to Australia, Canada, Japan, South Korea, Mexico and the United States. Under the provisions of this convention, Mongolian convict within member countries have been transferred to Mongolia.  At the same time, foreign convicts in Mongolia can be transferred to their home countries via the Convention or through bilateral agreements with Mongolia.

Mongolia has concluded a Bilateral Treaty on the transfer of sentenced person with seven countries, namely Peoples Republic of China, Russia, Canada, Poland, Turkey, South Korea and Cuba. At the beginning of 2016, the Parliament approved the bilateral agreement with Government of Hong Kong Special Administrative Region of the People’s Republic of China. As a result, nine Mongolian convicts serving jail time in Hong Kong are now eligible to be transferred to Mongolia.

New Criminal Law Delayed



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The Parliament passed a new Criminal law and Law on Infringement earlier this year, both  were supposed to come into force in 01, September 2016. However, now the Head of the Secretariat of the Government of Mongolia explains that the process of education of relevant government officials, and advertisement to the public for new laws, has not been sufficient. In light of this, it seems the government employee who will be responsible to enforce these laws are not yet ready, further new regulations in connection with implementation of the laws must be implemented as well. There is also a need to restructure the organizations in compliance with the law which may take quite some time to accomplish.

With all of these factors in mind, it is proposed that the implementation date be set back to 07 July 2017. This should allow enough time to address the outstanding issues.

The New Law on Infringement Explained



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On Dec 4, 2015, the Parliament of Mongolia nullified the Law on Administrative Liability adopted on Nov 27, 1992, and passed the Law on Infringement. The new law will come into effect starting from September 1, 2016, up to this date the previous law will remain in effect. The new law was adopted in line with the revised version of the Criminal Law and all laws containing articles in connection with administrative liabilities are amended accordingly. The new law is intended to correct some problems encountered under the previous law.

According to the new law, main punishment types for infringements are “to fine” and “to deprive or restrict a right.” The former potential punishment of arrest for 7-30 days is removed. Fines range from 10 to 10,000 units for individuals and from 100 to 50,000 units for legal entities (a unit equals 2000 tugrugs). The amount of such fine is considerably higher than the fine imposed by the previous law.

Administrative liability aims to punish business entities or individuals which have breached the public order and hopes to prevent re-occurrence of such breach. However, the penalties imposed by the previous law did not have a strong deterrent effect on violators and there were several cases where the person charged with the administrative penalty committed the same offense repeatedly. This was the main cause leaded to the increase of the fine amount.
Beginning September 1, 2016, unless a breach of environmental, sanitation, labor, land, licensing, finance and audit laws rises to the level of a criminal offence, punishment for such action will be imposed pursuant to the Law on Infringement.

The new law consolidates approximately 1200 violations formerly specified in over 200 different legislation texts, and which were previously not unified under a consolidated legal policy. In the future, breaches or violations will be punished only according to the Law on Infringement. The law is expected to improve legal accountability systems and to ensure the promotion of public order.

The Law on Infringement has general and special parts similar to the Criminal Law. The law calls for penalties to match the nature of the regulatory infringement in proportion, so a small violation will not result in the maximum possible fine.

Imposing Criminal Liability on a Legal Entity Under the Newly Adopted Criminal Code



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On December 3, 2015, the Parliament of Mongolia adopted the updated version of the Criminal Code. The law will come into effect on September 1, 2016.  We will briefly outline the primary provisions as they relate to leveling penalties on legal entities.

Currently, in case a legal entity commits a breach of applicable laws, including the Company Law, Taxation Law and Land Law, the company will be subject to administrative liability and the company’s management will be liable to pay for damages caused to the company.

Under the Criminal Code, there was previously no provision assigning legal liability to a legal entity. In this circumstance only physical persons were able to be subjected to liability.

This has been amended as follows: If certain crimes specified in the Criminal Code are committed for and on behalf of legal entity or in its interest, the person which committed the crime will be excused from punishment and the legal entity itself will be subjected to the punishment. Additionally, if the act is considered a crime, punishments will be increased and additionally compulsory measures will be applied.

Chapter 9 of the law states types of punishments for the legal entity. Depending on types of crimes specified in the special part of the Criminal Code, the legal entity will be subjected to the following punishment: fine, deprivation of rights and potentially dissolution.

  • Fine: A legal entity will be fined by an amount equal to 10,000 – 400,000 units. 1 unit is equal to 2,000 Mongolian tugrugs (approximately USD $10,000 -400,000 at current exchange rates);
  • Deprivation of rights: A legal entity’s right to carry out one or more operations may be restricted for 1-8 years;
  • Dissolution: In cases of serious violations, a legal entity may be dissolved, a court will decide matters regarding the confiscation of assets and distribution in compensation for damages incurred due to the crime and transferring the remainder to the state.

Globally, in countries such as USA, Australia, Canada, India, French, Switzerland, New Zealand, Netherland, Austria, Hong Kong and Scotland, a legal entity is subjected to criminal liability. In countries including Germany, Greek, Hungary, Mexico and Sweden, a legal entity is subjected to administrative liability. In Brazil, Bulgaria, Luxembourg and Slovak, a legal entity is not subjected to liability.

Generally, there are 2 forms of a criminal liability which may be imposed on a legal entity: derivative and institutional liability. The derivative liability is divided into i) liability assumed for actions of others and ii) equality liability.

For the liability assumed for actions others, the company assumes a criminal liability for the actions of any its employees.

For the equality liability, the company only assumes liability for the actions of persons at at least managerial level.

According to the institutional liability, the company assumes criminal liability independently on the basis of its policy, rights, operations and approach.

In the Criminal Code of Mongolia as revised, the principle of derivative equality liability will apply.