SouthGobi's top shareholder  is Turquoise Hill Resources which means Rio
.... grabbing bank accounts is pretty serious action ....add to that one Rio connected OZ Lawyer in jail  ..that story further down the page ...  quite a framework for
The Oyu Tolgoi  CU mine talks
...what an opera...Rio has messed up big time


Thu Feb 7, 2013 8:01am EST

Feb 7 (Reuters) - Canadian coal miner SouthGobi Resources Ltd said Mongolia's anti-corruption authority has imposed restrictions on the company's Mongolian unit, including its local bank accounts, as it investigates asset sales.

The orders restrict the use of in-country funds but are not expected to have any material impact on the company's activities, said SouthGobi, which is controlled by Rio Tinto Ltd .

Mongolia's Independent Authority Against Corruption (IAAC) launched an investigation last year into the divestment of some SouthGobi licenses to third parties and the involvement of government officials, SouthGobi said last year.

The company said in December that IAAC had concluded its questioning of SouthGobi's Chief Legal Counsel Sarah Armstrong and that she was no longer a suspect.

Neither SouthGobi nor any of its employees have been charged with any wrongdoing, the company said on Thursday, adding that it was reviewing the legal process under which the restrictions have been imposed.

In September, Aluminum Corp of China Ltd (Chalco) dropped its $926 million bid for a majority stake in SouthGobi due to political opposition from Mongolia. SouthGobi fired its Chief Executive Alexander Molyneux soon after.

SouthGobi's shares have fallen 72 percent to C$2.20 since touching a high of $7.77 in April.

Mongolia, which borders China and is home to some of the world's biggest mineral deposits, is wary of the growing Chinese presence in its mining industry and suspended SouthGobi's mining licenses following the bid by state-controlled Chalco.

SouthGobi, whose top shareholder Turquoise Hill Resources Ltd is majority-owned by Rio, owns the Ovoot Tolgoi mine located about 40 km (25 miles) north of the Mongolia-China border.


Aussie mining lawyer Sarah Armstrong held in Mongolia

RIO Tinto is embroiled in another potential Asian corruption scandal with Australian mining lawyer Sarah Armstrong being held in booming, resource-rich Mongolia.

It is believed the 32-year-old chief lawyer for Rio subsidiary SouthGobi Resources is being held as a witness to alleged corruption and money-laundering.

A spokesman for Foreign Minister Bob Carr said Ms Armstrong had been detained as a witness and she still had her passport.

Four months ago, she signed a complaint against the Mongolian government.

It is the second time in three years Rio has run into trouble in the region. In 2009, four of its executives, including Australian Stern Hu, were arrested and jailed in China for bribery.

Dismissing earlier reports she had been arrested, Senator Carr's spokesman said Ms Armstrong had been stopped on Sunday as she tried to board a flight at Ulaan Baatar airport to Hong Kong.


"They haven't taken her passport but they've asked her not to leave the country," he said.

"I understand it's in relation to an investigation they're doing into someone else, that she might be a witness to or have information of. Who they are is a mystery at this point."

Ms Armstrong's mother, Yvonne, said last night she had spoken to her daughter and she was distraught.

"I've understood the situation for a long time. It's pretty hairy, certainly when it's happening to your own daughter," she said. "We've heard from her. She rang not long ago, actually. We just hope she gets out safely, basically.

"Last night, she actually phoned my son rather than cry on the phone and upset us."

Senator Carr's spokesman said Ms Armstrong was scheduled to be interviewed by authorities on Monday, but it was postponed until today or tomorrow.

The spokesman said it had not been established what laws were being used to stop her leaving Mongolia. Australian consul-general to Ulan Baatar Dave Lawson has met with her.

Her travel ban comes only weeks after Rio rejected a move by the Mongolian government to recast its investment in the country's biggest mining project, the copper and gold mine Oyu Tolgoi.

Ms Armstrong's plight islooming as a huge test for Mongolia's increasingly uncertain investment environment.

SouthGobi lodged a Notice of Investment Dispute with the Mongolian government four months ago. Ms Armstrong signed it as the company's lawyer.

The parties had six months to resolve it otherwise it would go to court. It is still in the process of resolution.

The complaint alleged the Mongolian government tried to seize several hundred million dollars worth of coal from SouthGobi Sands, the group's Mongolian operating company. It also claimed officials asked for bribes - a commonplace event in Mongolia.

Ms Armstrong is free to move about within Mongolia, but is the subject of a travel ban. Rio is believed to have supplied her with security.

"SouthGobi Resources Ltd notes several recent articles in Mongolian and international media regarding charges against SouthGobi and some of its employees," spokesman Dave Bartel said in an emailed statement.

"Neither SouthGobi nor any of its employees have been charged with any wrongdoing. SouthGobi continues to co-operate with the Mongolian government agencies, including the Independent Authority Against Corruption, in their ongoing investigations."

Mrs Armstrong said her daughter had come home to Rosebery on the Tasmania west coast for a visit last month.

'She was home - she was home on the 20th of September for 24 hours," she said. "She came home on a Thursday, for a surprise. It was beautiful.

"We've been overseas and met up with her a few times on holidays. I haven't been to Mongolia with her, but I certainly understand that, basically, compared to Australia, the safety is . . . I mean, she's had bodyguards most of the time in the last four years."

Mrs Armstrong said her daughter had not been charged by Mongolian authorities.

'I don't want to jeopardise anything for her," she said.

"She's been detained in the country.

"She's not allowed out of the country. They've confiscated all of her rights to leave the country.

"My phone hasn't stopped all day."

Ms Armstrong studied at the University of Tasmania and in Japan. After returning to Australia, she worked as a legal adviser to Xstrata.

She has worked in Hong Kong and Mongolia for the past four years and has been an open critic of the Mongolian stock exchange's listing rules.

Former boss Neal O'Connor, general counsel and company secretary of Xstrata Copper, was shocked by the case.

"She's a bright thing. She speaks four languages fluently," he said.

"I hope she's not in any real trouble."

Sources in Mongolia described Ms Armstrong as a very accomplished lawyer with a good reputation.

Apart from Rio, there are dozens of Australian companies with operations in Mongolia, including Leightons and Aspire Mining.

Like its neighbour China, Mongolia - although democratic - is riddled with corruption. In April, former president Nambaryn Enkhbayar was charged with corruption.

SouthGobi is Mongolia's biggest coalminer and was the subject of a failed takeover bid by Rio's largest shareholder, the Chinese-owned Chinalco.

Additional reporting: Paul Garvey