Mongolia Bars SouthGobi’s U.S. Chief From Leaving Country

Mongolia has banned Justin Kapla, a U.S. citizen and president of Rio Tinto Group’s SouthGobi Sands LLC coal mining unit, from leaving the country as part of a probe into corruption among domestic officials.

Kapla was designated as a witness in a criminal case against D. Batkhuyag, the former chairman of Mongolia’s mineral resources authority, SouthGobi Sands said in an e-mailed response to questions yesterday. Batkhuyag was yesterday jailed for six and a half years for illegally issuing over 120 mining licenses, according to Mongolian news agency

“We are aware of the case of Justin Kapla, who has an exit ban in Mongolia,” a spokesman at the U.S. embassy in Mongolia said by phone, declining to be named due to government policy. “We are in touch with Mr. Kapla and are providing appropriate assistance. Due to privacy considerations we are unable to comment further.”

The restriction placed on Kapla is at least the second for a SouthGobi executive, following the travel ban on chief legal counsel Sarah Armstrong, an Australia native, last year. The Ulan Bator, Mongolia-based company, whose Hong Kong-listed parent SouthGobi Resources Ltd. (1878) is majority owned by Rio, has been under scrutiny from Mongolian authorities since last April, after state-run Aluminum Corp. (2600) of China Ltd.’s offer to buy it.

Kapla said he couldn’t comment on the ban when contacted by phone by Bloomberg News. SouthGobi said it won’t comment further on the matter. Mongolia’s Independent Authority Against Corruption, which is conducting the probe, didn’t reply to questions e-mailed to its general inquiries address. Its officer for international affairs said by phone she couldn’t comment.

Rio Tinto declined to comment on Kapla’s travel ban, the company said in an e-mail.