A Mongolian businessman has accused Boris Johnson’s half-brother of pursuing a spurious fraud complaint against him in order to wrest control of a mining project.
Max Johnson, the youngest son of the UK prime minister’s father Stanley, is seeking to recover a $19m investment in the Zasag Chandmani mines on behalf of Simon Murray, the former chair of Glencore.
After allegations from Johnson, the Mongolian police have investigated ZCM’s owner Buyantogtokh Dashdeleg on suspicion of embezzlement and money laundering and sent a report to the general prosecutor.
Buyantogtokh, who is seeking asylum in the US, fiercely denies the allegations and in his first public comments on the matter said Johnson put “huge pressure” on the Mongolian government to start criminal proceedings. Although a trial has been ordered, a case has yet to be called to court.
“I cannot afford to remain silent any more,” Buyantogtokh told the Financial Times. “The Mongolian government is trying very hard to attract foreign investment . . . and it is extremely challenging for them to push back against someone like Max Johnson.”
The dispute between Johnson and Buyantogtokh comes at a sensitive time for Mongolia, which needs more foreign capital to develop its natural resources but is locked in a bitter row with Rio Tinto over a late-running $6.8bn underground copper project.
Buyantogtokh insisted he could prove the money invested by Murray’s investment vehicle GRF Paragon was appropriately spent. “There are videos of the construction progress which I can share with anyone interested to verify this,” he said, adding that if the evidence against him was so overwhelming, “one would reasonably ask why this case is still ongoing two years later?”
“This matter is 100 per cent a civil matter and I’ve tried on many occasions to resolve it with Max. I have never said that I don’t owe GRF money and I have tried to reach an amicable settlement many times with Max,” he said. Buyantogtokh fears he could be stripped of the project if he is found guilty of fraud.
A former child actor, Johnson was educated at Eton and Oxford university, where he studied Russian. He first visited Mongolia in 2006 during the Naadam festival of traditional sport. He “fell in love with the country” and made a promise “to find some career choices that would bring me back here”, Johnson told Eagle News during a visit to Mongolia in September.
“In 2016 when Murray invested in Mongolia I was obviously aware,” said Johnson, who knew Murray from his days as a metal trader in Hong Kong. “He asked me to join the project in 2018, which I did.”
Murray’s private investment group GEMS set up GRF in 2015 to invest in ZCM, owner of a high-grade copper, gold and iron project.
Between 2016 and 2018, the fund invested $19m in ZCM in return for convertible loan notes — its only asset — that it could eventually exchange for a stake in the company.
Six months after the final tranche of cash was transferred, Johnson joined the project.
In Johnson’s telling of the story it became clear to him that the $19m invested by GRF had not been spent on developing the mine. In 2019 he reported his concerns to the Mongolian police, who launched an investigation, at which point work on the mine stopped.
“We would very much like the case to be heard in court,” Johnson told Eagle News. “Obviously we will respect the decision of the Mongolian judicial system — it is an independent, impartial authority.”
Buyantogtokh says these allegations are false. Independent analysis of ZCM’s financial statements between 2015 and 2018, prepared by accountants BDO and seen by the FT, found “no evidence proving cases of abuse of power and embezzlement and/or misappropriation of funds” by Buyantogtokh.
According to Buyantogtokh, a GRF team was actively involved with the project. “Not once did they raise an issue,” he said. “They visited the mine site every few months, visited Mongolia monthly for board meetings and received detailed monthly financial and operational reports from a team of expatriates working on this project.”
He added that Johnson resorted to legal proceedings only after Buyantogtokh acquired senior secured debt in ZCM from Noble Group, the commodity trader, in 2018.
“This put GRF in a very weak position as their debt was second ranking secured. I believe confronted with this reality, Max decided to pursue criminal proceedings as he had little civil recourse.”
Johnson said: “We cannot comment at this time due to the ongoing legal process but as soon as we can, we would be happy to do so.”
However, he told the Sunday Times in September that he was facing a personal loss of £1.5m in Mongolia and was “acutely aware” of the risks of any trading on the Johnson name.
Murray did not respond to requests for comment.
Asked why he had left Mongolia in 2019, Buyantogtokh said it was for a medical procedure. He decided not to return after learning that the authorities were investigating his wife, he added.
“Confronted with powerful adversaries, I felt my only chances of fairly resolving this entire matter was to go to the US and take my family with me,” he said.
Read More: Boris Johnson’s half-brother accused of false complaint in Mongolian mining dispute