Lawyer 'coping well' with Mongolian ordeal

A friend of an Australian lawyer stuck in Mongolia in connection with an unpaid tax investigation says she is coping well.

Sarah Armstrong, 32, is being questioned by anti-corruption officials in relation to activities at a coal mine in the country's south.

The Tasmanian is the chief legal counsel to SouthGobi Resources, a subsidiary of mining giant Rio Tinto.

She was detained at the airport in the Mongolian capital Ulaanbaatar on Friday.

Luke Dean, who is a good friend of Ms Armstrong's, spoke with her this morning.

"She's a bit nervous about the situation and obviously just asking about if it's receiving any media attention here and...

making sure her parents are OK," he said.

"I can't comment on anything legal, but I think it's great that Australia's getting behind her and that they know that she's over there." The attache of the Mongolian embassy in Canberra, Hantulga Galaazagraa, has told the ABC that Ms Armstrong is a witness in a case alleging unpaid tax by a mining company.

SouthGobi Resources - one of the largest coal producers in Mongolia - has a wholly owned subsidiary, SouthGobi Sands.

"Mongolian anti-corruption authority is investigating the case against SouthGobi Sands," Mr Hantulga said.

He alleged the subsidiary had not been paying tax to the Mongolian authorities.

"The tax issue has been going on several months.

The investigation has been going on for several months," he added.

It has been claimed that about four months ago Ms Armstrong signed a document regarding corruption by Mongolian officials.

Mr Hantulga refused to comment on this.

"At the moment we don't have any detailed information regarding that case, so I have no idea," he said.

Allegations denied SouthGobi Resources spokesman Dave Bartel disputes the claims the company has unpaid taxes.

"We've received no indication from any government agency that there is any issue with tax statements, and to our knowledge we're current on all our taxes," he said.

Mr Bartel says Ms Armstrong was the signatory to a formal document lodged with the government in July.

"There was a notice of investment dispute that the company filed against the Mongolian government in July and Sarah was the person who signed that document," he said.

"It was primarily regarding some pre-mining agreements on licences that had not been granted.

"We'd applied for those back in late 2011 and they had not been granted and we felt that the path that we needed to take was to file the notice of investment dispute." Mr Bartel was unable to clarify what assistance SouthGobi Resources was providing to Ms Armstrong.

He added the investigation involving her was not having an impact on the company's operations.

Mr Hantulga said Ms Armstrong's case could cause problems for Australian mining interests in Mongolia.

"Last year we had around 140 medium-sized company who were interested in investing in Mongolia," he said.

"So it might cost, in this case it might cost the interest of Australian mining companies to Mongolia." Mr Hantulga says he expects Ms Armstrong will be allowed to leave the country within days.

Editor's note: (14/11/12) A picture of the Oyu Tolgoi mine and a caption saying it produced 30 per cent of Mongolia's GDP has been removed from the article.

The mine is yet to be brought into operation, but some expect the mine could eventually account for up to 30 per cent of the country’s economic output.

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