A British-Australian citizen jailed for 11 years in Mongolia over a soured mining deal has taken his case to the United Nations human rights council claiming he was denied a fair trial.

After a trial in July that lasted just two days, Mohammed Ibrahim “Mo” Munshi was jailed for 11 years and fined $15m over a coal deal struck between Gobi Coal and Energy, of which he was chairman, and a company owned by Chuluunbataar Baz, a member of a prominent Mongolian family.

Munshi is the latest in a string of foreign investors to find themselves slapped with arbitrary travel bans or jailed over business deals in resource-rich Mongolia, while local partners seek to seize assets or alter agreements.

The tactic – of which foreign embassies in the country are aware – has been described as “Hotel Mongolia”, a take on the Eagles song Hotel California, from which “you can check out anytime you want, but you can never leave”.

Munshi’s family say the 57-year-old’s health is failing and the prospect of 11 years in prison had devastated his family.

“My dad’s quite a tough nut,” Munshi’s son Arif told the Guardian. “But this is starting to break him down, he’s becoming unravelled.

“He was moved on Monday to the equivalent of a maximum-security jail ... we are worried about his safety, and he is fearful for his own safety. He is asking us to do anything we can to get him out. He is very much fearful for his life.”

Munshi has varicose veins in his legs that doctors advise require immediate surgery. He is also unable to access medication to ameliorate the condition and so is at the risk of deep vein thrombosis and potentially fatal blood clots.

Munshi is a dual UK and Australian citizen.

A complaint lodged with the UN human rights council – of which both the UK and Australia are members – alleges there were gross irregularities during his trial.

“There was no prima facie case presented against Munshi at his trial, and the prosecutor even obtained a summary of the prosecution case from Baz’s attorney during the trial and presented it as the prosecution case,” the complaint says.

“Munshi was not given a fair trial in that his ability to address the criminal court and give evidence in his own defence was unreasonably limited.”

The complaint also alleges Munshi has been subjected to cruel, inhuman or degrading treatment: held in solitary confinement, physically harassed by guards, abused and spat on by other inmates, and allowed to shower only once every two weeks.

The case is, according to the complaint, “the improper use of the Mongolian criminal justice system in an attempt by a well-connected Mongolian national to attempt to secure Gobi Coal and Energy assets located in Mongolia”.

Munshi’s dispute arose after Baz’s company, Monnis International, invested $10m in Gobi Coal’s proposed mining projects in the south-west of the country.

But when the global coal price collapsed in 2012, a proposed initial public offering was postponed, with the projects put on hold until global prices recovered. Other investors acceded to ride out the price dip, but Baz reportedly demanded his money back.

Attempts at arbitration failed, and when Munshi visited Mongolia in 2015 he was hit with a travel ban and his passports were confiscated. The dispute dragged on until mid-2017, when Munshi was suddenly arrested, tried, convicted in a two-day trial and jailed. Gobi Coal’s licence over coal deposits was also suspended.

In court documents from the trial Baz alleged he had been tricked into investing in the projects and defrauded of his investment.

“Munshi committed the fraud, made others incur loss, received property of others by his or others’ company accounts, and changed financial statements.”

The court documents state Munshi “made a living” – understood to mean he funded his personal lifestyle – with investors’ money.

Munshi has denied the allegations. Through his lawyers, he told the court he had not made, or sought to make, any personal profit from any of the investments in the project, or used any investors money for personal expenses. More than 180 investors have remained invested in the Gobi projects.

Munshi said the case was a business dispute and should be settled by international arbitration not by punitive use of the criminal justice system.

“This is not a crime,” court documents, seen by the Guardian, say. “There is no physical evidence or written documents to support [Baz’s] claim of fraud, only his oral allegations.

“During this period, I lost everything that belonged to me. I spent 15 years to establish my company and develop it. All this was lost.”

The court documents state that Baz repeatedly offered to abandon the criminal prosecution in exchange for some of his investment being returned.

Attempts by the Guardian to contact Baz have not been returned.

The case has been complicated by a separate dispute involving Gobi Coal and another Baz family company. In March 2016, the Hong Kong International Arbitration Centre ordered the Baz family to pay Gobi Coal $US11.5m over defaulted loans.

Within weeks of the arbitration decision, stories began appearing in Mongolian newspapers accusing Munshi of fraud.

He was arrested, tried, and convicted in a two-day trial in July last year, and has since been held in Detention Centre 461, the equivalent of a remand centre, in the Mongolian capital, Ulaanbaatar.

His health has deteriorated, and his contact with family, legal representatives, and consular officials has been severely limited.

A substantive appeal to an appellate court failed, a final appeal to a higher court will be heard in coming months.

Last week Munshi was moved from Detention Centre 461 to a closed prison on the outskirts of the capital. His family has been told he can receive one short visit every 90 days, and one long visit every 120 days.

Munshi’s Australian lawyer, Alisdair Putt, who filed the complaint with the Human Rights Council, said his client had been subjected to an unfair criminal proceeding in which almost no incriminating evidence was presented.

“There must be serious concerns about the adequacy of that process in that it seems to have been motivated by a Mongolian investor attempting to gain an extortionate commercial outcome.”

Putt said the commercial dispute should be arbitrated before an international committee, not put before a criminal court. Putt, a former investigator in the International Criminal Court prosecutor’s office, said the “Hotel Mongolia” phenomenon was a troubling development in the country, where travel bans and criminal charges were used to detain and pressure foreigners.

Some reports say up to 50 foreign investors have been detained in the country using the tactic, which has been acknowledged by embassies. Forty workers employed on the Oyu Tolgoi mine in the Gobi Desert had their passports seized last week over alleged visa irregularities. Most have since been allowed to leave.

Both the Australian and UK governments have highlighted the use of travel bans in Mongolia in travel advice, while the US state department has warned: “investors and local legal experts have grown to fear what they call the capricious and arbitrary use of travel bans by Mongolian officials, sometimes at the behest of private interests, as a means to coerce foreign investors to settle civil and criminal disputes.”

Putt said: “It is a common tactic, and many people are affected by this. This shows the potential risk, there may be trumped-up criminal charges laid in efforts to win a commercial outcome.”

Published Date:2018-01-23