US citizen Justin Kapla and two Philippine nationals Hilarion Cajucom Jr and Cristobal David were each sentenced to between five and six years’ prison, while SouthGobi itself was fined 35.3 billion tugrik ($US18.2 million) for tax evasion, though money laundering charges of some 200 billion tugrik were dropped.

Hong Kong and Toronto Stock Exchange-listed SouthGobi will appeal what it considers to be a “gross miscarriage of justice”, adding that may have to file for bankruptcy if the verdict was upheld.

The company’s subsidiary, SouthGobi Sands, said it was not a party to the criminal proceedings and was not allowed to call witnesses in its own defence – yet the court declared it to be financially liable as a civil defendant for a penalty of $18.2 million.

It is still waiting for a reason for the court’s judgement, which was the end of a 30-month ordeal for the former employees of SouthGobi.

SouthGobi said the experts appointed by the relevant authorities in Mongolia had issued four reports – one report after each series of investigations – which the company claimed where all different and contradicted one another in terms of content and final sums of purported tax evasion.

“The conclusions contained in the experts’ reports are neither supported by nor consistent with

Mongolian tax law or international accounting standards utilised by reputable Mongolian and international firms,” SouthGobi said.

“The company believes that the inconsistencies are manifest when considering the systematic changes in the sums of alleged tax evasion from one report to another.”

These inconsistencies and errors in the experts’ reports were recognised by the same panel of appointed judges from the Second District Criminal Court of Justice in August 2014, who at that time viewed the prosecutor’s accusations as lacking evidence and ordered the case be returned for re-investigation.

Toronto and New York-listed company Turquoise Hill, which owns 47.9% of SouthGobi, denied the charges against it and its employees, who have been the subject of a travel ban since 2012, but only formally charged in May last year.

Independent researcher Dale Choi based in Ulaanbaatar told Bloomberg that “a criminal conviction would make huge waves internationally”

“It would create very negative publicity. Foreign investors and executives would be scared of signing documents in Mongolia,” Choi said.

Foreign direct investment in Mongolia, which depends on the mining sector to fuel its economic growth, shrank by nearly 45% in 2013 and in the first five months of last year just $400 million was invested, a 64% year-on-year drop.