WASHINGTON: The United States has said it will attempt to seize two luxury apartments in New York owned by former Mongolian prime minister Sukhbaatar Batbold that it said were bought with the proceeds of a corrupt scheme.

Mongolia, a landlocked democracy sandwiched between its much larger neighbours China and Russia, is rich in deposits of coal, metals and other minerals.

A years-long mining boom has helped ease historically high poverty rates but also fuelled elite corruption that has sparked social unrest.

The US Justice Department on Tuesday unsealed a civil complaint claiming that Sukhbaatar used his position to award Mongolian mining contracts in return for the equivalent of millions of dollars in kickbacks.

He allegedly splashed US$14 million of that income on a pair of properties in Manhattan's ritzy Midtown and Upper East Side neighbourhoods, the department said.

"Today's forfeiture action sends a message that corrupt officials will not use our real estate market to conceal proceeds of crimes," said Breon Peace, US Attorney for New York's Eastern District, in an accompanying press release.

The Mongolian Prime Minister's office did not immediately respond to a request for comment on Wednesday, and an adviser for Sukhbaatar directed AFP to his legal representatives in New York.

According to the complaint, Sukhbaatar and his family used state-owned mining contracts to move money through shell companies to fund lavish lifestyles.

In one example, a company owned by Sukhbaatar's "trusted intermediaries" was handed a US$68 million contract despite having "no operational history, no mining expertise, and no financial or logistical infrastructure to execute commodity sales".

Millions of dollars from those contracts were then allegedly funnelled into foreign bank accounts, filtered through a succession of shadowy shell firms and finally spent on the apartments and other items.

Sukhbaatar, 60, served as Mongolian prime minister from 2009 to 2012 and continues to represent the ruling party in the country's parliament.

He was later named in the Panama and Pandora papers, two major leaks detailing the overseas financial affairs of wealthy individuals and politicians.

Mongolia will hold legislative elections in June, in which incumbent Prime Minister Luvsannamsrain Oyun-Erdene will seek to maintain the ruling party's majority in parliament.

 - AFP