BAI calls for sacking of diamond resources envoy
The Board of Audit and Inspection said Kim Eun-seok, Korea’s resource ambassador, should take responsibility for misusing his authority in intentionally promoting a particular company so people could profit from trading its shares with inside information.
Kim led the drafting of a press release issued Dec. 17, 2010, by the Ministry of Foreign Affairs and Trade that said 420 million carats of diamonds, or 2.5 times the global annual diamond production, were estimated to be buried in Cameroon mines that would be developed by local developer CNK International.
In the press release, the ambassador described it as an exemplary case of “resource diplomacy,” which the government was actively promoting at the time.
CNK’s stock value skyrocketed after the press release. Various people connected with the company, the government or public organizations allegedly purchased shares before the release.
The Board of Audit and Inspection said it will provide detailed investigation results about the involvement of two other high-ranking figures and the head of the company to the prosecution.
“We are being stern on people who caused public distrust by performing the government’s assistance inappropriately,” said an official of the BAI.
The BAI said that Kim was aware the information in the release was exaggerated after he was briefed twice by Oh Deok-gyun, CNK’s chairman, in December 2008 and January 2009.
The press release cited the United Nations Development Program and Chungnam National University as sources of the figures. The BAI said Kim knew by May 2010 that the figures did not come from the UNDP or from Chungnam National University.
CNK research in 2009 concluded that only 5.8 percent of the diamond reserves mentioned in the press release were in the mine. Kim knew the results of the research immediately, the BAI said.
The stock price of the company, which was 3,465 won ($3.10) a day before the press release came out, skyrocketed to 16,100 won on Jan. 10, 2010, three weeks later.
Two younger brothers of the ambassador purchased the shares in bulk beforehand, the BAI said.
The BAI said Kim’s two brothers purchased 80,727 shares, some valued as low as 1,430 won, between March 18, 2009 and Jan. 13, 2011. The value of the shares rose to 562.6 million won as of Aug. 31, 2011.
Oh made 5.1 billion won from trading his company’s stock, the BAI said. The Financial Services Commission requested a prosecution investigation into Oh last week.
The BAI said Kim shoulders even heavier responsibility for issuing another press release from the Foreign Ministry on June 28, 2011, saying the data in the original release was credible. The second press release was in response to an article by the Korea Economic Daily that said the ministry had hastily issued the first release. The company’s stock price surged from 7,400 won on June 27, 2011, to 18,500 won to Aug. 19, 2011.
The BAI said it also found three other government or public company officials benefitted from trading the stock or having their relatives do it. They included Kim’s secretary at the Foreign Ministry, a director at the Prime Minister’s Office and an official of the state-funded Korea Resources Corporation. The three should be punished, the BAI said.
By Moon Gwang-lip [email@example.com]
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