Dig for truth on diamond deal

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Dig for truth on diamond deal

State prosecutors will embark on a criminal investigation into a high-profile scandal related to diamond mine development in Cameroon and stock price rigging involving top government officials. The Board of Audit and Inspection has concluded an internal investigation that has only raised questions about the government’s role.

The case dates back to late 2010 when the Ministry of Foreign Affairs and Trade issued a press release that said Seoul-based CNK International had won a deal to develop a mine near the southeastern town of Yakadouma with an estimated 420 carats in diamonds. The reserves were ridiculously overstated, but the developer’s stock price on the technology-laden Kosdaq market shot up based on the news. The state probe found that government officials and their relatives had purchased shares in the company before the press release and raked in hefty profits. Kim Eun-seok, the ambassador in charge of energy and resource development had ordered the press release, according to the investigation. His secretary and brother as well as a senior official at the state-run Korea Resource Corp. made huge profits from stock purchases.

But the questions do not end here. Kim allegedly met with Park Young-joon, the former vice minister of Knowledge Economy, Cho Joong-pyo, the former vice minister of the Prime Minister’s Office, and Oh Deok-gyun, the chairman of CNK International, many times before orchestrating the government news release. It is likely that there could have been a command from someone higher than vice-ministerial level on the entire process of aiding the CNK deal and its stock price, according to circumstantial evidence handed to the prosecution.

Lawmaker Jeong Tae-keun has insisted that two key inner circle figures have received CNK stock warrants at below market prices. Park Young-sun, an executive of the opposition Democratic Unified Party, also claimed that Oh sold stock warrants in his company at cheap prices to people close to the president. The focus has now shifted to other political officials that received warrants at a bargain.

Prosecutors have raided CNK headquarters and banned Kim, government officials, the CNK chairman and members of his family from leaving the country. They will likely be summoned next week. The probe will focus on why the Foreign Ministry distributed the press release and who earned how much from stock price gains. The prosecution will also have to discover whether the plot was a simple stock price scam or corruption involving high-rank officials.
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