Diplomat faces dismissal over diamond scandal

Diplomat faces dismissal over diamond scandal

Investigators of the Seoul Central District Prosecutors’ Office carry boxes out of the headquarters of diamond mine developer CNK International in downtown Seoul after a raid to secure evidence over a stock price rigging scandal involving the firm and a high-ranking Korean diplomat, Thursday. / Korea Times photo by Park Seo-gang Prosecution widens probe into illegal trade By Park Si-soo The state auditor demanded the Ministry of Foreign Affairs and Trade (MOFAT) dismiss a ranking diplomat Thursday for pocketing illegal profits by helping manipulate the stock price of a Korean company developing a diamond mine in Cameroon. The Board of Audit and Inspection (BAI) also asked MOFAT to discipline two other officials for benefitting from insider trading. It added the prosecution will be given detailed investigation results regarding a number of top-ranking civil servants. MOFAT said it will accept the agency’s calls and punish those responsible under the principle of “zero-tolerance.” The announcement by the BAI came on the same day that prosecution raided eight locations to secure hard evidence in a widening probe into a stock price rigging scandal centered on Ambassador Kim Eun-seok and mineral developer CNK International. Wrapping up a months-long inspection, the Amb. Kim Eun-seok BAI concluded in a statement that Ambassador Kim pressed MOFAT to issue a press release on Dec. 17, 2010, with deliberately exaggerated data that CNK had won the right to develop a diamond-rich mine in the African nation. CNK’s stock price skyrocketed immediately after the issuance of the press release. The press release, written based on Kim’s data, said the mine in Yokadouma, 520 kilometers east of Cameroon’s capital Yaounde, had an estimated 420 million carats worth of diamonds, more than twice the global diamond production. The BAI said the amount of diamonds buried there was estimated at one seventeenth of it, citing its on-site inspection and interviews with mine experts. The agency refuted Kim’s claim that the controversial diamond reserve was based on two separate geological reports on the mine _ one conducted by the United Nations Development Program between 1995 and 1997 and the other one by Korea’s Chungnam National University in 2007. The BAI said it had confirmed the U.N. report didn’t provide specific numbers regarding diamond reserves in the mine and the Korean university gave up its research due to the sudden demise of the professor in charge. Kim issued an additional press release on June 28 last year as the Korean media became skeptical of the first release. This said all information in the first release had been confirmed by the Cameroon government; but the BAI said it was not true. The two press releases were removed from the MOFAT website over the weekend. Kim was also accused of having leaked information to his family members and relatives before the public release of the news so that they could earn huge illegal gains by purchasing shares of the KOSDAQ-listed company. Immediately after the BAI announcement, foreign ministry spokesman Cho Byung-jae said in a statement that his ministry “humbly accepted” the audit results. “The ministry will immediately take necessary measures against officials involved (in the share-rigging scandal),” Cho said. “Also, we will actively cooperate with a probe by prosecutors.” The ministry has suspended Ambassador Kim from his duties and will soon hold a meeting to decide whether to sack him, Cho said. Kim still insists on his innocence, saying he “can't accept” the audit results. “I will fully explain my position to the prosecution and expect the prosecution to carry out its probe with objective evidence,” Kim said in an interview. Meanwhile, the Seoul Central District Prosecutors’ Office said its investigators had searched CNK’s headquarters in Seoul, and the homes of the firm’s chairman, Oh Deok-kyun, and former Vice Foreign Minister Cho Joong-pyo among others. Cho served as the firm’s advisor after retiring from his government post. MOFAT was not affected by the operation. Prosecutors said they obtained computer disks, accounting books and other related documents with which they will determine additional targets to be investigated. MOFAT said it will be “resolute and merciless” in dealing with any embroiled diplomats. “We will take action immediately after we are informed of the results by the BAI,” MOFAT spokesman Cho Byong-jae told reporters Thursday. “We will punish those responsible under the principle of zero-tolerance.” Former Vice Foreign Minister Cho and his family members are believed to have made nearly 1 billion won in illegal gains from the illicit information. CNK Chairman Oh is suspected of having earned a whopping 80.3 billion won ($72.9 million) through the alleged insider trading. Some staff members at the Prime Minister’s Office, the Ministry of Knowledge Economy and other overseas resource-developing firms also allegedly benefited. The political circle is moving to investigate the case. The main opposition Democratic United Party (DUP) initiated the move to launch a National Assembly investigation into the matter. The ruling Grand National Party is apparently prepared to cooperate. “Simply put, this scandal is a combination of all the corrupt practices in the public sector,” Kim Jin-pyo, the DUP floor leader, said last week. “We will pursue a parliamentary inspection of the case to get rid of this deep-rooted corruption.”