Back To Top

Diplomat suspended over stock manipulation

Resource diplomacy official denies allegations; audit result due later this month

The Foreign Ministry suspended a senior diplomat in charge of energy and resource diplomacy last week over his alleged involvement in a high-profile stock manipulation scandal, officials said Tuesday.

Kim Eun-seok is suspected of helping boost the stock price of C&K Mining, a local resource development firm, through a government press release in 2010 on its success in winning the rights to develop a diamond mine in Cameroon.

Last December, state auditors finished their inquiry into another allegation that Kim’s brother and the brother’s wife bought C&K stocks worth more than 100 million won ($87,000) based on insider tips. The stock price soared after the government announcement on the successful bid.

The result of the inquiry by the Board of Audit and Inspection is due to come out by the end of this month. It is rare for the ministry to suspend an official before an audit is finalized.

Kim denies all the allegations.

“(My brother’s purchase of the stocks) has nothing to do with me. I have already given sufficient explanation to the state auditors. I am exhausted over the issue. I did not do anything that could cause any problem,” Kim told the media.

The scandal has caused disappointment among a public that still remembers the 2010 scandal involving former Prime Minister Yu Myung-hwan. He bowed out amid allegations that his daughter was given preferential treatment when she applied for a Foreign Ministry job.

With the stock-rigging scandal escalating, critics called for the government to tighten discipline in officialdom.

On Dec. 16, 2010, the African state offered the right to C&K Mining to develop the diamond mine in Yokadouma in southeastern Cameroon. Because of the potential economic benefits to Korea, Seoul government officials had helped the firm win the deal.

One day later, Seoul’s Foreign Ministry issued the press release, in which it said the mine held an estimated 420 million carats in diamonds. Critics say the estimate appears to have been exaggerated, arguing that it was based on insufficient research.

Less than a month after the announcement, the stock price, which had stood at around 3,000 won per share, had risen to 16,100.

Former minister for the Prime Minister’s Office Cho Joong-pyo and his family members also are reported to have been offered the right to purchase 250,000 newly-issued shares of C&K Mining ahead of the announcement on the successful bid. They are said to have gained more than 500 million won in trading profits.

After he retired in January 2009, Cho worked for an advisor to C&K. Cho is close to CNK head Oh Deok-gyun, and they hail from the same hometown of Cheongju in North Chungcheong Province.

Former Vice Minister of Knowledge Economy Park Young-joon has also been implicated in the scandal. While working as vice minister for the Prime Minister’s Office, he visited the African state, calling on it to support the firm’s bid. 

By Song Sang-ho
Korea Herald Youtube