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Prosecutors seek arrest warrant in CNK scandal

Prosecutors investigating the CNK International stock-rigging scandal sought an arrest warrant for its technical adviser surnamed Ahn on charges of exaggerating diamond reserves in Cameroon in its exploration report.

Ahn is the first person for whom prosecutors requested a warrant in the case.

According to the Seoul Central District Prosecutors’ Office, Ahn directly prepared a report overestimating diamond reserves in a CNK mine in Cameroon, becoming an accomplice in the illegal insider stock trade with CNK chief Oh Deok-gyun and others. Oh is suspected of leading the scandal, and currently in Cameroon.
Kim Eun-seok, former energy and resources ambassador of the Ministry of Foreign Affairs and Trade, addresses the media as he appears at Seoul Central District Prosecutors Office in Seoul on Thursday for the second time to be questioned on the CNK diamond mine scandal. (Yonhap News)
Kim Eun-seok, former energy and resources ambassador of the Ministry of Foreign Affairs and Trade, addresses the media as he appears at Seoul Central District Prosecutors Office in Seoul on Thursday for the second time to be questioned on the CNK diamond mine scandal. (Yonhap News)

The CNK report based on UNDP’s 1995-1997 research and Chungnam National University’s 2007 field research estimated that the mine held 420 million carats of diamond reserves, about 2.5 times as much as the annual global diamond output.

The company delivered the report to the Ministry of Foreign Affairs and Trade via Cho Joong-pyo, former minister of the Prime Minister’s Office, and the ministry issued press releases in December 2010 and June 2011, based on the report.

CNK International shares shot from 3,400 won on Dec. 16, 2010 to about 18,000 won on Jan. 11, 2011. Oh and his brother-in-law disposed of their stocks, pocketing 80 billion won in profits.

Financial regulators and the state audit agency found in their probe into the CNK case that CNK officials knowingly issued an exaggerated report.

Prosecutors also brought in Kim Eun-seok again, then energy and resources envoy suspected of leading the preparation and distribution of the exaggerated Foreign Ministry press release on CNK mining rights and diamond reserves.

“My stance has not changed one bit from before,” Kim told the media as he walked into the prosecutors’ office. Kim was summoned Jan. 17 for questioning.

Former ambassador to Cameroon Lee Ho-sung was questioned earlier on whether he tried to cover up his name in a diplomatic cable on CNK mining, prepared and reported to the ministry in a subordinate’s name.

Last month, the Financial Supervisory Service pressed charges against Oh for illegal stock trading, which can be punished by a maximum of 10 years in prison or 500 million won in fines.

On Dec. 16, 2010, CNK’s joint venture C&K Mining won the bid to develop the diamond mine in Yokadouma in the southeast of the country. Because of the potential economic benefits to Korea, Seoul government officials, including former Vice Minister of Knowledge Economy Park Young-june, had helped the firm win the deal.

By Robert Lee (robert@heraldcorp.com)
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