Securing steady supplies of energy and natural resources is a matter of grave concern that is not limited to individual business enterprises. It is vital to the entire nation to ensure them, as it depends on them to generate sustained growth. It goes without saying that diplomatic efforts must be made to this end, with the upsurge in their prices posing a formidable threat to the Korean economy.
Since its inauguration four years ago, President Lee Myung-bak’s administration has been mounting a full-court press to secure long-term supplies of resources at affordable costs. It has tasked an ambassador with the mission to negotiate them and sent high-powered delegates trotting the globe for diplomacy on resources. The key figures among them are Rep. Lee Sang-deuk, the president’s brother, Ambassador Kim Eun-seok and some others close to the president.
But the diplomacy on resources, which included the dispatch of Rep. Lee as a special presidential envoy to more than a dozen countries, has produced no impressive results. Worse still, dirty linen is being brought out of the closet.
One notable case in this regard is an insider-trading scandal involving Ambassador Kim and Park Young-june, a protege of the president, who until recently served as vice minister of knowledge economy. The scandal dates back to June 2010 when Park visited Cameroon in his capacity as a vice minister at the Prime Minister’s Office.
Park was quoted as saying that he called on Ambassador Kim to help CNK International Co. acquire the right to develop a diamond mine allegedly with 420 million carats in reserves through CNK’s joint venture C&K Mining Inc. He told a Korean-language daily recently that he did this after he was told by Cameroon’s prime minister that CNK International was participating in the mining project.
In December 2010, the Ministry of Foreign Affairs and Trade issued a press release in which it said CNK International obtained the right to develop the mine with an estimated 420 million carats in reserves, or twice the entire global diamond supply. Ambassador Kim put their value at more 50 trillion won. The price of the company’s stock, which had been traded around 3,000 won per share in early December, jumped almost fivefold within 17 days of the announcement.
An allegation that the reserve estimate was overblown came later, pulling down the stock price. It now hovers around 9,000 won.
The Board of Audit and Inspection, which has been conducting an inquiry into the case, has reportedly confirmed that Ambassador Kim’s brother and his wife bought shares worth more than 100 million won prior to the ministry’s press release. In a surprise move last week, the ministry suspended Ambassador Kim from duty, possibly on suspicion that they purchased the shares on tips from the diplomat ― a criminal offense.
Kim’s relatives are not alone in being suspected of trading the mining company’s share on insider information. Cho Joong-pyo, formerly a vice foreign minister and minister in the Prime Minister’s Office, and his relatives reportedly had more than 1 billion won in capital gains. The financial authorities are reportedly pressing criminal charges against Cho, who was adviser to the mining company at the time the shares were traded.
If the outcome of the state watchdog’s inquiry, which is due in the near future, confirms that Ambassador Kim deliberately exaggerated the value of the diamond reserves, it would mean he was involved in the manipulation of share prices. That would be a despicable criminal offense for a diplomat to commit.
Kim denies the allegation. Should the state watchdog’s investigation confirm it, however, he would be accused of shirking his duty as a diplomat as well as charged with a criminal offense. A diplomat is an official appointed to protect the interests of the nation, and is not allowed to pursue his own interests in his official capacity.
If the allegation should be upheld by the inquiry, the prosecutors’ office would have to launch a criminal investigation immediately. It would also have to look into what role the former vice minister of knowledge economy and the former minister in the Prime Minister’s Office played in connection with the alleged stock price manipulation.
