Foreign minister expresses dismay over stock manipulation scandal

Foreign Minister Kim Sung-hwan expressed distress Saturday over allegations that some ministry officials were involved in a snowballing stock manipulation scandal related to a diamond mining project in Cameroon.

Kim Eun-seok, the foreign ministry's ambassador for energy and resources, is under investigation by the Board of Audit and Inspection (BAI) on suspicion that he played a role in driving up the stock prices of CNK International, a mineral development company involved in mining diamonds in Cameroon.

The energy ambassador is suspected of deliberately over-estimating the size of diamond reserves in a Cameroon mine in a press release his ministry issued in December 2010, which prompted CNK's stocks to drive up.

The ministry's press release later turned out to have been exaggerated.

Some foreign ministry officials, including former vice minister Cho Jung-pyo and some of the energy ambassador's relatives, were found to have pocketed large profits, apparently helped by the exaggerated press release.

"I feel indescribable distress and infinite responsibility," the foreign minister wrote in an e-mail to all ministry staff, shortly after holding a meeting with senior ministry officials to discuss the issue.

The minister had just returned from a four-day visit to Denmark and Turkey earlier in the day.

"As minister, I am unable to describe my feelings about our ministry having once again caused concern to the people and being denounced by the public due the inappropriate work conduct and actions of certain members of our ministry," he said in the e-mail.

Before the ministry issued the press release, CNK International was trading at about 3,000 won (US$2.64) per share prior to winning the bid, and the price jumped to 16,100 won per share within 16 trading days.

The energy ambassador's younger brother and sister-in-law are suspected of purchasing large amounts of CNK's stocks before the winning bid was announced.

Other officials at the Prime Minister's Office, the foreign ministry and an affiliate of the Ministry of Knowledge Economy are also suspected to have been involved.

The minister pledged to punish those responsible under a "principle of zero-tolerance" after the BAI announces the results of its investigation next week. The results are expected to come shortly after the Lunar New Year's holidays, which this year started Saturday and will end on Tuesday.

"(I ask you all) not to be shaken in these difficult circumstances and devote yourselves to your work," he said. (Yonhap News)