Africa diamond mine scam implicates Korean ministers and execs who made quick $70 million

The Korea Herald reports prosecutors are expected to begin summoning key figures – including two ministers – implicated in an insider trading and ‘pump and dump’ scam as early as next week.

Financial regulators say after CNK International’s mining arm won the contract for a diamond mine in Cameroon in December 2010 it vastly overstated the size of the deposits which it put at an eye-popping 420 million carats.

However, the company received an official stamp of approval after a former CNK advisor and minister in the Prime Minister’s office put out an official press release through the foreign ministry. The information sent CNK’s stock rocketing five-fold. CNK CEO Oh Deok-gyun and his sister-in-law, who is also an executive of the company, are believed to have raked in 80.3 billion won ($70.7 million) in the scam.

The Korea Herald reports:

Prosecutors plan to first focus on investigating key company staff involved in the scam and then expand their probe into others in the Prime Minister’s Office, the Foreign Ministry, the Ministry of Knowledge Economy and Korea Resources Corp.

The scandal, which initially focused on Kim Eun-seok, a suspended senior diplomat in charge of energy and resource diplomacy, has spread to other public organizations with a flurry of fresh allegations involving public servants.

The Dong-a Ilbo reports:

When the scandal first surfaced last year, the ministry focused on explaining the situation without making rigorous fact-finding efforts. The ministry issued a second news release in June last year to give an explanation for the scandal. Back then, rumors of it had been spreading in the Korean stock market.

The ministry, however, reiterated its claim that the Cameroonian government conducted a “strict” review in the exploration process, was careful about granting mining concessions, and “officially recognized” CNK’s exploration report.

The Korea Times reports:

The release highlighted the visit of high-ranking officials to the African state to play a supporting role in striking the deal, touting it a “model form of successful resource diplomacy.”

It cited two separate geological research 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. But the authorities believe the estimation was based on wrong samples.

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