Diamond Scandal Spreads In Seoul

Published on 03/02/12

South Korea's state auditor said a senior foreign-ministry official deliberately overstated the size of a Cameroon diamond mine as part of a stock-manipulation scam that has become a major election-year embarrassment for President Lee Myung-bak's government.

The Board of Audit and Inspection on Thursday urged the Ministry of Foreign Affairs and Trade to dismiss Kim Eun-seok, the ministry's ambassador for energy and resources, after its investigation concluded he had ordered a rare government press release on a resources deal that caused a quintupling in the share price of a local mining company.

The auditor said Mr. Kim leaked information to family members ahead of the press release, and they then profited by buying shares in the company, CNK International Co., which is listed on South Korea's Kosdaq market. Mr. Kim said he planned to clear himself of "wrong allegations."