Findings released Thursday from a Board of Audit and Inspection (BAI) probe of a Cameroonian diamond mine confirmed insider stock trading by senior officials at the foreign ministry and Prime Minister‘s Office. The results provide a clear picture of the current state of the energy resource diplomacy emphasized by the Lee Myung-bak administration.

The first step in the investigation was figuring out why the Foreign Ministry undertook publicity efforts for the acquisition of development rights by CNK, a private company. The BAI said the figure behind this was Energy Resource Ambassador Kim Eun-seok.

CNK estimated that the mine held 420 million carats of diamond deposits. After first meeting CNK president Oh Deok-gyun in December 2008, Kim had a press release drafted and distributed on Dec. 17, 2010, in which the deposits were estimated at more than 420 million carats, according to the UN Development Programme and a Chungnam National University study. The BAI audit concluded that the UN Development Programme materials only made reference to possible deposits, while the Chungnam National University investigation findings found no evidence for them.

Even after a June 2011 press report found that the foreign ministry had jumped the gun in declaring the deposits at least 420 million carats, Kim had materials distributed stating that the Cameroonian government had “conducted a rigorous comparison and officially acknowledged the deposit estimates.” This move came despite protests from the presiding bureau director. CNK stock values rose sharply around the time of the two press releases, jumping from 3,465 won to 16,100 won with the first and from 7,400 won to 18,500 won with the second.

Kim made off with profits through trading CNK stock. His two younger siblings sold around 80 thousand shares of CNK stock and earned over 500 million won ($450,000).

A former director of resource cooperation at the Prime Minister’s Office, who was a secretary at the time of a January 2009 visit by Oh to the former Prime Minister‘s Office chief Cho Joong-pyo, and a Korea Resources Corporation (KORES) team director were found to have engaged in illicit stock transactions through the individuals and their relatives after learning of CNK’s request for acquisition rights.

The BAI said it plans to request disciplinary action for Kim’s secretary and the KORES director and to use the information in personnel decisions for the former director of resource cooperation, for whom the statute of limitations has passed.

“These kinds of illegal stock transactions by public official have incurred distrust among the South Korean public,” the BAI said.

Please direct questions or comments to [englishhani@hani.co.kr]