By Park Si-soo

A snowballing stock price rigging scandal, involving a ranking diplomat and a Korean diamond developer in Cameroon, is snaring other diplomats and officials at non-diplomatic ministries, calling the morality of public servants into question.

Ambassador Kim Eun-seok has already been suspended for his alleged pivotal role in inflating the developer’s stock price with “unfounded” news that the company, CNK International, had hit the jackpot in the African country.

Kim is suspected of leaking information to his family members, relatives and friends before the public release of the news that the company had won a diamond mining contract so that they could earn huge illegal gains by purchasing shares of the listed firm.

Some staff member at the Prime Minister’s Office, the Ministry of Knowledge Economy and Korea Resources Corporation also benefited from the alleged insider trading, according to media reports.

The Ministry of Foreign Affairs and Trade (MOFAT) said Tuesday it will not tolerate this and discipline those involved.

Kim has firmly denied all allegations against him. The Board of Audit and Inspection plans to make public the results of its investigation into the case later this month.

Against this backdrop, an incumbent lawmaker raised a fresh allegation Wednesday that a former South Korean ambassador to Cameroon was also involved in the scandal.

Independent lawmaker Jung Tae-geun said in a radio interview that Lee Ho-sung, the former ambassador, wired a diplomatic cable that overemphasized the business’s value to MOFAT while he was staying there as ambassador, despite opposition from other Korean diplomats.

The lawmaker claimed Lee even wrote the cable using the name of a subordinate diplomat, raising the possibility that he was trying to cover up his involvement.

“Former ambassador Lee wrote the cable under the name of a first secretary at his embassy,” the lawmaker said. “The cable was written based on information from CNK International. MOFAT cited key information in the cable in its press release that caused the scandal.”

The politician said wiring a diplomatic cable under a borrowed name is “totally nonsense,” raising suspicions of unsavory ties forged between the former ambassador and the diamond developer. “My understanding is that the former ambassador then deeply colluded with the developer,” he said.

CNK’s stock price skyrocketed immediately after MOFAT issued the press release regarding the company’s project in Cameroon on Dec. 17, 2010.

MOFAT said in the release that CNK had won the right to develop a diamond mine in Yokadouma, 520 kilometers east of the African state’s capital Yaounde, which had an estimated 420 million carats worth of the precious stones. The reported amount is nearly 2.5 times actual diamond production worldwide in 2007.

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.

Among other alleged beneficiaries from the insider trading are Cho Joong-pyo, a former official at the Prime Minister’s Office, and an executive of a nationwide TV station.

Cho and his family members are believed to have made nearly 1 billion won in illegal gains through the insider trading. The TV station executive was alleged to have bought stocks worth 1.27 billion in early 2009, whose current value is now around 20 billion won.

CNK’s stock price closed Wednesday at 7,770 won ($6.70), up more than 300 percent from the 2,100 won before the issuance.

Meanwhile, the Financial Supervisory Service is considering filing a formal request for an investigation into CNK with the prosecution in the belief that the firm’s announcement of its jackpot in Cameroon was fraudulent.