By Lee Hyo-sik
Investigators summoned Cho Joong-pyo, a former senior official of the Prime Minister’s Office, Tuesday for questioning over his alleged participation in a stock price-rigging scheme involving a local firm developing a diamond mine in Cameroon.
Cho, 60, appeared for questioning at the Seoul Central District Prosecutors’ Office in southern Seoul at 2 p.m. He is suspected of having played a key role, along with former Ambassador for Resources Kim Eun-seok, in inflating stock prices of KOSDAQ-listed CNK International by circulating a press release based on deliberately exaggerated data on the mine’s value in December 2010.
He has denied all the allegations.
Asked by reporters whether he delivered embellished reports filed by CNK to the foreign ministry, he said, “I was not in a position to deliver the documents.” He declined to elaborate further.
It is also alleged that Cho, also former vice foreign minister, realized capital gains amounting to 1 billion won by trading CNK shares with insider information. Cho, who served as the firm’s advisor after returning from his government post, bought company shares before the press release and sold them upon hearing the news.
``Investigators questioned Cho about whether he played a role in the preparation of the controversial press releases on the size of diamond reserves discovered by CNK in Cameroon,‘’ a prosecution official said. ``They also grilled him over whether he raked in illicit financial gains through insider trading with information obtained prior to press releases. Cho will likely be summoned several more times if needed.’’
The Securities and Futures Commission also asked the prosecution to investigate any insider trading of CNK shares, claiming that Cho helped engineer the scam by providing exaggerated data to the Ministry of Foreign Affairs and Trade.
According to the Board of Audit and Inspection, CNK International provided false information concerning the size of the firm’s diamond reserves in the African nation to the foreign ministry via Cho. The ministry then issued press releases in December 2010 and June 2011, based on CNK reports.
The press release said the mine in Yokadouma, 520 kilometers east of Cameroon’s capital Yaounde, had an estimated 420 million carats worth of diamonds, more than twice the annual global diamond production. CNK’s stock price skyrocketed immediately after the issuance of the press release.
Additionally, former Ambassador for Resources Kim has been summoned several times for questioning over suspicions that he intentionally pressed the foreign ministry to issue press releases with deliberately overstated data.
According to the prosecution, Kim told family members in January 2009 about CNK’s business in Cameroon. Two of his brothers and several relatives bought and sold CNK shares over the past two years, realizing tens of millions of won in capital gains. Kim’s secretary was also found to have invested in CNK shares from August 2010 and earned 35 million won in capital gains.
He continues to deny any wrongdoings.