MOFAT Diamond scandal

The MOFAT Diamond Scandal involves allegations against a senior South Korean government official accused of insider trading and stock-price manipulation in collaboration with CNK International, a mining company that secured the rights to a diamond mine in Cameroon.

The scandal began with a press release issued by the South Korean Ministry of Foreign Affairs and Trade (MOFAT) on 17 December 2010. This announcement, led by Energy and Resources Ambassador Kim Eun-seok, claimed that CNK International had secured the rights to develop a diamond mine in Cameroon, purportedly containing approximately 420 million carats (185,000 lb) of diamonds. This figure was based on CNK International's research reports, which were later found to be exaggerated and misleading. Following the press release, CNK International's share price surged to approximately 18,500 Korean won. When the company was unable to substantiate the magnitude of the diamond reserve it had previously announced, the share price plummeted to 2,000 Korean won within a matter of weeks.

Ambassador Kim faced accusations of insider trading for allegedly sharing non-public information with family members. However, the timeline between the stock purchases made by his family members and the press release that inflated CNK International's stock price was substantial. As a result, the insider trading charges were ultimately dropped.

This incident prompted criticisms against the Lee Myung-bak government. The investigation also implicated other high-ranking officials and members of CNK International, leading to criminal referrals and further scrutiny. Both Ambassador Kim and CNK Chairman Oh Deok-gyun were acquitted of stock manipulation charges. Ambassador Kim was demoted, and CNK Chairman Oh was convicted of breach of fiduciary duty, being sentenced to 3 years in prison and 5 years probation.