Appeals Court Sentences Business Man to Additional Jail Time in Stock Price Rigging Case
John Kim, Feb. 3, 2016, 9:37 a.m.
An appeals court on Friday handed down an increased three-year sentence to the head of a mine developer for reaping massive profits from a stock price rigging scam linked to a diamond mining project in Cameroon. Still, the Seoul High Court suspended the sentence for Oh Deok-gyun, head of CNK International, for five years.
The 50-year-old was indicted in April 2014 on charges of pocketing about 90 billion won (US$81 million) by exaggerating the volume of diamond reserves in a Cameroon mine through a press release in 2010. Put out by the South Korean foreign ministry in December 2010, the press release claimed the company won a project near the southeastern Cameroon town of Yokadouma to mine about 416 million carats of diamonds, prosecutors said.
The news sent CNK shares jumping more than fivefold in the first three weeks, from about 3,000 won apiece to 16,100 won. The mine, however, was later found to hold only 6 percent of the claimed reserves. The project was eventually handed over to a Chinese company. Oh was also charged with committing malpractice and violating the Foreign Exchange Transaction Act.
A lower court had delivered an 18-month jail term, suspended for two years, to the defendant for the malpractice and the violation of the Foreign Exchange Transaction Act, while acquitting him of other charges. The appeals court, however, found him guilty of violating the Capital Market Act by distributing the false press release.
"Without going through a thorough verification procedure, (the company) announced the estimated amount based on certain reports and pretended as if it can be backed by objective and scientific evidences," the court said.
In the same ruling, the court acquitted another key defendant in the case -- Kim Eun-seok, the former Energy and Resources ambassador at the foreign ministry -- of charges that he colluded with Oh in the scheme. Kim was alleged to have played a role in getting the foreign ministry to issue the press release on the diamond project. "Though Kim had been in contact with Oh often during the process, it seems like it would have been difficult for Kim to acknowledge what Oh said was false," the court said.