Cobalt Gate (1)
The investigation wasn’t wrapped up until three years had passed.
The executives who had pocketed tens of billions in gains through the stock surge were cleared of wrongdoing. So were the Foreign Ministry staff who had issued the disclosure and distributed the press release without checking a single thing.
Not even the senior Foreign Ministry officials suspected of being involved in the operation were investigated.
In the end, Chairman Cheon Deok-yu got off with nothing more than two years in prison, suspended for three. There was no confiscation, no clawback of the illicit profits.
And that wasn’t the end of it.
As the saying went, a thief who steals a needle will one day steal an ox. He was already a fine fraud at this point, and this case only made him grow into something bigger. In time, he would become the face of a scam that turned all of South Korea upside down.
As for KNC International, it kept plunging until it became a penny stock trading at 100 won, then was delisted four years after the incident.
I could have just sold and walked away, but...
“If I’m going to do it, I’d rather make it spectacular.”
* * *
Min Hong-soo.
After majoring in media and communications at Korea University, he joined Joongheung Economic Daily, one of the country’s biggest financial newspapers.
When he became a reporter, he had thought he would be free to write whatever articles he wanted. That had been nothing more than his own illusion.
As a financial paper, most of what he wrote was about the economy, and in Korea, economic news was tied to the chaebols nine times out of ten.
And no Korean media company was truly free from the influence of those conglomerates.
The moment you wrote an article criticizing a chaebol or pointing out its flaws, the complaints came in and the advertising revenue disappeared.
So most outlets ran only favorable coverage of the chaebols, if they mentioned anything negative at all it was reduced to a brief line before they moved on.
After the Primus disaster, Min Hong-soo had written articles questioning hereditary management and the competence of third-generation chaebol heirs, but every one of them had been cut from above.
It wasn’t that he had some noble calling to fight the establishment. He simply wanted to write the articles he wanted to write.
But that’s not easy at all.
Feeling frustrated, Min Hong-soo stepped outside for a bit of fresh air and took out a cigarette.
The moment he slipped it between his lips and was about to light it, his phone rang.
When he saw the name on the screen, he answered.
“Reporter Min Hong-soo speaking.”
[Hello, this is Han Miru. You contacted me before, asking for an interview, didn’t you?]
It was the same new employee who had blown open the Primus scandal.
“Ah! Hello.”
[Are you available to meet right now?]
The Primus disaster had shaken the financial world, but he hadn’t given interviews to anyone. And there was no shortage of things I wanted to ask him about.
Min Hong-soo nodded at once.
“Yes. Where are you now? I’ll come to you.”
* * *
I met the man in a café.
He handed me his business card and introduced himself.
“Hello. I’m Min Hong-soo from Jooheung Economic Daily.”
“Nice to meet you. I’m Han Miru.”
I looked him over.
He was thirty-three, tall and lean, wearing black-rimmed glasses. His square jaw and dark brows gave him a somewhat sharp look.
He was, in fact, a hot-blooded reporter with a sense of justice that was hard to find these days.
But a tall tree catches the wind. As was often the case, people with too much righteous fire had a hard time surviving.
Because he ignored the people around him and kept hammering out exposés, he had become a thorn in the company’s side and was eventually pushed into a dead-end position.
After that, he quit Jooheung Economic Daily and moved to an online outlet called News Trigger.
It was a tiny, ordinary internet media company that couldn’t compare to Jooheung Economic Daily, but that was where he broke the scoop that would turn South Korea upside down.
That was why I remembered his name.
Well, that was all in the future.
“Thank you for agreeing to the interview. I actually have a lot of questions about the Primus Fund. I heard you left the company, so was there any pressure from above?”
“Not exactly.”
It seemed he was curious not just about the article itself, but about what had happened in the process.
“Let’s take the interview slowly. Before that, though, I have something I wanted to tell you separately.”
“What is it?”
I got straight to the point.
“Do you know a company called KNC International?”
He nodded readily.
“Yes. It’s been making a lot of noise lately.”
As expected of a financial reporter, he knew the name.
That made this easier.
“Do you know it’s a manipulated stock?”
“I have a rough idea.”
Min Hong-soo asked, looking puzzled.
“Then why are you interested in it? Market manipulation isn’t exactly rare.”
“That’s true.”
Stock manipulation was almost routine in the market. But this case was different.
“Out of all those schemes, how many involve the government?”
“That...”
“This is corruption at the level of the administration.”
At my words, he was visibly startled.
“What did you say?”
“Think about it. Isn’t it strange that a government agency got involved in the disclosure of an individual company?”
“There have been similar cases.”
When a company landed a major contract or secured a large investment, the relevant ministry or local lawmakers would sometimes comment on it and even visit the company or factory in person to congratulate them.
This case could be seen as one of those, but...
“Did anyone actually verify that cobalt mine in the Congo? Did a Foreign Ministry official go there and dig in the ground? Are you really telling me they believed a few videos and photos, plus some research institute nobody can even locate and some professor nobody knows anything about?”
“Then why do you think the Foreign Ministry got involved?”
I answered as if I had been waiting for the question.
“Because they took bribes.”
“Who did?”
“Who do you think?”
“Don’t tell me it was the staff who distributed the press release?”
“The staff just did what they were told from above. Of course, there were plenty of people who bought the stock in the middle of all that, but if you dig, a lot more will probably come out.”
“Then is it Director Oom Myung-ji?”
“Higher than the director. How many people at the Foreign Ministry do you think could just order something like this on their own?”
Min Hong-soo looked like something had just clicked.
“Don’t tell me...”
“Yes. Second Vice Minister Jeong Hyeon-cheol.”
It was one thing for someone to remember the vice minister’s name when he probably didn’t even know the minister’s name, but...
“You mean Kim Han-su’s brother-in-law?”
As expected, he wasn’t a reporter for nothing.
For reference, Chief Secretary Kim Han-su was one of President Oh Young-hwan’s closest and most trusted aides.
Later, when the cobalt mine was exposed as a lie and the stock collapsed, the prosecutors and the Financial Supervisory Service launched investigations. There were inquiries into the Foreign Ministry as well as KNC International.
But as the saying went, the lobster and the crab belonged to the same pond. There was no way a proper investigation into a government ministry would actually happen.
Not only was there no summons or cross-examination, there wasn’t even the usual raid and seizure. The Foreign Ministry claimed it had simply believed KNC International’s statements and filed the disclosure, and all the relevant employees were cleared of charges.
No one was punished, and nobody ever found out who gave the order.
So how did I know this?
Ridiculously enough, it had come to light years later in a way that had nothing to do with the investigation at all.
The current Second Vice Minister of Foreign Affairs, Jeong Hyeon-cheol, was appointed Foreign Minister in the next administration.
But while preparing for the confirmation hearing, suspicions arose that he had deliberately underreported his assets. Once they looked into it, it turned out that his wife’s assets had increased by 42 billion won over three years.
They dug into how she could possibly have made that much money in so short a time, and found that she had invested in KNC International.
She had made over 42 billion won by investing in a manipulated stock that had driven countless retail investors to tears and blood!
At the confirmation hearing, Jeong Hyeon-cheol insisted it had been a legitimate investment, but who would believe that?
Of course his appointment as minister was canceled, and the prosecutors launched an investigation.
He bought the stock at 2,500 won before the cobalt mine disclosure, then sold it at 37,700 won, making more than fourteen times his money.
He had even borrowed the money to buy the shares from Chairman Cheon Deok-yu!
He made 42 billion won without spending a single won of his own. It was a miracle of personal finance, all right.
After hearing me out, Min Hong-soo looked utterly dumbfounded.
“W-wait a second. You’re saying Vice Minister Jeong Hyeon-cheol received stock from Chairman Cheon Deok-yu and ordered the company to file the disclosure and issue the press release?”
“Exactly.”
He asked in disbelief, “Does that even make sense?”
“It doesn’t, which is why it’s illegal.”
In short, the vice minister had taken a bribe and joined a stock manipulation scheme.
If he had just retired quietly, he would have lived comfortably off that money. But that hunger for power of his made him run for minister, and he ended up getting torn apart in the confirmation hearing.
Min Hong-soo fell into deep thought, twirling his pen between his fingers.
About sixteen spins later, when he finally seemed to have finished thinking, he lifted his head and asked, “How did you find out?”
“I got a tip from an insider.”
“Who was it?”
I shrugged.
“The person involved didn’t want to be identified.”
“Then do you have evidence?”
“If you dig into the accounts, it’ll come out.”
“You need evidence to write a story.”
That was true. It would be hard to write an article based solely on my word without any evidence. Besides, I wasn’t one of the people involved in the operation, either. I was simply passing along what I’d been told by a source.
Min Hong-soo looked torn between believing me and dismissing it altogether.
If another person had said this, he might have brushed it off.
But I was different.
Because I was the one who had exposed the Primus Fund. If someone had already brought down one rotten scheme, why couldn’t they uncover another?
“I knew about this operation from the beginning. That’s why I know who was involved and how it ends. When the syndicate sells, who do you think buys the stock?”
“Retail investors, I guess.”
“Exactly. While they’re the ones crying blood, the syndicate walks away with the money. So do Vice Minister Jeong Hyeon-cheol and the Foreign Ministry staff who were involved. If you dig deeper, there may be even more people connected to it.”
Min Hong-soo’s expression grew grave.
He had already realized that if what I said was true, this was not a small matter.
“There’s no direct evidence, but there is circumstantial evidence.”
“Circumstantial evidence?”
“If you promise to keep this confidential, I’ll show you.”
Min Hong-soo nodded.
“I promise.”
I showed him the document containing Seon-woo’s account history.
“This came from one of the people in the operation.”
I had erased the name and account number, but the amounts were still visible. The balance had already passed 10 billion won.
Just from the gains so far, the return was already over 900 percent.
When he saw that, Min Hong-soo’s eyes widened.
“T-ten billion...”
Watching him struggle to close his mouth, I said, “If you investigate a little, you’ll find out what the International Resource Exploration Institute does and who that professor is. If you’re planning to run the article, you need to do it as fast as possible. The syndicate is already preparing to get out while we’re still sitting here.”
Once I’d said that much, he’d surely be itching to write the piece.
I stood up.
“Then I’ll be going.”
Min Hong-soo panicked and stopped me.
“Wait.”
“Why?”
“Aren’t you going to do the Primus interview?”
Come to think of it, that was why we had met in the first place.
I answered as if it were the most obvious thing in the world.
“Ah! That? I’ll see how your article goes first.”
“...”
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