The Financial Supervisory Service has launched an inspection after concluding that a normal contract was not carried out in NH NongHyup Life's purchase of promotional items. NH NongHyup Life signed a contract to purchase 100,000 promotional hand creams worth 2 billion won to provide to regional agricultural and livestock cooperatives to encourage sales of its insurance products, but the subcontractor was a "skin shop" run by an employee's family, and only half, "50,000," of the hand creams were delivered.
Some suggest the deal may have been used for illegal rebates. Park Byung-hee, now the CEO, who was then a vice president at NongHyup Life, was listed on the contract approval line.
According to the financial sector on the 22nd, the Financial Supervisory Service (FSS) began an inspection on the 21st in connection with NongHyup Life's negotiated contract for promotional items. An FSS official said, "We are checking the facts."
According to audit materials for NH NongHyup Life submitted by the National Agricultural Cooperative Federation to the office of Lee Byung-jin of the Democratic Party of Korea, a member of the Agriculture. Food. Rural Affairs. Oceans. and Fisheries Committee, NongHyup Life on Dec. 31 last year signed a negotiated contract with Nonghyup Hanaro Distribution Samsong Agricultural Products Integrated Distribution Center (Samsong Distribution Center) to purchase three-piece sets of promotional hand creams to be supplied to 17 regional agricultural and livestock cooperative headquarters. The unit price per set was set at 20,000 won, for a total purchase of 100,000 sets worth 2 billion won. The purpose was to support promotional items to be given to customers when regional agricultural and livestock cooperatives sell NongHyup Life's insurance products, thereby boosting performance. The proposal stated, "Purpose is to strengthen the foundation for an all-out push to achieve the agricultural and livestock cooperative institutional sector business goal (30 billion won)."
Suspicious circumstances emerged in several places after the contract. NongHyup Life explained that after receiving quotes from three companies—Samsong Distribution Center, AO, and Lineplus—Samsong Distribution Center offered the lowest unit price and thus won the contract. However, Samsong Distribution Center subcontracted to AO and Lineplus, and those two companies in turn re-subcontracted to a company called "Jihyun Salon."
Three companies were involved only in distribution, not cosmetics manufacturing, but the issue is that Jihyun Salon is a skin care shop run by the younger sister of a NongHyup Life employee. According to the small business information lookup site "MoneyPin," Jihyun Salon specializes in skin care and eyelash extensions, with its establishment in Wando-eup, Jeollanam-do.
That is not all. Contrary to the contract, only 50,000 hand creams were supplied by the delivery deadline on Feb. 28. A tip containing these details was submitted to the National Agricultural Cooperative Federation, and NongHyup Financial Group, after receiving it, conducted a field audit from Aug. 28 to Sept. 11. It was confirmed that the remaining 50,000 hand creams were delivered immediately after NongHyup Financial's audit began.
Questions have also been raised about the delivery price. The three-piece hand cream set purchased as a promotional item was priced at 20,000 won per set. The online sale price is 37,000 won, but it was said to have been lowered to 20,000 won considering bulk purchases. However, among top-selling products on major portals such as Naver and e-commerce sites such as Coupang, the price of hand cream sets with similar ingredients and volumes is around 10,000 won. Although cosmetics prices vary widely depending on brand and functionality, the seller of the product in question is unclear, and its official sales site is currently suspended. An executive in the cosmetics industry said, "If it does not have special branding or functional ingredients, the retail price of a typical 30 ml hand cream product is about 3,000 won," adding, "Most sets are around 10,000 won per set."
Within NongHyup Financial, some argue that this questionable contract was likely an attempt to secure rebates. A NongHyup official said, "It does not appear to be a simple case of an employee's personal misconduct," adding, "The money that was to be skimmed off in the middle was likely used as rebate funds, which are rampant inside NongHyup."
Park Byung-hee, CEO of NongHyup Life, said in a phone call with ChosunBiz, "NongHyup Financial is auditing the matter, so there is nothing to add." Park also avoided giving a direct answer regarding the rebate allegations. A NongHyup Life official said, "If the payment amount exceeds a certain level, the vice president is also included in the approval line."