Lee Chan-jin, head of the Financial Supervisory Service, said there are strong suspicions of corruption regarding the lack of a proper contract in NH NongHyup Life's purchase of hand cream promotional items and noted that stern action will be taken based on the examination results.
At a comprehensive audit by the National Policy Committee of the National Assembly on the 27th, Lee said in response to Democratic Party of Korea lawmaker Heo Yeong's criticism that "NH NongHyup Life engaged in a slush fund-type cash rebate transaction during a negotiated contract for 100,000 units of hand cream to be given to customers as gifts," that "because the suspicion of corruption is strong, we are verifying the facts, and an on-site inspection has already been conducted. If violations are confirmed, we will take stern action in accordance with relevant laws."
Earlier, the Financial Supervisory Service (FSS) launched an ad hoc inspection of NongHyup Life on the 21st. On Dec. 31 last year, NongHyup Life signed a negotiated contract to purchase a total of 100,000 "three-piece hand cream sets" for promotions aimed at boosting insurance sales at local agricultural and livestock cooperatives, at 20,000 won each. However, only half of the ordered quantity (50,000 units) was actually delivered to NongHyup Life, raising suspicions that part of the funds may have been embezzled. The negotiated contract features a skin care shop, "Jihyeon Salon," located in Wando, Jeollanam-do, which was revealed to be operated by the younger sister of a third-grade employee at NongHyup Life who is currently on standby.
Heo said, "While conducting a transaction with a shell company at a unit price of 20,000 won and a production cost of 11,000 won, it appears that up to 900 million won in slush funds was created," adding, "Cash was allegedly delivered in cash to the president of the National Agricultural Cooperative Federation and the head of NongHyup Life, and embezzlement and bribery occurred, yet NongHyup Financial Group conducted no internal audit of those involved."
Lee said, "We are specifically aware of the situation, and because the matter is so serious, criminal procedures and searches and seizures are underway. We are monitoring continuously, separate from the investigative procedures, and will take stern action as soon as the inspection results come out," adding, "In addition, we will promptly improve internal control weaknesses centered on the National Agricultural Cooperative Federation, and we will supplement any deficiencies in consultation with the chair of the Financial Services Commission (FSC)."