Financial accidents at regional agricultural and livestock cooperatives managed by the National Agricultural Cooperative Federation grew sharply this year compared with last year. According to the National Agricultural Cooperative Federation on the 13th, from January to on the 15th of last month, the amount of losses from financial accidents at regional agricultural and livestock cooperatives, including embezzlement, breach of trust, and poor loan management, totaled 14.8 billion won (35 cases). Of that, 6.8 billion won was recovered.
The amount of financial accidents at regional agricultural and livestock cooperatives rose from 17.4 billion won in 2020 to 43.6 billion won in 2022. It plunged to 3.3 billion won last year but surged again this year. The amount of financial accidents at regional agricultural and livestock cooperatives was higher than the combined total of other mutual finance institutions' regional cooperatives over the same period, including credit unions (300 million won), fisheries cooperatives (5.8 billion won), and the Korean Federation of Community Credit Cooperatives (3.7 billion won).
Currently, regional agricultural and livestock cooperatives are not supervised by the financial authorities and undergo only internal audits. As criticism grew that their closed operating style has led to repeated financial accidents, the Ministry of Agriculture, Food and Rural Affairs, which is responsible for management and oversight, said on the 5th that it would conduct an audit of the overall operations of the National Agricultural Cooperative Federation.
Regional agricultural and livestock cooperatives have small business scales, so even minor loan accidents lead to worsened results. Last year, a unit livestock cooperative in Jeonju, North Jeolla, conducted loan screening poorly, resulting in a loss of 250 million won.
Seo Ji-yong, a professor in the Department of Business Administration at Sangmyung University, said, "The continued financial accidents at NongHyup show that its internal control system is insufficient," and added, "Institutional measures are needed so that the financial authorities can directly exercise management and oversight powers."