In Sept. this year, a Korean Federation of Community Credit Cooperatives (KFCC) chair in Yeosu, South Jeolla, was found to have routinely hurled verbal abuse and committed assaults against employees and was sentenced to one year in prison, suspended for two years. The chair was indicted for assaulting an employee in 2019, when serving as managing director, by striking the employee's head with the handle of a broom for not cleaning properly.
The Korean Federation of Community Credit Cooperatives (KFCC) said this month it began investigating Chair A of a KFCC branch in Dongjak District, Seoul. A is said to have ordered employees from 2022 through last month to install a coin application (app) on their smartphones. The app allows free mining by pressing a button or inviting acquaintances. A reportedly forced employees to run the coin app repeatedly, sending messages during work hours and even after they got off work to make them carry out mining.
In Oct. this year, a KFCC branch in Seongbuk District, Seoul, imposed the harsh penalty of disciplinary dismissal on employee B solely because B posted a question on an internal community about rules restricting recordings. The branch's chair, citing two years earlier that an employee had spread false rumors, not only imposed internal discipline but also ordered the employee to handwrite a letter of apology and go around nearby branches to get verification stamps from branch managers, engaging in repeated "gapjil."
As controversy persists over KFCC chairs' "gapjil," including assaults, verbal abuse, and improper orders, critics say penalties by the financial authorities and the KFCC itself are not functioning properly. The KFCC also drew criticism from President Lee Jae-myung in Sept., who called it a "blind spot of oversight."
According to the Korean Federation of Community Credit Cooperatives (KFCC) on the 16th, from January this year through the 11th of this month there were a total of 96 sanction disclosures containing disciplinary actions against executives and employees at regional KFCC branches. That is more than 20 higher than the 73 cases in 2023, showing an upward trend. This year, 80 executives, including chairs, at regional KFCC branches were disciplined, an increase of 24 from 2023 (56).
The number of regional KFCC branches decreased from 1,288 in 2023 to 1,262 this year. Although the number of regional branches is falling due to consolidations caused by poor management, the number of disciplinary cases against executives and employees continues to rise.
When an incident occurs, the branch imposes its own discipline, but critics say sanctions are not being properly enforced. In July this year, the Korean Federation of Community Credit Cooperatives (KFCC) dismissed the chair of a regional branch in Seongnam, Gyeonggi, after the branch caused an improper loan incident worth 180 billion won, and ordered disciplinary dismissal for the managing director, director general, and Director.
However, the branch downgraded the chair's punishment to a reprimand through an interim board meeting. For the managing director, director general, and Director, it lowered the disciplinary level to one to two months of suspension. When the central federation raised objections, the branch reportedly even filed for a provisional injunction.
Observers say that because the local influence of each of the 1,262 individual branches nationwide is significant and the chair's control is strong, deviations are occurring outside the management scope of the financial authorities and the central federation.
Financial incidents at the Korean Federation of Community Credit Cooperatives (KFCC) are also increasing. The amount of financial incidents such as embezzlement and breach of trust at KFCC branches nationwide was 724 million won in 2023, but reached 3.656 billion won in January–October this year.
Jeon Sam-hyeon, a professor of law at Soongsil University, said, "Since it is difficult for the financial authorities to oversee all regional branches, the central federation needs to come up with measures such as expanding compliance monitoring personnel and increasing the frequency of inspections."