NH NongHyup Life, where a hand cream embezzlement and breach of trust case worth about 1 billion won occurred, is said to have imposed a pay cut on Chief Executive Park Byung-hee, who was the final approver. Whether the embezzled and misappropriated funds were used as rebates is expected to be revealed by a prosecution investigation.
According to the insurance industry on the 6th, NongHyup Life convened a personnel committee last month and decided to impose a pay cut on Park. The Vice Administrator Park, who was in charge of the hand cream project, was dismissed. The Head of Team, general bureau chief, and Director General who were parties to the contract or listed on the approval line received pay cuts.
Former Vice Administrator Park is suspected of siphoning off company funds while handling a contract in 2024 to purchase 2 billion won worth of hand cream by, among other methods, selecting a company run by Park's younger sister as the exclusive distributor. Park, then an executive vice president, was the project's final approver. NongHyup Life disclosed in Nov. last year that, during the project, improper contracts were concluded, resulting in a financial incident involving 400 million won in embezzlement and 580 million won in breach of trust.
On Dec. 31, 2024, NongHyup Life signed a contract with NH Nonghyup Hanaro Mart Samsong Agricultural Products General Distribution Center (Samsong Distribution Center) to purchase 100,000 three-piece sets of promotional hand cream for supply to 17 regional NongHyup and livestock cooperative general bureaus for 2 billion won.
However, only 50,000 units of hand cream were actually delivered, and there were allegations that the remaining 1 billion won (50,000 units) was used as rebate funds. The NongHyup labor union reported the suspicion to the National Agricultural Cooperative Federation, and NongHyup Financial Holdings launched a special audit in Aug. last year. The Financial Supervisory Service also began an on-site inspection in Oct. the same year. NongHyup Life delivered the remaining 50,000 units of hand cream in Oct. last year, after the special audit began.
The Financial Supervisory Service completed its inspection of NongHyup Life and filed a complaint with the Seoul Western District Prosecutors' Office against Vice Administrator Park on charges of embezzlement. However, it did not determine where Park used the embezzled funds or whether the money was used for rebates. The Financial Supervisory Service is weighing the level of sanctions against NongHyup Life. Lee Chan-jin, the Financial Supervisory Service governor, said during a National Assembly audit in Oct. last year that the allegations of wrongdoing were "very strong."
Whether the embezzled and misappropriated funds from the hand cream promotional project flowed up to "higher-ups" is expected to be revealed by a prosecution investigation. If additional allegations are uncovered during the investigation, people other than the already reported Vice Administrator Park could also become subjects of investigation. The Financial Supervisory Service has handed over all materials collected so far to prosecutors.