The Financial Supervisory Service's regular examination of the National Federation of Fisheries Cooperatives is expected to be released as early as the second half of this year. Allegations of preferential and unsound loans related to Deutsch Motors, Mugunghwa Trust, and Sarang Jeil Church that were raised at last year's National Assembly audit also appear likely to be included in the findings.
According to the financial sector on the 1st, the Financial Supervisory Service (FSS) wrapped up its regular examination of the National Federation of Fisheries Cooperatives, which began in Nov. last year, early this year and has been reviewing the results to date. The examination was carried out after controversy over bad loans to Deutsch Motors erupted at the Oct. National Assembly audit by the Agriculture. Food. Rural Affairs. Oceans. and Fisheries Committee last year.
At the audit, it was disclosed that Suhyup Bank and some local cooperatives lent 64.8 billion won to Deutsch Motors and its affiliates in 2023–2024. The loans were extended as the Deutsch Motors stock-manipulation trial was underway and management uncertainty had grown, prompting allegations of preferential and unsound lending. Deutsch Motors engages in sales of imported cars such as BMW, as well as auto finance and maintenance businesses.
Loans related to Mugunghwa Trust are also a key issue. As of Sept. last year, 56 fisheries cooperatives nationwide lent a total of 744.7 billion won to Mugunghwa Trust business sites, and with Mugunghwa Trust facing a liquidity crunch due to problems in real estate project financing (PF), more than a quarter of those loans were found to be in arrears. It is being pointed out as a problem that several local cooperatives executed loans simultaneously without fully recognizing the potential for defaults.
Allegations of preferential loans related to Sarang Jeil Church were also included. In Dec. 2023, Sarang Jeil Church struggled to raise relocation funds after its site was excluded from the Jangwi District 10 redevelopment and borrowed 6.5 billion won from Suhyup to cover the balance for a temporarily secured building. Of that, 5 billion won was executed by Jinhae Suhyup, where National Federation of Fisheries Cooperatives President Noh Dong-jin had served, leading to suspicions of a politically brokered loan.
At the time, Noh said, "The National Federation of Fisheries Cooperatives president is structurally unable to be involved in lending," denying the allegations. However, as the controversy grew, the Financial Supervisory Service (FSS) moved up the schedule for the regular examination and said it would look into various suspicions surrounding Suhyup. In this examination, whether the federation intervened in the loan process is expected to emerge as a key issue.
Audits of individual local cooperatives are expected to take longer. The National Federation of Fisheries Cooperatives is conducting separate audits of local cooperatives on its own. Suhyup has a structure in which the federation and local cooperatives are separate; even if the federation recommends audits and disciplinary action, actual sanctions are decided by each cooperative's personnel committee. Therefore, it may take considerable time until a final disposition.
A National Federation of Fisheries Cooperatives official said, "The FSS regular examination checks for management and oversight issues at the federation level," and added, "As far as we know, there are no issues at the federation level." The official went on to say, "The internal audits of local cooperatives are still underway, so it will take more time to produce results."