At the National Assembly audit, allegations that National Agricultural Cooperative Federation Chairman Kang Ho-dong received money and valuables came under scrutiny, and a series of NongHyup-related suspicions have prompted criticism that the Ministry of Agriculture, Food and Rural Affairs neglected oversight. NongHyup's sitting chairman has been searched by police, and even the vice chairman has been named as a subject of investigation. But the ministry in charge has not even conducted an inquiry. Experts noted that if the competent ministry's oversight is lax, corruption issues are bound to recur.
On the 28th, according to the Ministry of Agriculture, Food and Rural Affairs, the National Agricultural Cooperative Federation is a central organization formed by regional agricultural and livestock cooperatives as members, and under the Agricultural Cooperative Act it is subject to the supervision of the Minister of Agriculture, Food and Rural Affairs.
The legal basis for supervising the National Agricultural Cooperative Federation is stipulated by law. Article 162 of the Agricultural Cooperative Act states, "The Minister of Agriculture, Food and Rural Affairs supervises the central federation and may issue orders and take measures necessary for supervision."
Next, Article 164 provides that if operations or accounting violate laws or regulations, dispositions such as corrective orders, disciplinary requests for executives and employees, and suspension of business may be imposed. Article 166 likewise grants the authority to provide management guidance or suspend an executive's duties if losses occur due to illegal or improper acts by central federation executives and employees.
Despite this legal basis, the ministry has not yet intervened in the recent NongHyup corruption allegations. A ministry official said, "Under the NongHyup Act, the supervisory authority over the central federation and cooperatives basically rests with the ministry, but some matters concerning corruption allegations are structured to be entrusted to the central federation," adding, "Institutional improvements to enhance managerial transparency have been steadily pursued, and we are examining what needs to be improved in light of this case."
Another ministry official also said, "Only when the investigation results are finalized can we review legal measures," adding, "Follow-up actions such as dismissals are possible only after a Supreme Court ruling." In effect, this means the ministry will move only "after judicial determination," indicating it is reluctant to take preemptive control or personnel measures despite a supervisory basis.
On the 24th, at the National Assembly audit by the Agriculture, Food, Rural Affairs, Oceans, and Fisheries Committee, attacks targeting Chairman Kang intensified. Rep. Jeon Jong-deok of The Progressive Party said, "Must the 'president of farmers' be investigated on illegal corruption allegations? From personnel corruption allegations to bribery, is NongHyup a department store of corruption?"
Jeon released a recording indicating that Kang received money and valuables from a service provider official, claiming, "There is also a tip that an attempt was made at the Plaza Hotel to cajole." In response, Kang avoided a direct answer, saying, "I will go to the police and explain," and the National Agricultural Cooperative Federation said, "It is a one-sided recording by a third party, not the person involved," adding it would "clarify through an investigation."
On the 15th, the Seoul Metropolitan Police Agency's anti-corruption investigation unit searched Kang's office and other locations and is currently investigating allegations that Kang received tens of millions of won in money and valuables from a partner company official.
More recently, allegations arose that NH NongHyup Life had problems in the process of purchasing 2 billion won worth of promotional hand cream through a private contract, prompting the Financial Supervisory Service to begin an inspection. The actual delivered volume amounted to only half, and the subcontractor in charge of delivery turned out to be a skin-care shop run by an employee's family. In response, NH NongHyup Life claims that the deliveries were received in partitions considering seasonal factors.
There is also controversy that the National Agricultural Cooperative Federation purchased a "puffed rice machine" to promote rice consumption at a price far higher than in China. NongHyup said it selected by comparing the performance of machines from two bidders and that the bidding process was conducted transparently. Kang was elected the 25th chairman of the National Agricultural Cooperative Federation in January last year and began a four-year term in March of the same year.
The problem is that this is not the first time NongHyup has faced corruption allegations. Since the introduction of the directly elected chairman system in 1988, six of the seven past chairmen of the National Agricultural Cooperative Federation have been implicated in various corruption cases such as creating slush funds, bribery, and illegal electioneering, and were subjected to legal action. Even after the chairman's consecutive-term system was changed to a single term in 2009, controversies over "money-driven elections" and "favoring close associates in personnel" did not disappear.
Many view the endless stream of corruption allegations at NongHyup as stemming from powers excessively concentrated in the central chairman. The chairman of the National Agricultural Cooperative Federation is an unpaid honorary position, but effectively controls the "NongHyup group" by holding the authority to recommend personnel for nationwide cooperatives and affiliates as well as the budget and business direction. Still, the organization has been consistently criticized for weak internal checks. The chairman's powerful authority structure has long been recognized as a problem even within the ministry.
Experts noted that the case should not be seen merely as individual misconduct within NongHyup, but also as an issue tied to the election structure and internal power structure.
Im Jeong-bin, a professor at Seoul National University's Department of Agricultural Economics and Rural Sociology, said, "We first need to determine whether this case is merely an individual's deviation or a structural problem," adding, "The structure in which the NongHyup chairman election process overheats and money changes hands is itself the soil that breeds corruption." He added, "Institutional mechanisms must be strengthened to prevent excessive funds from being poured into the election process."
Baek Seung-woo, a professor at Chonbuk National University's Department of Agricultural Economics, emphasized, "Only if the ministry strengthens management and supervision more than it does now will a sense of alertness arise within NongHyup," adding, "If the supervisory body lets go, the corruption structure is bound to repeat."