Criticism has surfaced that the National Agricultural Cooperative Federation engaged in serious mismanagement, such as paying more than 10 million won in goodwill-style performance bonuses to executives, even as concerns over arrears at member cooperatives were growing. On the 9th, the Ministry of Agriculture, Food and Rural Affairs said that such management problems were found in a special audit of NongHyup conducted in Nov.–Dec. last year.
The special audit was launched after allegations surfaced during the National Assembly's audit in Oct. last year about parachute appointments at the National Agricultural Cooperative Federation, vote-buying in cooperative head elections, and embezzlement and improper loans at regional agricultural and livestock cooperatives. President Lee Jae-myung also said in last month's ministry briefing that "NongHyup is a real problem," ordering a thorough audit.
◇ Director put forward "give performance bonuses" agenda, then pushed it through
Arrears at NongHyup member cooperatives rose from the 9 trillion won range at the end of 2023 to the 14 trillion won range at the end of 2024, reaching 18.7 trillion won at the end of May last year. Yet at the National Agricultural Cooperative Federation's 2024 board meeting, one director abruptly tabled and passed an agenda to pay a total of 157 million won in special performance compensation to 11 people, including the vice president and executive managers.
The National Agricultural Cooperative Federation was also paying activity allowances twice a year to nonstanding directors, auditors, and cooperative audit committee members without even verifying their activities. The allowance was 3 million to 4 million won per month. Yoon Jong-hoon, a certified public accountant who joined this audit as an outside expert, said in a briefing, "The National Agricultural Cooperative Federation ranks within the top 10 of the business community in size, but I felt it lagged considerably behind general corporations in systems and professional staffing."
It was also confirmed that the federation's interest-free funding was concentrated in specific cooperatives whose heads served as federation directors. Among 1,052 general NongHyup cooperatives, the average amount of interest-free support in 2024 was 12.17 billion won per cooperative, up 7.6% from the previous year. However, for the 18 cooperatives whose heads were serving as federation directors, interest-free funds rose to 18.1 billion won, an increase of 26.3%.
There were also indications that the National Agricultural Cooperative Federation awarded no-bid contracts for goods purchases and services, including construction, to companies funded by retirees. The federation had been awarding no-bid contracts for security and driving staff to a particular service provider funded by a retirees' group, and a NongHyup subsidiary reportedly provided part of a building to this company free of charge. In addition, the federation signed management advisory contracts worth 1.585 billion won each with a specific consulting firm in 2023 and 2025. The government judged that some of the tasks did not match the purpose of the contracts.
National Agricultural Cooperative Federation President Kang Ho-dong was also flagged for excessive travel expenses and a lack of transparency in disclosing business promotion expenses. Since taking office in March 2024, Kang reportedly exceeded the federation's lodging cap on overseas trips by as much as 40 million won. The federation sets a cap of $250 per night, but Kang exceeded that by at least 500,000 won to more than 1.86 million won per night. Kang was also said to have stayed in suites at five-star hotels overseas.
Kang also reportedly did not disclose details of his business promotion expenses. He was said to have refused to provide an explanation on these matters when asked during the ministry's audit.
The ministry decided to launch an additional audit to determine whether the problems found this time warrant a criminal referral.
◇ Ministry audits NongHyup once every three years... failed to catch it all this time
The special audit has prompted criticism that problems with the ministry's regular audits of NongHyup have been laid bare. The Ministry of Agriculture, Food and Rural Affairs conducts a comprehensive management audit of NongHyup once every three years. Most recently, it audited NongHyup in 2024. The audit period then was 2021–2023, which overlaps with the period of this special audit (2022–2025). Yet illegal acts not detected in the regular audit at the time were uncovered en masse this time. A government official said, "This could be interpreted to mean that the ministry's audits of NongHyup have been conducted in a perfunctory manner."