The government said on the 9th that the National Agricultural Cooperative Federation provided funding in the 60 billion won range in 2022 to a capital company where a former executive served as an officer, and that the prospects for recovery are unclear. The government said it asked police to investigate employees involved in the funding support on suspicion of breach of duty.
That day, the government announced the results of a special audit of "National Agricultural Cooperative Federation·subsidiaries·member cooperatives." The audit found that the National Agricultural Cooperative Federation improperly handled low-feasibility projects and large unsecured loans.
According to the government, the federation's mutual finance institutions and the NongHyup Foundation provided funding in the 60 billion won range in 2022 to B Capital, where A, a former managing director of the federation, served as an advisor. A was said to have returned in March last year as an executive in the federation's mutual finance institutions. The recovery of the money provided to B Capital is said to be uncertain. In connection with this matter, the government asked police to investigate A and the employees who provided the funding on suspicion of breach of duty.
It also emerged that a 14.5 billion won unsecured loan the federation extended in 2022 to a frozen food manufacturer went into arrears in Feb. last year. The loan was said to have been requested by NongHyup Economic Holdings to the National Agricultural Cooperative Federation. However, the government concluded that the review was lax across the board on the business plan, required funds for facility investment, repayment capacity, and creditor protection measures during the screening process. It asked police to investigate the employees involved on suspicion of breach of duty.
In addition, the federation last year lent 110 billion won to a logistics center operator to promote a logistics center construction PF. In doing so, it was said to have granted preferential treatment, such as having NongHyup enter into a lease agreement after the logistics center was completed. The contracted rent at the time was also 47,000 won per pyeong, reportedly higher than the surrounding market rate (22,000 won to 45,000 won). However, due to an oversupply of logistics centers and other factors, it was said to be uncertain whether the project principal can be recovered.