The government said on the 11th it will push to revise the NongHyup Act to suspend NongHyup executives and employees from duty if they receive a first-trial guilty verdict on charges such as embezzlement or breach of trust. National Agricultural Cooperative Federation President Kang Ho-dong is under police investigation on suspicion of receiving money and valuables from a businessperson in a transaction relationship with the federation during the 2024 presidential election process. In addition, a recent government audit uncovered additional suspicions of embezzlement and taking money and valuables, leading to another investigation. If the government's proposed amendment passes and Kang is indicted and receives a first-trial guilty verdict, his duties will be suspended.
On this day, the Ministry of Agriculture, Food and Rural Affairs announced the "Phase 1 NongHyup reform plan" after consultations between the ruling party and the government. Earlier, the National Assembly noted that election corruption and poor management at NongHyup were serious. In response, the ministry conducted a special audit in Nov.–Dec. last year. A subsequent joint audit by government ministries ran from late Jan. to early this month.
According to the audit results, an executive at the NongHyup Foundation siphoned off 490 million won from business expenses to buy gifts for cooperative heads, members, and executives and employees who helped Kang win the presidency. Kang also is said to have received a 10-don gold key worth 5.8 million won from some cooperative heads on the first anniversary of his inauguration. The government, therefore, asked police to investigate Kang and related executives and employees on charges including embezzlement and violating the anti-graft law.
The government said it will prepare a legal basis in the NongHyup Act to allow suspension from duty if executives and employees of the federation receive a first-trial guilty verdict on charges such as embezzlement, breach of trust, or taking money and valuables. Currently, Article 164 of the NongHyup Act states that the Minister of Agriculture, Food and Rural Affairs may order suspension from duty for executives recognized to have violated laws or articles of association in the course of work. However, there have been no NongHyup executives suspended under this provision. The amendment will specify the requirements for suspension from duty more concretely than "acts that violate laws or articles of association in the course of work."
◇ Clarifying the ban on concurrently serving as federation president... an independent audit committee under the Agriculture Ministry will audit the holding company and affiliates
A revision of the NongHyup Act to reduce the federation president's powers will also be pursued. The government will codify in the act that "the federation president must not exert undue influence over personnel or management." A legal provision will also be prepared to ban the federation president from concurrently holding executive positions at other affiliates. After taking office in Mar. 2024, Kang also served as CEO of The Nongmin Shinmun and reportedly received an additional annual salary of more than 300 million won. Kang stepped down as CEO of The Nongmin Shinmun after the announcement of the government's special audit results in Jan.
The interest-free "member cooperative support fund," known as the president's "governing fund," will require prior annual allocation plans to be reported to the Agriculture Ministry so the president cannot arbitrarily expand the total amount or allocate it to specific cooperatives. The support fund is created through the federation's and cooperatives' own revenue or bond issuance. It was 16 trillion won last year and 18 trillion won this year. The audit found indications that the president unilaterally expanded the fund's size and funneled support to favored cooperatives.
Meanwhile, the government will establish the "NongHyup Audit Committee," an independent audit committee under the Ministry of Agriculture, Food and Rural Affairs. Previously, the ministry regularly audited the National Agricultural Cooperative Federation and cooperatives, and there was an internal audit committee under the federation. Nevertheless, because internal controls did not function properly, a separate independent audit body will be created. If the amendment passes, the committee will audit not only the federation and cooperatives currently audited by the ministry but also NongHyup Economic Holdings and all of its subsidiaries. However, NongHyup Financial Holdings and mutual finance institutions will continue to be supervised by the Financial Services Commission.
A Ministry of Agriculture, Food and Rural Affairs official said, "The ruling party and the government decided to implement this reform plan swiftly," and added, "The ruling party will quickly introduce a bill to amend the law for the reform plan, and the government will flesh out and actively push the follow-up reform tasks." The official also said, "This plan is the first-phase reform plan, and we will additionally prepare measures to revitalize NongHyup's economic business and to restrict reemployment of departing executive managers."