The National Agricultural Cooperative Federation, a Hotbed of Corruption: President's "2.22 Million Won per Night" Luxury Trips and 2.3 Billion Won Worth of Phones Handed Out

Ministry of Agriculture Announces Interim Results of Special Audit on National Agricultural Cooperative Federation and Nonghyup Foundation
Two Cases of Suspected Misconduct Referred for Investigation, 65 Cases of Improper Operations Identified
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Kang Hodong, President of the National Agricultural Cooperative Federation, was found to have stayed at luxury hotels costing over 2.22 million won per night during overseas business trips. This exceeds the regulation of "250 dollars (about 360,000 won) per night" by six times. The National Agricultural Cooperative Federation's lax spending is not limited to this. All cooperative presidents who attended the General Assembly were given mobile phones worth about 2.2 million won each (a total of 2.346 billion won), and new directors were allowed to personally own work tablet PCs that should have been registered as Nonghyup assets.

On January 8, the Ministry of Agriculture, Food and Rural Affairs announced these interim results of the special audit on the National Agricultural Cooperative Federation and the Nonghyup Foundation.

On the 8th, Kim Jonggu, Vice Minister of the Ministry of Agriculture, Food and Rural Affairs, is announcing the "Interim Results of the Special Audit on the National Agricultural Cooperative Federation and the Nonghyup Foundation" at the Government Complex Sejong. Ministry of Agriculture, Food and Rural Affairs

The Ministry of Agriculture, Food and Rural Affairs conducted a special audit for four weeks from November 24 to December 19 last year, deploying a total of 26 people (including six external experts such as lawyers), following repeated allegations of misconduct related to Nonghyup raised during last October's National Assembly audit and other occasions.

Kim Jonggu, Vice Minister of the Ministry of Agriculture, Food and Rural Affairs, said, "This special audit was conducted simultaneously at both the National Agricultural Cooperative Federation and the Nonghyup Foundation, with audit offices set up at each. To ensure strict and objective auditing, six external experts, including lawyers and accountants, participated. In addition, 11 audit and inspection staff from the Ministry and four other public agencies, such as the Agricultural Policy Insurance & Finance Service, collaborated, bringing the total to 26 people."

The special audit uncovered a total of 67 cases of misconduct at the National Agricultural Cooperative Federation and the Nonghyup Foundation. The Ministry of Agriculture, Food and Rural Affairs has already requested an investigation by law enforcement on January 5 for two cases-suspicions of legal violations regarding the payment of legal fees for criminal cases involving Nonghyup executives and suspicions of breach of trust by Nonghyup Foundation employees-citing the need to secure further evidence and seek criminal judgment on the facts.

A Ministry official explained, "We confirmed that one executive paid legal fees for a personal criminal case using public funds," adding, "The Nonghyup Foundation case may constitute occupational breach of trust, as public funds were used inappropriately."

Of the 65 cases where the facts were confirmed through the special audit, the major issues included: ▲ improper composition and operation of internal control bodies; ▲ lenient and perfunctory disciplinary actions for executives and employees; ▲ improper execution and management of funds and expenses; ▲ closed and exclusive improper contracts; and ▲ the Nonghyup Foundation's disorganized and inefficient operations.

The audit found that the board of directors of the National Agricultural Cooperative Federation is supposed to form a personnel recommendation committee for executive nominations based on recommendations from agricultural organizations and academia. However, the National Agricultural Cooperative Federation (HR and General Affairs Team) only solicited candidates from a limited selection of such organizations, resulting in a restricted and closed composition and operation. In particular, at the 15th board meeting in 2024, a special performance bonus was proposed as an impromptu agenda item by one director and was approved without further review. A total of 157 million won was paid to 11 individuals, including the Vice President (Executive Director) and executive managers, with each receiving between 14 million and 16 million won, without thorough review of the reasons for payment or the amounts.

The National Agricultural Cooperative Federation also turned a blind eye to criminal acts by executives and employees. Although the principle is to report criminal acts, of the 21 disciplinary cases since 2022, six involved criminal suspicions but were not reported. Furthermore, the personnel committee responsible for disciplinary action, including for sexual harassment and other misconduct, was composed solely of internal staff without any women, and disciplinary levels reviewed by the HR and General Affairs Team were adopted 100% as is, indicating a perfunctory process.

Kang Hodong, President of the National Agricultural Cooperative Federation. (File photo)

President Kang stayed at luxury hotels during overseas business trips. Although the regulation caps overseas accommodation expenses at 250 dollars per night, this was not observed. The audit found that for all five of President Kang's overseas trips where accommodation fees were paid, the expenses exceeded the cap-by at least 500,000 won and up to 1.86 million won per night. The nightly accommodation cost ranged from a minimum of 860,000 won to a maximum of 2.22 million won. The total excess accommodation expenses amounted to about 40 million won.

The President of the National Agricultural Cooperative Federation also did not disclose the details of work-related expenses. According to the "Act on Disclosure of Information by Public Institutions," the President's work-related expense details must be made public. Vice Minister Kim stated, "Although the President is effectively executing work-related expenses, the details are not disclosed on the grounds that the work-related expense card is assigned to the secretariat," adding, "The Federation also pays regular activity allowances of 3 to 4 million won per month to non-standing directors, auditors, and cooperative audit committee members, and in addition, pays special allowances of 3 to 4 million won twice a year without special supporting documents."

Numerous improper contracts were also identified. Contracts for purchasing goods, services, and construction should be conducted through open competitive bidding, but contracts for services such as security and driving, with firms funded by retiree associations, were routinely awarded by private contracts. In particular, a Nonghyup subsidiary provided part of its building to such a firm free of charge.

The Ministry of Agriculture, Food and Rural Affairs plans to send prior notification of administrative action for these 65 cases within this month, initiating procedures such as appeals. Final notifications of administrative action are expected around March this year.

The audit also identified 38 additional matters requiring further investigation. The President of the National Agricultural Cooperative Federation concurrently serves as President of the Nongmin Newspaper Company, receiving annual actual expenses and allowances of 390 million won from the Federation, and an annual salary and severance pay (about 420 million won) exceeding 300 million won from the newspaper company. Upon retirement, the President also receives a retirement merit bonus (about 323 million won) from the Federation. Ha Seungsoo, an external audit committee lawyer, stated, "We will review whether it is legitimate and appropriate for the President to receive large salaries from both the National Agricultural Cooperative Federation and the Nongmin Newspaper Company, as well as a large retirement merit bonus," adding, "According to legal precedent, if an executive's compensation is significantly excessive compared to the work performed, it may be deemed illegal."

Additionally, the Federation provides new directors with tablet PCs, purchased as rewards, which are kept as personal property (not registered as Nonghyup assets). Upon retirement, departing employees receive, in addition to severance pay, farewell money collected by current staff, travel vouchers, and commemorative gifts (pure gold). At the 2022 regular general assembly, all cooperative presidents in attendance were given mobile phones (worth about 2.2 million won each, totaling 2.346 billion won), representing excessive benefits.

The National Agricultural Cooperative Federation's lax and irresponsible management and closed internal control system are also subject to further audit. Nonghyup Agribusiness Group paid special performance bonuses to full-time executives in January 2025, despite an expected net loss of about 81 billion won in 2024. There were also issues such as the compliance officer, who is supposed to play an internal control role, being appointed from within by the President.

Vice Minister Kim said, "The Ministry of Agriculture, Food and Rural Affairs will establish a pan-government joint audit system, involving the Office for Government Policy Coordination, the Financial Services Commission, and the Financial Supervisory Service, to conduct more thorough and rigorous additional audits of the National Agricultural Cooperative Federation and on-site specific audits of member cooperatives," adding, "We will conduct more thorough audits of the alleged misconduct and pursue fundamental institutional reforms to ensure Nonghyup is reborn."