The Root Cause of 'Nonghyup Corruption' Is 'Money Politics'... "Abolish the Six-Month Statute of Limitations for Elections" [Why&Next]

Interim Results of the Special Audit of the National Agricultural Cooperative Federation and Foundation
Various Irregularities, Personnel and Organizational Mismanagement, and Dysfunctional Internal Controls Identified
Electoral System and Governance Reform to Be Reviewed
Through the 'National Agricultural Cooperative Reform Task Force'

"It was the consensus among the external audit committee members, including myself, that the root cause of various issues occurring at the National Agricultural Cooperative Federation and its affiliated cooperatives lies in the electoral system," said attorney Ha Seungsoo, an external member of the special audit committee for the National Agricultural Cooperative Federation and the National Agricultural Cooperative Foundation.

On January 8, while announcing the interim results of the special audit of the National Agricultural Cooperative Federation and the National Agricultural Cooperative Foundation, attorney Ha Seungsoo identified the electoral system as the fundamental cause of corruption within the organization. He explained that the various irregularities and mismanagement in personnel and organizational operations at the National Agricultural Cooperative Federation stem from "money politics" in elections. To prevent this, he recommended abolishing the statute of limitations (currently six months) for election-related crimes within the organization.

The previous day, the Ministry of Agriculture, Food and Rural Affairs announced the interim results of the special audit of the National Agricultural Cooperative Federation and the National Agricultural Cooperative Foundation. The audit revealed that executives of the Federation had used company funds to pay for personal legal fees in criminal cases, and that there were allegations of breach of trust involving executives of the Foundation. It also confirmed instances of excessive spending, such as the Federation's chairman using luxury hotels costing over 2.22 million won per night during overseas business trips.

Attorney Ha stated, "Because elections at the National Agricultural Cooperative Federation require significant financial resources, there is a high risk of irregularities occurring to secure funds. The practice of appointing people who helped in the election to key positions is also prevalent. Without eradicating money politics, reform of the National Agricultural Cooperative Federation is impossible."

The current Public Official Election Act stipulates a six-month statute of limitations for election-related crimes. Based on this, both the Agricultural Cooperatives Act and the Act on Entrusted Elections for Public Organizations set the statute of limitations for the Federation's elections at six months. This means that even if unlawful acts are committed during elections, they cannot be prosecuted after six months.

Attorney Ha emphasized, "Currently, there is a widespread perception that 'as long as you use money illegally in the election, you just have to wait out the six-month statute of limitations.' The external audit committee members agreed that the special provision of a six-month statute of limitations should be abolished, and that money politics in elections should be thoroughly tracked and punished to the end."

The government also believes that improvements to the electoral system, including abolishing the statute of limitations for election crimes within the National Agricultural Cooperative Federation, are necessary. Kim Jonggu, Vice Minister of the Ministry of Agriculture, Food and Rural Affairs, stated, "Because the statute of limitations expires within six months even in cases of corruption, excessive money politics are occurring. This month, we plan to form a 'National Agricultural Cooperative Reform Task Force' (tentative name) that will include members of the agricultural sector and external experts to review improvements to the electoral system."

There is also an urgent need to improve systems to strengthen internal controls such as the compliance officer, personnel committee, audit committee, and cooperative audit committee within the National Agricultural Cooperative Federation. Currently, the Federation's chairman appoints the compliance officer, who should be responsible for internal control, from within the organization. A Ministry of Agriculture, Food and Rural Affairs official explained, "We believe that the compliance officer should be someone who can view matters objectively. However, even if the compliance officer is always an external person, if they have close ties to the Federation, it is meaningless. Therefore, we are considering institutional mechanisms to ensure that the compliance officer can properly perform internal control functions."

Another issue is that, including the chairperson, three out of five members of the audit committee and the cooperative audit committee are former or current executives of the National Agricultural Cooperative Federation or its affiliates, or former or current cooperative presidents. To address this, appointing an external person as the chairperson is being considered.

The Ministry of Agriculture, Food and Rural Affairs plans to establish a pan-government joint audit system this month with the Office for Government Policy Coordination, the Financial Services Commission, and the Financial Supervisory Service to conduct more thorough and intensive additional audits of the National Agricultural Cooperative Federation and on-site targeted audits of member cooperatives. Additionally, the National Agricultural Cooperative Reform Task Force will discuss institutional improvement tasks identified through audits and review reforms to the electoral system and governance structure.

Vice Minister Kim stated, "Through this special audit, we will fundamentally identify the causes of corruption and use this as an opportunity to implement improvements. We will devise fundamental solutions so that the National Agricultural Cooperative Federation can fulfill its proper role."