Government Joint Special Audit of NongHyup Launched... Financial Misconduct to Be Intensively Investigated by FSC and FSS

Special Audit to Begin on January 26
Audit Results to Be Announced in March

The special audit of NongHyup will be expanded into a pan-government investigation led by the Office for Government Policy Coordination. The government plans to conduct a rigorous audit by mobilizing not only the Ministry of Agriculture, Food and Rural Affairs, which is currently conducting a special audit, but also the Financial Services Commission, the Financial Supervisory Service, and the Board of Audit and Inspection.

On January 22, the government announced that it would form a "Government Joint Special Audit Team" comprising the Office for Government Policy Coordination, the Ministry of Agriculture, Food and Rural Affairs, the Financial Services Commission, the Financial Supervisory Service, and the Board of Audit and Inspection, and would launch a special audit of NongHyup starting on January 26.

NongHyup Central Association building. (File photo)

This special audit is a follow-up to the ongoing special audit by the Ministry of Agriculture, Food and Rural Affairs, with a significantly expanded scope and participating agencies. Previously, a total of 26 people were involved, including the Ministry, the Agricultural Policy Insurance & Finance Service, and external experts. Starting January 26, an additional 15 personnel from the Office for Government Policy Coordination, the Financial Services Commission, the Financial Supervisory Service, and the Board of Audit and Inspection will join, bringing the total to 41 participants.

A government official stated, "We have established a pan-government joint audit system to conduct a more thorough and intensive investigation into the alleged misconduct at NongHyup," adding, "The Government Joint Special Audit Team plans to focus on uncovering further facts related to NongHyup's irregularities, including improper election practices and reports of abnormal operations at member cooperatives."

The Office for Government Policy Coordination, serving as the control tower of the Government Joint Special Audit Team, will oversee and coordinate all audit work to maximize the synergistic effect of the joint investigation. The Financial Services Commission and the Financial Supervisory Service will focus on financial matters within their jurisdiction, and two professional auditors from the Board of Audit and Inspection will also participate in the audit.

The government aims to quickly uncover the alleged misconduct at NongHyup through this special audit and announce the results by March. In addition, within this month, the government plans to establish the "NongHyup Reform Task Force," which will include representatives from the agricultural sector and external experts, to accelerate fundamental institutional reforms such as strengthening the election system, enhancing internal and external controls, and improving governance structure.

Previously, on January 8, the Ministry of Agriculture, Food and Rural Affairs announced the "Interim Results of the Special Audit of NongHyup Central Association and NongHyup Foundation." The Ministry referred two cases of alleged misconduct for investigation: one involving executives and staff of the Central Association who paid legal fees for individual criminal cases with company funds, and another involving NongHyup Foundation executives suspected of breach of trust. The Ministry also identified 65 cases of improper institutional management. In particular, Kang Hodong, President of NongHyup Central Association, spent more than 2.22 million won per night on overseas business trips and, while concurrently serving as President of the Nongmin Ilbo, received an annual salary exceeding 300 million won. In response to these findings, President Kang issued a public apology on January 13, resigned from his position as President of the Nongmin Ilbo, and pledged to reimburse the excessive travel expenses with his personal funds.