[비즈한국] A joint government special audit targeting NongHyup has uncovered widespread corruption across the organization. Numerous instances of public fund misappropriation, preferential lending, and accounting fraud have been exposed throughout the National Agricultural Cooperative Federation (NACF) and its member cooperatives. The government has requested investigations into 14 cases with significant evidence of illegal activity and is pursuing follow-up measures, such as institutional improvements, for 96 other cases. The audit findings point to the autocratic management of the NACF Chairman and weak internal controls as the root of these problems.
The government's announcement of the NongHyup special audit results on the 9th has caused a stir. Aiming to eradicate corruption within NongHyup, the government formed a joint special audit team starting January 26, involving the Office for Government Policy Coordination, the Ministry of Agriculture, Food and Rural Affairs, the Financial Services Commission, the Financial Supervisory Service, the Board of Audit and Inspection, and external experts to inspect the NACF, its subsidiaries, and member cooperatives.
The special audit team announced that it has requested investigations into 14 cases with significant grounds for illegal activity and will impose corrective measures, such as institutional reforms, for 96 cases requiring improvement. The matters referred for investigation include allegations of private use of NongHyup public funds by Chairman Kang Ho-dong and other executives, preferential lending and private contracts, and accounting fraud by insolvent member cooperatives.
The audit revealed that misconduct occurred across various areas within both the central federation and local cooperatives. The audit team also identified multiple incidents involving Chairman Kang Ho-dong. According to the team, Chairman Kang is suspected of using public funds to provide gifts to thank people for their support during his election campaign between 2024 and 2025. The report alleges that a key official at the NongHyup Foundation manipulated expenditure proof documents to siphon off approximately 500 million won in project funds, which were then used to provide gifts to local agricultural/livestock cooperative members and NongHyup employees who assisted in Chairman Kang's election.
Charges of violating the Improper Solicitation and Graft Act were also raised. According to the audit team, Chairman Kang received a gold key worth 10 don (approximately 5.8 million won) from a regional cooperative operating committee in February 2025 under the guise of celebrating his first anniversary in office, which he returned only after a certain period of time had passed.
Internal control issues were also highlighted. The audit team uncovered cases where the NACF Chairman operated the organization autocratically, such as failing to implement board resolutions on organizational restructuring, arbitrary execution of incentive payments, and opaque management of foundation funds. For example, over the past five years, 7.5 billion won in "incentive payments" were indiscriminately distributed to member cooperatives and specific departments through the Chairman and Vice Chairman without any objective performance evaluation.
Allegations also emerged that Chairman Kang received preferential treatment exceeding established standards. The audit team stated that when Chairman Kang signed a lease contract for his official residence in March 2024, with a dedicated area of 84.98㎡ and a deposit of 1.2 billion won, he violated both the guidelines for dedicated area (60㎡) and the deposit limit (at the time 500 million won, currently 1.09 billion won).
Budget management issues, abuses in human resources and hiring, and unfair practices across the NACF, its subsidiaries, and local cooperatives were also revealed. These included the NACF providing improper credit loans at the request of its holding company, leading to defaults, or providing financial support to companies where retired executives had been re-employed, despite low recovery prospects.
It was also discovered that some member cooperatives covered up financial instability through accounting fraud, such as arbitrarily adjusting interest rates on overdue loans and misrepresenting non-performing loans as healthy assets. In one case, a cooperative with a net loss exceeding 300 million won falsely reported a net profit of 500 million won and even paid out dividends of over 400 million won using funds created through accounting fraud.
Some problems in the cooperatives even led to requests for investigations. These include a case where a cooperative executive sent the personal information of job applicants to an interviewer to ensure they were all hired, and a case where a cooperative head purchased 40 million won worth of holiday gifts for acquaintances using advertising and promotional expenses. The audit team has requested investigations into each of these cases on charges of hiring solicitation and personal misappropriation.
This joint government special audit follows a special audit conducted by the Ministry of Agriculture, Food and Rural Affairs from November 24 to December 19, 2025. Beyond the cases referred for investigation, the government is taking corrective action on issues that can be handled immediately. Additionally, a plan for NongHyup reform will be announced following a government-party consultative meeting on the 11th.
Meanwhile, it is notable that Chairman Kang Ho-dong has not issued a specific statement regarding the allegations of embezzlement and violations of the Improper Solicitation and Graft Act. Immediately after the Ministry of Agriculture's announcement of the interim audit results in January, the NACF issued an apology and a reform plan. At that time, Chairman Kang personally apologized to the public. As part of its reform plan, NongHyup is currently operating its own NongHyup Reform Committee. The committee held its third meeting at the end of February to discuss issues such as improving the election system and innovating the human resources system. The fourth meeting is scheduled for March 10.
Regarding the results of this joint government special audit, the NACF stated, "We humbly accept the audit results and will make institutional improvements regarding the pointed-out matters," adding, "We will strive to prevent the recurrence of similar cases and work to restore the trust of farmers and the public by strengthening the transparency and accountability of the entire organization."