Will NongHyup carry out large-scale reforms effectively?

National Agricultural Cooperative Federation Chairman Kang Ho-dong, right, attends the National Assembly's Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee, Oct. 24. Yonhap

The recently announced reforms by the National Agricultural Cooperative Federation (NACF), which also operates NH NongHyup Bank, are drawing attention over whether, and to what extent, a sweeping personnel overhaul will follow, market watchers said Thursday.

The organization unveiled a wide range of measures, Monday, to restore public trust following a series of corruption scandals and operational irregularities, including employee embezzlement and poorly screened loans.

At the heart of the reforms is a focus on strengthening the central cooperative’s oversight and ensuring a corruption-free regional network, with the goal of rebuilding public confidence.

NH NongHyup Financial Group Chairman Lee Chan-woo / Yonhap

According to the NACF, it plans to replace more than half of its top executives, including senior management and board members, while strengthening transparency in the executive selection process.

Retired NACF officials will, in principle, be barred from reemployment as part of a broader effort to end the culture of influence-driven networks.

Top executives will be dismissed upon confirmation of serious misconduct, in accordance with a new accountability system.

The NACF also intends to ban arbitrary contracts that did not undergo public bidding to prevent unfair practices and conflicts of interest, strengthening transparency in procurement and operations.

NH NongHyup Bank CEO Kang Tae-young / Korea Times file

The central body will withhold its support from any cooperative proven to have committed misconduct. This is in response to repeated cases of embezzlement and fraud at regional agricultural and livestock cooperatives.

Their spending will be strictly reported and monitored. Election-related corruption will be monitored by the central body’s newly established committee. Suspected irregularities will be immediately investigated.

Regional cooperative members seeking mergers to bolster competitiveness will receive greater financial support from the central body.

The NACF aims to restore public trust. It plans to invest 108 trillion won ($78 billion) over the next five years in productive and inclusive finance to support innovative industries and small businesses.

The slew of measures came after irregularities were reported at the organization.

During this year’s assembly audit, NACF Chairman Kang Ho-dong was grilled due to allegations of bribery.

Kang is suspected of having received 100 million won from the head of a firm doing business with NongHyup affiliates in January 2024.

Police said the head offered the cash in exchange for favors related to contract deals with the NACF, adding that Kang will soon be summoned for questioning as a suspect.

In addition, Rep. Mun Geum-ju of the ruling Democratic Party of Korea said that half of the 10 loan-related irregularities uncovered at NH NongHyup Bank over the past two years were committed by its employees, with the total amount reaching 29.3 billion won.

In October of last year, the bank was investigated by police over a fraudulent loan granted to a borrower who used falsified documents.

The banking subsidiary of NongHyup Financial Group said at the time that a customer had committed loan fraud worth 1.5 billion won at one of its branches in Seoul.

“We will continue efforts to bolster transparency and public trust,” a NH NongHyup Bank official said.