Probe zeroes in on NongHyup chief

By Choi Kyong-ae

Choi Won-byung

Choi Won-byung, chairman of the National Agricultural Cooperative Federation (NACF), may face a similar fate his three predecessors suffered as prosecutors will investigate if he was involved in allegedly illegal loans to a resort company.

The NACF is also called NongHyup, the cooperative federation of Korean farmers. NACF runs a wholly-owned NH Financial Group whose nine affiliates include NH Bank, NH Life Insurance, NH Development and NH Investment & Securities.

“On July 31, a team of prosecutors from the Supreme Prosecutors’ Office dropped by the headquarters of NH Bank in western Seoul to secure the loan-related documents and statements from bank officials,” an NH spokesman said Tuesday.

A spokesman for the Supreme Prosecutors’ Office confirmed there was a raid on NH Bank’s headquarters last week. But he declined to comment on the “ongoing” investigation.

Local media reports had it that NH Bank, the flagship unit of NongHyup, has extended loans worth 140 billion won ($120 million) to Resom Resort since 2011 under the pressure of unidentified outside forces.

In the illegal lending scandal, one of NH Bank officials who decide the credit limit for customers depending on their capability to repay debts opposed to an additional lending to Resom Resort in July 2011, citing risks of non-performing loans, according to reports.

But more loans were extended to Resom later that year. Before the loans were executed, Chairman Choi was reportedly briefed on the matter, they said.

Chairman Choi, 69, may also be investigated into alleged charges of setting up a slush fund, the reports said. All of his three predecessors stepped down in the middle of their tenure as they were arrested for their involvement in making slush funds and other wrongdoings.

“Choi is one of close aides to the former President Lee Myung-bak. With the general election coming in April next year, there seems to be the political influence which wants to replace him with their own pick to win the election,” said an official from KB Financial Group. “They can exert their influence over farmers through NongHyup’s nationwide networks.”As of June, 2015, 2.35 million farmers as NACF members invested in the farmers’ federation and make financial transactions in its affiliates.

Choi has served as chief of the farmers’ federation since 2007 and his second four-year term ends in January next year.

In a statement released on July 30, NH Bank said, “The loans were delivered to finance Resom’s projects to build new facilities. We made the lending to help the resort continue its business and pay back their debts.”

Resom has paid back interests to the loans in the past 10 years without delays despite capital erosion and a prolonged slump in the real estate market, the statement said.

Resom saw its capital begin to erode in 2005 and last year its debts worth 382.7 billion won exceeded assets valued at 322.4 billion won in capital erosion.