NongHyup chairman Kang Hodong said on Jan. 13 at the NongHyup Central Federation headquarters building that he would work to restore trust by issuing a public apology and announcing plans to overhaul the organisation and improve systems, in connection with the interim results of a special audit by the Ministry of Agriculture, Food and Rural Affairs.

In his apology statement, Kang said, "I deeply feel responsible and sincerely apologise for failing to meet the expectations of the public and farmers and for causing concern." He added, "I will treat this case not as a simple crisis response but as a starting point to set NongHyup’s purpose for existence and role on the right path."

He then said, "We need reforms that match the public’s expectations." He stressed that he would faithfully follow through on subsequent procedures with a responsible attitude and restore trust through painful innovation.

NongHyup Central Federation decided to clarify the chairman’s authority and role and push ahead with personnel changes. Kang said he would step down as chairman of the Nongmin Newspaper and as chairman of the NongHyup Foundation, posts he had held concurrently by convention.

Key executives, including the executive director, the head of mutual finance and the president of the Nongmin Newspaper, also said they viewed the matter seriously, felt responsible and had expressed their intention to resign voluntarily.

Going forward, Kang plans to entrust overall management, including personnel matters, to business-dedicated representative directors and focus more on his core duties of developing agriculture and rural communities and expanding farmers’ rights and interests.

NongHyup Central Federation said it would take seriously the issues flagged in the audit and push institutional improvements. It said it plans to proactively fix shortcomings and matters that require institutional supplementation.

It plans to rationally overhaul related systems and procedures, including reflecting price levels in rules for overseas lodging expenses that were capped at $250 because regulations were not in place. Kang also plans to personally repay amounts spent above the lodging cap.

NongHyup reform committee to be formed, structural reform to be pursued

NongHyup will form a "NongHyup Reform Committee" to address structural problems across the organisation. The committee plans to identify improvement tasks centred on structural issues that have been continuously raised from outside, including how the federation chairman is elected, the governance structure and election rules for executives, including heads of agricultural cooperatives. It also plans to prepare reform measures to raise transparency in cooperative management.

The NongHyup Reform Committee will be chaired by an external expert and made up of specialists from the legal profession, academia, the agricultural sector and civil society, among other fields. It aims to thoroughly improve not only items flagged by the audit but also an overall set of unreasonable systems that have long been condoned as "custom."

It said it would closely communicate with a NongHyup reform promotion team to be formed by the Ministry of Agriculture, Food and Rural Affairs to speed up reforms.

Kang said, "NongHyup has done its best for agriculture, rural communities and farmers over the past 65 years, but I once again deeply apologise for falling short of the public’s expectations." He added, "Going forward, I will be more faithful to our core role of protecting agriculture, rural communities and farmers’ lives, regain the public’s trust and be reborn as a cooperative that is loved."