NongHyup chairman Kang Ho-dong has unveiled a reform plan and issued a public apology, but critics say it is a cosmetic move because it does not include stepping down as chairman. Some raise suspicions the steps are meant to avoid real responsibility after an interim special audit by the Ministry of Agriculture, Food and Rural Affairs revealed allegations of wrongdoing and weak internal controls.

In an apology statement on Jan. 13, Kang said he "deeply feels responsible" for causing concern to "the public and farmers". He said he would pursue "bone-cutting" reforms, using the case as a starting point to reaffirm NongHyup's purpose and role. Kang stressed he would make his commitment to reform clear through pre-emptive innovation even before the final audit results are released.

The reform plan has four pillars: reshaping authority, strengthening external oversight, improving systems and holding executives accountable. Kang said he would step down from the chairmanships of the Farmers Newspaper and the NongHyup Foundation, positions the federation chairman has customarily held concurrently. He said overall management, including personnel matters, would be delegated to professional managers such as the business-focused chief executive, while he would focus on developing agriculture and rural communities and improving farmers' rights and interests. The executive director, the head of the mutual finance unit and the president of the Farmers Newspaper will also resign over the matter.

On the use of overseas travel expenses cited during the audit, he said he was sorry "regardless of the reason" for spending more than $250 a day on lodging during overseas trips. He pledged to refund the full amount and overhaul systems and procedures.

He also pledged to form a NongHyup Reform Committee chaired by an outside expert to review structural issues including how the federation chairman is chosen, governance and the executive election system.

◆Calls for accountability grow despite apology and reform plan

Industry and political responses remain cold. The Korean Peasants League issued a statement the same day, criticising the plan as merely giving up part of the privileges it had enjoyed for a long time under the name of "custom" and saying it did not come close to the essence of reform. It said the current chairman is at the centre of serious issues including alleged illegal campaign funds, suspected bribery and controversy over parachute appointments. It urged him to immediately resign as federation chairman and sincerely cooperate with investigations into all allegations.

Jeon Jong-deok, a lawmaker from the Progressive Party, also said "self-reform" would not restore trust in NongHyup and that the starting point for reform is Kang's resignation as chairman. Calls were also raised to introduce a direct election system in which members directly elect the chairman and to establish an independent audit body. The argument is that ending concurrent posts and delegating authority alone does not change the core of the power structure.

The Korea Advanced Farmers Federation positively assessed measures such as forming a reform committee centred on outside experts. It said the government should give NongHyup time to pursue structural improvements autonomously rather than intervening unilaterally. It added it is necessary to watch whether voluntary reforms lead to tangible results.

The government's stance is even stricter. Agriculture minister Song Mi-ryeong publicly pointed to a governance problem, saying NongHyup is a cooperative but members' intentions are not democratically reflected. She said shortcomings in the system that undermine the cooperative spirit must be fixed. She stressed the need for institutional changes, saying a structure in which only a few senior executives know and decide on matters such as fund flows conflicts with members' interests.

The ministry said it plans to form a "NongHyup reform task force" this month and review follow-up legislation including changes to the election system and governance.

It will also activate an all-government joint audit system involving the Office for Government Policy Coordination, the Financial Services Commission and the Financial Supervisory Service, based on the already released interim results of the special audit. This is expected to lead to a probe into overall governance, including NongHyup Financial Group and NongHyup Bank.

Song said the joint audit system will operate through March, with additional probes into unresolved areas and referrals for criminal investigation when necessary. She said measures within its power would be taken forcefully.

Kang has been under police investigation since last year over allegations of taking bribes. He is accused of receiving money and valuables worth more than 100 million won in two instances from the head of a service contractor that did business with NongHyup affiliates around the time of the chairman election. With talk of possible additional allegations emerging in the final audit results, some see it as unlikely that trust in NongHyup's reform drive will be easily restored.

The financial industry is questioning the reform plan and apology statement. A financial industry official said resigning from concurrent posts and refunding travel expenses are unavoidable steps but are hard to view as the substance of reform. The official said the key issue may be how the ministry, centred on the agriculture ministry, will overhaul the overall system, including governance improvements, strengthening internal controls, blocking interference in personnel decisions and preventing money politics in elections. The official added that it is necessary to see how far additional audits and follow-up steps will go.