[1mm Financial Talk] Controversy Over NongHyup Central Association President's Self-Reappointment Law

Lee Seong-hee, President of the National Agricultural Cooperative Federation

[Asia Economy Reporter Bu Aeri] The National Agricultural Cooperative Federation (NACF), which faced severe criticism over the unprecedented 'special savings product cancellation' incident, is now at the center of controversy again due to a revision bill of the Agricultural Cooperative Act (Nonghyup Act) that focuses on the reappointment system for the NACF president. Some in the financial sector continue to criticize it as Lee Seong-hee NACF president's 'self-reappointment law.'

According to the National Assembly and financial circles on the 28th, the Agricultural Cooperative Act revision bill was passed at the early this month’s subcommittee of the Agriculture, Forestry, Livestock, Food, and Fisheries Committee. Although the subcommittee usually discusses until full agreement between the ruling and opposition parties is reached, the bill was forcibly passed when Kim Seung-nam, a Democratic Party member and co-chair of the subcommittee, put it to a vote despite opposition from Democratic Party lawmakers Shin Jeong-hoon and Yoon Jun-byeong. Although it was not submitted to the full committee meeting of the Agriculture, Forestry, Livestock, Food, and Fisheries Committee held that morning, some ruling and opposition lawmakers are strongly pushing it, making it likely to emerge as a major issue next year.

Lawmakers Shin and Yoon have expressed caution about the bill’s passage. If this bill is discussed and passed next year, it is highly likely to apply to President Lee, whose term runs until January 2024, leading to continued criticism of it as a 'self-reappointment law.' In a closed subcommittee meeting, Lawmaker Shin said, "Under the current opaque election law, this is a law to extend the term of the incumbent NACF president," adding, "This issue needs to be discussed more thoroughly and alternatives must be prepared."

Lawmaker Yoon also criticized, "The currently elected NACF president was elected under a single-term system, but if it changes to a reappointment system, it will exert enormous influence not only on the member cooperative support funds but also during the election process." After the subcommittee, Lawmaker Yoon even introduced a bill to prevent self-reappointment. The Agricultural Cooperative Act revision bill he proposed on the 16th stipulates that even if the reappointment system is introduced in the future, its application will only apply to the NACF president elected for the first time after the law’s enforcement.

The NACF labor union and others have also continuously opposed this bill. Min Kyung-shin, chairman of the National Cooperative Union Labor Union, said in a phone interview, "Even under the four-year single-term system, management issues such as collusion with cooperative heads were not controlled, and if the reappointment system is applied, vested interests will become even more entrenched," adding, "The NACF president election should first move to a direct election system by cooperative members, not cooperative heads."

Some criticize that the NACF is focusing all its efforts solely on the president’s reappointment while neglecting important supervisory duties. In fact, the NACF has been criticized for poor management and supervision following the special savings product cancellation incidents at Namhae Livestock Cooperative and Donggyeongju Cooperative. These cooperatives conducted special savings promotions but faced a crisis of bankruptcy as 900 billion KRW, 90 times the target amount of 10 billion KRW, poured in. They caused controversy by requesting customers to cancel their savings. As a result, the Financial Supervisory Service has stepped in and ordered each NACF branch to strengthen internal controls such as special product management systems. A financial sector official familiar with the NACF situation said, "The organization's priorities have shifted, and attention is focused on the wrong areas, so it is difficult to expect detailed management."

This content was produced with the assistance of AI translation services.