NongHyup group under investigation over 10.9 billion won embezzlement

The financial watchdog is investigating the internal controls of Nonghyup Financial Group and its affiliates over the embezzlement of 10.9 billion won by an employee between 2019 and 2023.

Yoon Byung-un

The Korean financial watchdog is inspecting internal controls of NongHyup Financial Group and its affiliates following the embezzlement of 10.9 billion won ($8.3 million) and controversy surrounding the CEO appointment at NH Investment & Securities.

The Financial Supervisory Service (FSS) launched on-site probes last week into the financial group NongHyup Bank and NH Investment & Securities.

The scope of the investigation is comprehensive as the major group is involved in a series of scandals.

A banker at NongHyup Bank inflated the value of collateral tied with loans, generating 10.9 billion won in losses, according to the bank. Given that the misconduct took place between 2019 and 2023, the authorities are questioning the group’s capability to manage internal control.

The bank found out about the fraud earlier this month and is in the process of filing a criminal suit against the employee.

In a separate event, the group faced a rough road in naming a replacement for outgoing CEO Jeong Young-chae at its brokerage affiliate because of a disagreement between the heads of NongHyup Financial Group and the National Agricultural Cooperative Federation.

NH Investment’s CEO candidate recommendation committee named Yoon Byung-un, NH Investment & Securities' executive vice president, as the final candidate on Monday, a figure widely considered to have the endorsement of the NongHyup Financial Group chairman.

The committee's shortlist had included two other candidates — Yoo Chan-hyung, a former vice chairman at the National Agricultural Cooperative Federation and Sa Jae-hun, former vice president at Samsung Securities.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]