SEOUL, KOREA - The Korean Federation of Community Credit Cooperatives, the organization representing the interest of small savers and small business owners, turned out to have incurred billions of won of losses and other mishaps in its management practice.

The Ministry of Public Administration and Security said on February 4 that it has conducted an audit on the credit union and its sales offices across the country for ten days from August 28 to September 7 and found out a total of 69 problems including 39 warnings, 18 remedial orders, 10 improvement orders, and 2 recommendations.

 

The credit union's total assets have grown 15 percent to 104.8 trillion won as of the end of 2012 from 91.4 trillion won at the end of 2011. The assets under management are also in excess of 50 trillion won.

 

The recent audit revealed that the organization's investment portfolio has been focused too much on cyclically sensitive areas such as real estate financing and real estate investment trust. The audit report proposed that the credit union be mandated to set a maximum investment limit on real estate.

 

The ministry will soon set out to make an in-depth audit on the federation and 1,427 individual credit cooperatives under the umbrella, in partnership with the Financial Services Commission and the Financial Supervisory Service.