[The World of Kickbacks]② "You'll Have a Hard Time From Now On"... The Fate of a Hanaro Mart Retailer Who Refused a Bribe

Nonghyup Distribution Purchase Corruption Allegations
Interview with Witness Summoned by Prosecutors

On the morning of the 29th, the seafood section at NongHyup Hanaro Mart in Yangjae-dong, Seocho-gu, Seoul. Photo by Han Yeju

Mr. A, who ran a commission-based store for 10 years at Hanaro Mart in Seoul operated by Nonghyup Distribution, cannot forget a phone call he received in the fall of 2020. At the time, there were only about three months left before the annual Nonghyup contract expired, but he had no doubt the contract would be renewed as he had run the store without significant issues.

Mr. B, a senior-level MD (merchandiser) at Nonghyup Distribution, announced he would visit Mr. A’s office. Although they had dined together with other employees before, it was the first time they would meet one-on-one, which made A understandably nervous. Nevertheless, since the contract renewal was approaching, A wanted to make a good impression and invited B to a nearby restaurant.

As the meal progressed, B said, "Just give me 5 million won." It was a blatant demand for money. A immediately refused. In response, B abruptly stood up, saying, "You are going to have a hard time from now on," and left.

Two months later, what A had feared came true. Nonghyup Distribution notified him that the operating rights for the store, which had previously been awarded through private contracts, would now be subject to open bidding. Four or five companies participated in the open bid. Even though A hired a professional presentation company to prepare, there were widespread rumors that "Company B," supported by C, the manager of seafood purchasing, was already picked for success. In the end, A lost the bid. After running the store for 10 years, he had to leave. "I even hired a professional presentation company to participate in the open bidding process, but I just ended up in a supporting role," A said, still expressing frustration.

In an interview with The Asia Business Daily, Mr. A, who was summoned as a reference by the prosecution in April this year during their investigation into bribery allegations at Nonghyup Distribution, described the process that led to his exit from Hanaro Mart.

Mr. B, who demanded 5 million won from Mr. A, served as a seafood MD for nearly a decade. Typically, Nonghyup Distribution assigns the MD position for only two to three years to prevent collusion with suppliers, but B was an exception. According to A, B, a former labor union executive, became a VIP figure in Jeju-do after overseeing seafood purchasing there for 10 years. The value of seafood B purchased each year reached tens of billions of won, and in Jeju-do, a major seafood-producing region, he was given special treatment. A said, "He wielded unimaginable influence in Jeju, and I heard that whenever he went there on vacation, they gave him royal treatment."

Within the distribution industry, there are concerns that annual private store contracts have enabled such abuse of power by merchandisers. In fact, according to data submitted by The Minjoo Party of Korea lawmaker Lee Jaegwan’s office to the National Agricultural Cooperative Federation, as of this year, all 19 Hanaro Mart commission-based live fish stores operated by Nonghyup Distribution had entered through private contracts. There hasn’t been a single bid over the past five years.

These live fish commission-based stores (tenants) pay Nonghyup Distribution a fee based on a percentage of seafood sales. The number of these commission stores increased from eight in 2021, including Hanaro Mart Yangjae Branch, to 15 in 2022, and grew further to 23 in 2024. Since then, the number slightly declined. As the number of stores grew, their sales increased sharply: from 3.1 billion won in 2021 to 8.4 billion won in 2024, with sales reaching 5.6 billion won by August this year.

Mr. A remarked, "To put it simply, at Nonghyup Distribution, you just have to be in the right line. If you caught the eye of C, who held real power, you could become a full-time employee even if you joined as a contract or special appointee. If you stood in the so-called right line, it was only a matter of time before you landed a key position."

C, who was regarded as the real power broker at the time of the bid, has since been promoted to a senior executive position, while B has left the company.  

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