Prosecutors said Wednesday they have raided the offices of an affiliate of the National Agricultural Cooperative Federation over allegations that it created slush funds by exaggerating construction expenses.

The Seoul Central District Prosecutor's Office said it has confiscated hard disks containing accounting books and contract documents of construction service provider NH Development Ltd., based in eastern Seoul. 

Prosecutors are investigating whether the company created slush funds with its business partners by exaggerating the cost for the construction of Nonghyup's franchises, such as Hanaro Mart.

Prosecutors have detained the owner of the company's two main business partners, identified only by his surname Jung, on July 15.

The 54-year-old Jung is suspected of siphoning some 5 billion won ($4.22 million) in the process of constructing 21 projects that NH Development Ltd. ordered.

As the younger brother of Nonghyup chairman Choi Won-byung is working as an adviser at one of the subcontracted companies, known only by its initial H, prosecutors are investigating whether the embezzled money flowed to the leading members of Nonghyup. (Yonhap)