SoftBank-Backed Fish Firm Allegedly Faked Most of Its Sales

EFishery Pte, a high-flying agritech startup from Indonesia, just got tangled in a major fraud scandal that’s rattling the entire startup scene there. This company, which snagged hefty investments from industry giants like SoftBank and Temasek, is now under the microscope for puffing up its revenue and profit numbers like they're on steroids. To turn up the heat, a chunky 52-page draft report has been making the rounds among the investors, and guess what? Bloomberg News got a peek too. Talk about fanning the flames!

Indonesia's Rising Agritech Marvel

EFishery was the poster child for Indonesia’s startup game, especially for its fish farming hustle. With its smart feeders and tech-savvy solutions, it was all about leveling up aquaculture and helping farmers nail feed distribution like pros. This flashy innovation reeled in some serious coin, snagging big-name investors like G42 and even earning that unicorn badge of honor. But here’s the kicker—beneath all that shiny success, the books were allegedly cooked. Yep, the numbers might’ve been as fake as a three-dollar bill, leaving folks wondering if the company’s splashy claims actually held water.

The Allegations

An internal probe into the company, which specializes in fish and shrimp farming tech, dropped some jaw-dropping revelations. A draft report reviewed by Bloomberg spilled the beans: the company had allegedly puffed up its revenue by a whopping $600 million in just the first nine months of 2024. That’s over 75% of the reported figures turning out to be total fiction—talk about a sucker punch for investors!

Despite flaunting a $1.4 billion valuation and bragging about a $16 million profit for 2024, the investigation uncovered the truth: the business actually racked up a loss of $35.4 million. And those revenue numbers? What was hyped as $752 million was more like $157 million. Ouch.

A Whistleblower’s Revelation

When a whistleblower ratted out eFishery’s sketchy books to the board, all heck broke loose! They kicked off a deep dive in December 2024, and boy, did it unearth some jaw-dropping stuff. The company was all talk, claiming to run 400,000 fish feeders, but guess what? Only 24,000 were making a splash. The forensic audit then laid it all out. Since 2018, eFishery’s stakeholders have been playing a high-stakes game of double or nothing with their accounting—keeping one set of books for the inner circle and another for the outside world. This sneaky shuffle made them look like they were swimming in cash, totally duping investors and stakeholders.

And the plot thickens—they were also shuffling money around like a hot potato, tossing it between new companies to cook up some fake transactions. Now that’s shady! This whole circus has thrown shade on the management's rep and put a dent in the Indonesian startup scene’s street cred, which was already on thin ice with investors.

CEO’s Exit Raises Eyebrows

Following the bombshell findings, eFishery’s CEO, Gibran Huzaifah, got the boot, and now the company’s management is under a serious microscope. The preliminary report didn’t hold back, pointing out retained losses of around $152 million as of November 2024. Yikes.

With over $220 million in reported assets—including chunky accounts receivable and investments—the big question staring down investors and directors is, “What’s the next move with what’s left in the tank?” As the investigation keeps digging, you can bet more tea will be spilled on the company’s real financial state.

When Oversight Unmasked the Truth

Investors like SoftBank and Temasek got blindsided by eFishery’s cooked books, despite the company hiring big-league auditors like PWC and Grant Thornton. The scale of the discrepancies has sent shockwaves through Indonesia’s startup scene, shaking investor trust and putting future funding flows on thin ice. But the fallout doesn’t just stop here—it’s a major wake-up call for professionals in accounting, auditing, and corporate governance. Here’s the lowdown on what this saga teaches us:

• Rigorous Internal Controls: Fast-growing startups, like eFishery, need airtight checks and balances to keep managers from feeling tempted to fudge the numbers under performance pressure.
• Whistleblower Protection Programs: Employees need to feel secure blowing the whistle on shady practices. A safe environment for reporting misconduct is a must for nipping fraud in the bud.
• Continuous Monitoring and Due Diligence: External audits aren’t enough. Ongoing reviews, transparency, and a commitment to spotting red flags early are key to ensuring financial integrity.

Closing Note

The eFishery scandal has rocked Indonesia’s startup scene, raising tough questions about investor due diligence and oversight. This isn’t just a bump for the company—it’s a shake-up for emerging markets where trust in startups is key. With the investigation underway, all eyes are on eFishery. Can they repair their reputation, or is this the end of their rise? Either way, the impact is massive, prompting investors to rethink how they assess risks. Stay informed—subscribe to our weekly newsletter for must-know insights.