Indonesia Arrests eFishery Founder in Fraud Investigation

The founder of the Indonesian aquaculture startup eFishery, Gibran Huzaifah, along with two associates, has been arrested on allegations of fraud, according to police statements released on August 5, 2024. This development marks a significant shift for a company that once stood as a prominent player in the aquaculture industry, offering an innovative online platform for fish and shrimp farmers.

eFishery, which aimed to revolutionize the sector by providing services for “feed, financing, and market,” has faced turmoil since late 2024. Following suspicions of revenue irregularities, Gibran was suspended from his role as chief executive. The national police’s director of special economic crime, Helfi Assegaf, confirmed that Gibran and two former executives are now suspects in a case involving the manipulation of the company’s financial books.

The allegations indicate that the trio engaged in fraudulent activities during the investment process by artificially inflating eFishery’s revenue and profit to attract investors. Helfi Assegaf disclosed that nearly 15 billion rupiah (approximately US$915,499) had been embezzled from the firm, although he did not specify whether formal charges had been filed against the suspects.

“The three collaborated to carry out fraud and embezzlement on the investment process of eFishery by marking up the investment,” Helfi told reporters. “It’s still under process. We also are carrying out an audit of financial reports and the use of money.”

The three individuals have been in custody since July 31, 2024, according to information from the Indonesian police-run site Tribratanews. Following Gibran’s suspension, eFishery faced significant operational challenges, leading to widespread layoffs and the appointment of a consulting firm to manage the company.

Once valued at US$1.4 billion, eFishery has seen its reputation tarnished due to findings from an internal investigation that revealed inflated accounts and significant losses for investors amounting to hundreds of millions of dollars. In a recent interview with Bloomberg, Gibran acknowledged that he had manipulated the company’s financial statements but denied any intent to steal funds.

eFishery attracted investments from notable firms including SoftBank and Temasek, indicating the potential for substantial growth in a burgeoning market. However, this incident has raised concerns about transparency and governance within the startup sector in Indonesia, reflecting broader challenges in maintaining trust and integrity in rapidly evolving industries.

As the investigation continues, stakeholders and investors will be closely monitoring eFishery’s next steps, particularly in the wake of the ongoing financial audits and the impact of this scandal on the company’s future viability.