Malaysia’s US$47 million investment in Indonesian start-up revealed as fraud

The Retirement Fund Incorporated’s (KWAP) US$47.7 million investment in Indonesian agritech start-up eFishery was the victim of an orchestrated fraud, Malaysia’s finance ministry has confirmed.In a parliamentary written reply dated July 15, the ministry explained that KWAP’s July 2023 investment followed a robust evaluation and governance process. This included internal assessments, independent due diligence and the verification of financial statements by certified international auditors.KWAP invested alongside a consortium of reputable international institutional investors, including Singapore’s Temasek, SoftBank, 42XFund and Northstar, all of which conducted their own rigorous reviews.Despite these comprehensive safeguards, the start-up’s management successfully executed a well-planned fraud by manipulating its financial reports.The consortium has since lodged reports with the relevant authorities and initiated legal action to recover the funds.“The consortium of investors, including KWAP, is continuing all possible efforts to recover the investment funds,” Prime Minister Anwar Ibrahim said.Internally, KWAP completed a holistic review of the investment and presented the findings to its board for scrutiny, leading to subsequent actions taken under its institutional accountability framework.The ministry was responding to a question from lawmaker Wong Chen (PH-Subang) regarding accountability actions against KWAP’s board and senior management following the failed investment.Last year, eFishery co-founder Gibran Huzaifah was sentenced to nine years in prison by an Indonesian court in Bandung after being convicted of embezzlement and money laundering, Free Malaysia Today reported.A preliminary investigation into eFishery, which deploys feeders to fish and shrimp farmers in Indonesia, found that management inflated revenue by almost US$600 million in the nine months through September 2024, according to Bloomberg.The company was the nation’s latest so-called unicorn, or a start-up valued at more than US$1 billion.Further ReadingThis story was first published by The Star