Anatomy of a crisis: Inside an Indonesian startup's scandal

The year 2025 saw one of Southeast Asia's celebrated tech success stories unravel. An Indonesian agritech unicorn, eFishery, once valued at US$1.4 billion, imploded under the weight of a massive financial fraud. 

The fraud at eFishery was both audacious and deeply embedded, spanning several years. For the first nine months of 2024, the company reported revenues of US$750 million and a pre-tax profit of US$16 million to its investors and board. 

The reality, unearthed by the FTI audit, was dramatically different: actual revenue was only US$150 million, and the company had incurred a loss of US$35.4 million. This amounted to a revenue inflation of nearly US$600 million, meaning over 75% of reported sales were fake.

Investigations indicated this financial manipulation had been occurring since at least 2018. Central to the deception was a system of dual accounting, with one set of books for internal use and a heavily inflated version for external stakeholders like investors and auditors. 

To support the fake numbers, management allegedly used at least five shell companies to cycle funds and create the appearance of legitimate transactions. Employees were reportedly instructed to forge documents. 

Beyond financials, the fraud extended to key operational metrics. eFishery claimed to have over 400,000 of its IoT-enabled smart fish feeders deployed across Indonesia. The FTI audit found the actual number was only around 24,000. Further reports suggested the number actively transmitting data was even lower, with only a fraction sending reliable information. 

Claims of advanced “AI-enhanced” technology were also misleading as the technology was largely non-functional, and processes claimed to be automated were manual. In essence, the company was operating like a traditional business, not a tech leader.

At the centre of the crisis was co-founder and CEO Gibran Huzaifah. After being dismissed by the board in December 2024 following the whistleblower's allegations, Huzaifah later confessed to the fraud in an interview. 

His justification was stark: “I think I just did it to survive.” He claimed the manipulation started in late 2018 when the company faced a financial crisis. Huzaifah denied stealing funds, framing his actions as a misguided attempt to protect the company and its mission, though this explanation was widely criticised. 

He also controversially suggested other Indonesian startup founders manipulated numbers, an assertion that further damaged his credibility. Huzaifah is now reportedly facing criminal penalties for fraud under Indonesian law.

The fact that a fraud of this magnitude went undetected for years is a significant aspect of the eFishery scandal. Investors, including some of the world's largest and most experienced, faced a near-total loss of their capital, estimated to be over US$300 million. This raised serious questions about their due diligence processes.

Commentators pointed to an “ESG Halo Effect,” where eFishery's compelling social mission of helping poor farmers may have blinded investors to fundamental financial and operational red flags. 

The strong narrative made it a company investors wanted to believe in. While standard due diligence steps like hiring auditors were taken, a critical failure was the lack of rigorous, on-the-ground verification.

Simple but crucial checks, such as physically verifying the number of deployed fish feeders or independently testing the functionality of the claimed technology, were seemingly not performed adequately. 

Investors reportedly prioritised growth potential and the compelling story over verifying the operational reality. The eFishery case joins others, like Theranos, highlighting how investors can overlook obvious red flags when chasing the "next big thing".

Crucially, the fraud was ultimately brought to light not by routine audits or investor checks, but by a whistleblower who approached a board member in late 2024. This underscores the vital role of internal reporting mechanisms and protection for those brave enough to come forward. 

The whistleblower's actions triggered the formal investigation by FTI Consulting that uncovered the scale of the deception.

In the immediate aftermath, eFishery's board acted decisively. Following the whistleblower's allegations and initial findings, they suspended and dismissed the co-founders in December 2024. An interim CEO and CFO were appointed. 

As the scale of the crisis became clear, shareholders appointed FTI Consulting to take over as acting management in February 2025, tasked with addressing the governance failures and navigating the company's future.  

The financial consequences were devastating. With cash reserves depleting and the business deemed not commercially viable in its current form, eFishery underwent massive layoffs, reducing its workforce dramatically. 

The impact extended beyond the company, damaging trust in Indonesia's wider tech ecosystem and potentially making it harder for other legitimate startups to secure funding. The credibility of the prominent investors was also questioned. 

Regulatory bodies in Indonesia have taken note. The Financial Services Authority (OJK) had already been granted more power to investigate financial crimes.

In the wake of the Indonesian startup scandal, there were reports that the OJK was drafting new rules to mandate audits for startups raising over IDR 100 billion (approximately US$6 million), a direct response to the governance issues exposed. The OJK has received over 153,000 financial fraud reports, indicating a broader issue.

The eFishery scandal was a multi-year, systemic deception orchestrated by the company's own founder. It exposed deep vulnerabilities in corporate governance and investor oversight across the region. It should be a wake-up call for Southeast Asia's startup scene. Here are the key takeaways for building a more resilient future:

Rein in founder power. Unchecked authority at the top can be dangerous. It's critical to establish independent oversight from the very beginning to challenge decisions and ensure accountability.

Build strong internal guardrails. Don't wait until it's too late. Implement robust internal controls, empower independent directors, and create secure, anonymous channels for whistleblowers to report issues without fear.

Link pay to proven performance. Executive compensation should be tied to genuinely audited and verifiable metrics. Tying bonuses to inflated, unverified figures only creates incentives to cheat.

Go beyond the data room. Traditional due diligence isn't enough when things move fast. A skeptical, forensic approach is necessary. Don't just rely on management presentations.

Get your boots on the ground. The best way to verify a business is to see it for yourself. Physically check on assets, talk to actual customers and suppliers independently, and confirm the business operations are real.

Hire forensic and tech experts. Bring in forensic accountants to hunt for sophisticated financial manipulation like dual books or shell companies. If it's a tech company, get an independent audit to prove the technology actually works as advertised.

Prioritise substance over narrative. Social proof and a great story can be misleading. The biggest failure wasn't the fraud itself, but that it went on for so long. Investors must fight confirmation bias and focus on the underlying substance, not just the hype.

Beyond board oversight and investor due diligence, the most powerful defense against systemic failure is a company's internal culture. The eFishery scandal is a stark reminder that when culture breaks down, no amount of external checks can save a company from itself.

The "survive at all costs" mindset, driven from the top, created a high-pressure environment where the truth became a liability. This fostered a culture of fear, not of innovation. When employees were allegedly told to forge documents, the system failed to protect them. Instead, it demanded their complicity.

This is why building a people culture founded on open communication and transparency is not a “soft” skill—it is a critical business imperative.

Open communication is about creating psychological safety. It means every employee, regardless of rank, feels safe to question a decision, raise a concern, or even challenge the CEO's idea without fear of reprisal. It's when leaders actively ask, "What am I missing?" or "What's the argument against this?" and genuinely listen to the answer.

Transparency is always about leadership being honest about challenges and failures. When leaders openly discuss what's not working, they build trust and model behavior that makes it difficult to hide systemic problems. A culture of transparency replaces the pressure to project perfection with a collective drive to solve real problems.

The eFishery whistleblower is a hero, but their existence proves the system’s failure. In a healthy culture, their concerns would have been heard and addressed through normal channels long before a crisis erupted. Building this culture is an intentional, daily act. It is the human firewall that protects an organisation when all other controls fail.