Introduction

A recent forensic audit into alleged financial misconduct by eFishery, a prominent Indonesian aquaculture firm backed by Temasek, has unveiled shocking preliminary findings. The audit highlights widespread and systematic fraud perpetrated by the company's founders and former executives.

Inflated Revenue Figures

Sources have revealed to DealStreetAsia that prior to a major leadership overhaul in December, eFishery’s management significantly inflated the company's revenue figures for the first nine months of 2024. The inflated figures show an astounding discrepancy—reported revenue was nearly five times higher than actual figures, presenting a façade of profitability despite staggering losses.

Accounting Practices

The chaos in eFishery's accounting practices spans several years. The company reportedly maintained two sets of financial records since at least 2018: one for senior leadership and another for external stakeholders such as shareholders, banks, and auditors. This dual-recording system presented a misleading picture of the company's growth trajectory.

Actual Revenue vs. Reported Revenue

According to internal accounting data, eFishery generated an actual revenue of 2.6 trillion rupiah (approximately $161 million) from January to September 2024. However, the external records falsely reported this figure at an incredible 12.3 trillion rupiah ($750 million). This deception marks a severe escalation compared to previous years—revenue was inflated by 1.8 times in 2023, 1.4 times in 2022, and 1.7 times in 2021.

Pre-Tax Profit Reporting

Amid this financial charade, the external accounting portrayed a pre-tax profit of 261 billion rupiah ($16 million) based on these inflated figures. In stark contrast, internal records indicate a significant loss of 578 billion rupiah ($35 million). Shockingly, it's been concluded that eFishery retained losses totaling approximately $152 million from its inception in Indonesia until the end of November last year.

Ethical Concerns Regarding Bonuses

Despite these losses, employees were rewarded with bonuses calculated based on the inflated financial figures. A staggering 24.4 billion rupiah ($1.5 million) was dispensed in bonuses for the 2023 performance, a dramatic increase of 98.4% from the previous year. This raises serious ethical questions regarding executive compensation in light of the company's actual financial health.

Scope of the Forensic Audit

It's crucial to note that the scope of the forensic audit currently only extends to eFishery’s Indonesian operations, including PT Multidaya Teknologi Nusantara, PT eFishery Aquaculture Indonesia, and PT Teknologi Untuk Pembudidaya. Other entities, such as the holding company eFishery Pte. Ltd, eFishery America Inc., and eFishery Aqua Techworks Private Limited, were not audited, which leaves room for speculation about the extent of potential misconduct across the company's global operations.

Conclusion

This scandal is unfolding in an industry already fraught with challenges, and it raises urgent questions about transparency and accountability within emerging markets. Keep an eye on this developing story—could there be more shocking revelations on the horizon?