Malaysia’s Retirement Fund Inc (KWAP) was misled into investing nearly RM200 million in the Indonesian aquaculture startup eFishery, according to Prime Minister and Finance Minister Anwar Ibrahim. In a written parliamentary reply, Anwar described the incident as a deliberate fraud, noting that the startup’s management had manipulated its financial statements to deceive investors. The investment, made in July 2023, was intended to support a tech-driven firm aimed at modernizing fish and shrimp farming.
Anwar emphasized that KWAP followed its standard investment governance framework, which includes rigorous due diligence processes. The fund conducted evaluations based on provided information and received confirmation of financial statements from internally accredited auditors. Additionally, a consortium of investors, which included KWAP, performed independent due diligence to verify the accuracy of the data. Despite these precautions, the sophisticated nature of the financial manipulation by eFishery’s leadership led to the loss.
The fallout from the eFishery scandal has affected several major international institutional investors, including Singapore’s Temasek Holdings, Japan’s SoftBank Group, and the Northstar Group. Investigations revealed that the startup had been inflating its revenue and profit figures for years to maintain its valuation and attract capital. In Indonesia, the company’s co-founder, Gibran Huzaifah, was convicted of embezzlement and money laundering, receiving a nine-year prison sentence.
This disclosure came in response to a parliamentary inquiry regarding whether KWAP’s management and board of directors would be held accountable for the losses. While the government maintains that the fund followed proper protocols, the incident highlights the inherent risks associated with venture capital investments in startups. As the situation remains under scrutiny, the focus has shifted toward how state-linked funds can better protect public assets from fraudulent activities in the future.