Indonesian startup eFishery’s shareholders have appointed business advisory firm FTI Consulting to take over as acting management of the aquatech company. The startup. which is reeling from allegations of fraud and financial irregularities, had laid off approximately 300 employees last month.
The appointment is with immediate effect, said a press statement from FTI and eFishery.
FTI Consulting is currently conducting a forensic audit on eFishery whose preliminary findings reveal alleged financial fraud by the founders and former top executives, as reported by DealStreetAsia in a series of exclusive stories from Dec 15, 2024.
In a statement, FTI Consulting confirmed its role in overseeing eFishery’s operations while conducting a “thorough and objective business review” to determine the best course of action for eFishery and its stakeholders.
“As an independent third-party manager, our focus is to gain a clear understanding of the company’s true financial and operational position. Based on our findings, we will help determine the most appropriate next steps,” FTI Consulting stated in a press release.
At the same time, eFishery’s Board of Directors released an update acknowledging the challenges and confirming that necessary steps are being taken to ensure the company remains compliant with governance standards.
The statement noted that FTI Consulting’s appointment was part of a larger effort to “restore confidence and realign business operations with actual financial realities.”
The board emphasised its commitment to protecting employees and ensuring lawful and responsible decision-making amid the crisis.
“In recent weeks, we have had to make several difficult decisions to align our operational costs with the Group’s actual business scale. These decisions have been made in full compliance with applicable rules and regulations and with due regard to upholding good corporate governance and protecting the integrity of the Group.”
The announcement also confirmed that eFishery subsidiaries, including PT Multidaya Teknologi Nusantara, PT eFishery Aquaculture Indonesia, and PT Teknologi Untuk Pembudidaya, are part of the restructuring process under FTI’s oversight.
The decision to hand over management to FTI follows recent revelations of alleged financial misconduct and governance failures. These issues have led to serious concerns among investors and industry observers about eFishery’s sustainability and the broader implications for Indonesia’s startup ecosystem.
The board of directors acknowledged these concerns, stating, “The recent revelations of alleged misconduct (including fraud) within the Group have been deeply disheartening to us all and may jeopardize the confidence in the Indonesian investment climate where the principal subsidiaries of our Group are located, and we will continue to act with integrity and compliance with applicable laws[..].”
Mass layoffs
As the forensic investigation continues, eFishery has conducted a mass layoff exercise, impacting approximately 300 employees, effective last month.
According to the eFishery’s labour union, the layoffs primarily affected contract workers. Prior to the layoffs, the company had approximately 1,800 employees.
To address worker concerns, the union recently held a meeting with Deputy Minister of Manpower, Immanuel. During the meeting, the Deputy Minister urged eFishery to halt further layoffs, emphasising that employees should not bear the consequences of financial misconduct allegedly committed by management.
“Layoffs should be put on hold to prevent further job losses. The fraud was committed by management—workers should not be the ones sacrificed,” he stated, as quoted by Katadata.
In response to the ongoing issues, the Ministry announced that it will conduct an on-site visit to eFishery’s office to seek clarification regarding the layoffs and allegations of financial fraud. The Deputy Minister also emphasised that the issues facing eFishery are internal company matters and do not reflect the broader aquaculture industry.
