The eFishery case shocked the business world at the end of 2024 after the unicorn startup was accused of fabricating financial reports. eFishery, a unicorn startup previously led by Gibran Huzaifah, faces serious allegations of financial statement manipulation. Based on the investigation, as quoted by kompas.com, it was revealed that this company was suspected of having inflated its revenue to almost 600 million US dollars, equivalent to 9.74 trillion IDR. The financial manipulation took place over a period of nine months ending in September 2024.
The investigation showed a striking difference between the financial statements submitted to investors and the actual data. Officially, the reported profit was recorded at 16 million US dollars (259.9 billion IDR). However, internal analysis shows that eFishery actually suffered a loss of up to 35.4 million US dollars (575 billion IDR). The income statement provided to investors also shows a much higher figure, reaching 752 million US dollars (12.2 trillion IDR).
eFishery’s management is suspected of having fabricated financial reports over the past few years. They claim to have more than 400,000 fish feeders, but investigations show that there are only about 24,000 active feeders. As a result of the eFishery case, Gibran Huzaifah was dismissed from his position as CEO.
The Success and Fall of e-Fishery
To better understand the eFishery case, let’s look at the history of the unicron startup that Gibran founded in 2013. eFishery is a startup that focuses on aquaculture technology. With limited capital, Gibran started this business from a rented garage before eventually successfully growing his business.
Quoted from liputan6.com, after it was officially established, eFishery began to attract the attention of investors who saw the potential of the technology-based aquaculture business. In 2015/2016, eFishery succeeded in obtaining initial funding that enabled them to expand operations and begin mass production of devices.
eFishery produces a number of products such as eFeeder, an automatic feeding technology that focuses on feed efficiency and waste reduction that can speed up harvest times and increase farmer income.
In a few years, eFishery has developed services such as eFisheryFund, which provides access to financing for fish farmers, and eFisheryKu, which is an education and aquaculture management platform. Its success earned Gibran a place on the Forbes 30 Under 30 Asia 2017 list. eFishery achieved unicorn status in 2023 after securing US$200 million in Series D funding (around Rp. 3 trillion).
However, as a result of the eFishery case that came to light in 2024, several investors are reported to have begun withdrawing their support from the company, resulting in uncertainty about the sustainability of eFishery’s business.
Valuable Lessons from the eFishery Case
What happened in the eFishery case shows the importance of integrity. Integrity is the quality of honesty and shows consistent and uncompromising adherence to strong moral and ethical principles and values. However, maintaining integrity is not easy. In the early days of leadership, the leader’s idealism is still high, including the determination to maintain integrity. But as time goes by, the challenge of maintaining integrity gets tougher. What is the cause?
The bigger the organization, the more stakeholders want to get closer and get involved. Thus, the pressure faced is greater. Among other things, the pressure is to maximize profits, attract as many customers as possible, obtain large amounts of funds, and expose the organization to make it more famous. Everything must be done in a short time to maintain reputation. It is this pressure that makes many leaders marginalize the integrity they once held high. Thus, practices such as financial statement manipulation and public deception occur. Not to mention if the organization often interacts with policymakers and lobbyists. In these conditions, bribery and politically related pressures are more likely to occur. Thus, organizations are vulnerable to ethical violations.
The larger the organization, the more complex the decision-making process. When an organization is still small, it is easy for the leader to control. They are free to manage all the details of the organization. But as the organization grows, the highest leader can no longer control everything. If someone below them violates integrity, the organization’s reputation can be tarnished even if the leader is clean. In addition, as the organization grows, the organizational structure undergoes adjustments. The number of employees, units, departments, divisions, or whatever they are called increases. Thus, supervision becomes increasingly complex.
Becoming a Leader with Integrity
Power and success can change a person. All the facilities, praise, and abundant rewards obtained make the leader addicted. To maintain it, he will do everything he can. Integrity is no longer a consideration. How many leaders who were once hailed for being close to the lower classes lose their integrity due to the great temptation.
The eFishery case teaches us that even when facing tough challenges, efforts to maintain integrity must not be compromised. Integrity should not be sacrificed for any reason. So how do you maintain it? By always being a good role model for followers and the public; empowering people under the leader to always maintain integrity; encouraging open communication and proper, accurate, and complete reporting mechanisms; intensively enforcing ethical behavior; encouraging independent audits; and making ethical behavior part of performance appraisal and reward criteria. So, it’s not just a financial factor.
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