KUALA LUMPUR (July 20): Indonesia’s eFishery collapse should serve as a warning that international audit firms’ seal of approval does not guarantee that an investment is safe, Prime Minister Datuk Seri Anwar Ibrahim said.
The investment by Retirement Fund Inc, better known by its Malay acronym KWAP, had undergone checks involving major international audit firms, although part of the verification process was not completed in time, he told the Dewan Negara on Monday.
“This is also a lesson that even when verified by renowned international audit firms, there is no guarantee,” Anwar said. “Relying entirely on them, as we have seen, also carries risks.”
eFishery is an Indonesian aquaculture technology start-up investigated by authorities for inflating its revenue and profits. Co-founder and former chief executive officer Gibran Huzaifah was subsequently sentenced to nine years in prison for crimes including embezzlement and money laundering.
KWAP, which manages the civil service’s pension fund, invested in eFishery that had also attracted backing from several international investors — including Singapore’s Temasek Holdings Pte Ltd, Japan’s SoftBank Group and Abu Dhabi’s 42XFund.
Anwar, who is also the finance minister, said KWAP invested RM163.4 million in the Indonesian aquaculture technology start-up after the proposal underwent the fund’s usual due diligence and approval process.
He drew comparisons with the 1Malaysia Development Bhd (1MDB) scandal, noting that established global financial and professional firms had also been involved in transactions that later came under scrutiny.
The eFishery case should prompt KWAP’s investment panel to reassess how much weight it places on external advisers and audit firms when evaluating investments, Anwar said.
He nevertheless defended KWAP’s overall investment record, pointing out that the fund recorded net investment income of RM12.9 billion, while its fund size grew by 9.3%.
The loss “should not have happened”, he said. “But we must also look at the overall performance and the methods used.”
Anwar also backed the Malaysian Anti-Corruption Commission’s investigation into the investment process. KWAP had been instructed to cooperate fully even as preliminary findings did not indicate corruption or misconduct, he added.
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