Rachel Wong: eFishery Fraud Founder Confession, Self-Justification vs. Excuses, & Civil vs. Criminal Startup Ecosystem Consequences – E567

"Accountability doesn't mean stripping them of their ability to serve, but there has to be some sort of a pain, whether it's a financial pain, or a temporary suspension, or at least an investigation for accountability on how do you guys actually sign off on these numbers. Thumb Chicken did a report that was highly scoped. It did clear that, okay, we're only referring to these fishermen that we're talking about. Then at least we know in the next cycle that we can't rely on the scoping by the founders. We have to randomly pick them ourselves. So I think that's a really important point, and I hope that we pick this up. And I think that if I may add one point, it is that I empathize with why individual private parties do not feel the incentive to conduct a civil investigation, right? Because if you're a VC and you already lost 85 cents on a dollar, are you really going to spend are so expensive." - Rachel Wong, Startup Lawyer

"So my perspective is that if there is no enforcement action against a public confession, clear facts, clear paper trail, in his own words he explains how he did it and why he did it. And if nobody investigates him in either Indonesia, because that's where the company was domiciled, or Singapore, where his co-holding company was and where there are significant investors, then I think Southeast Asia ecosystem, the regulators will suddenly find, oh wait, there is now a systematic lack of trust because bad apples walk away scot-free." - Jeremy Au, Host of BRAVE Southeast Asia Podcast

"So I'll just bring up another example where I was a bit bolder by then because I was perhaps seven years, eight years into practice. I was a little bit bold because I had the ability to curate my own style. And I actually told the investor not to do the deal. The thing that I picked up was not legal. I was only engaged to do legal due diligence, but I looked at the contract and I said, you guys are investing half a million dollars into this company. The founders, when you add their compensation together, pay themselves half a million dollars each a year. Are you sure your money is going where it's going? And it's simple things like that." - Rachel Wong, Startup Lawyer

Jeremy Au and Rachel Wong unpack eFishery's founder’s public confession to systematic fraud. They dive into how cultural pressures, ecosystem gaps, and misplaced investor trust contributed to the fallout. They discuss the challenges of cross-border enforcement, the limits of traditional due diligence, and the real-world consequences for Southeast Asia’s startup reputation. Together, they reflect on how founders, investors, and regulators must learn from these failures to rebuild trust and resilience in the next cycle.

1. Founder confessed openly: The eFishery CEO admitted in a Bloomberg interview to falsifying numbers, directly exposing himself to criminal and civil legal risks.

2. Cross-border enforcement is weak: Rachel explains that without strong local enforcement or overseas assets, penalties against founders in emerging markets are hard to execute.

3. Culture of normalized fraud: The founder justified faking numbers by claiming it was common practice among Indonesian startups, though Jeremy and Rachel reject this excuse.

4. Investors and auditors missed the fraud: Despite hiring PwC and visiting farmers, due diligence failed because the founder orchestrated systematic deception through subsidiaries and coached farmers.

5. Utilitarian morality used to rationalize: The founder defended his actions by claiming the fraud helped fishermen and employees, which Rachel critiques as dangerous self-gaslighting.

6. Civil lawsuits unlikely: They points out that expensive litigation, low recovery odds, and coordination problems among investors make civil action improbable.

7.Southeast Asia’s startup credibility at risk: Both argue that if regulators fail to act on this clear case, it will cause long-term damage to trust and investment in the region.

(00:51) Jeremy Au: Hey, Rachel. Good to see you. 

(00:53) Rachel Wong : Hey, Jeremy. Nice to see you as well. 

(00:56) Jeremy Au: We came together because there was an interesting article that both got us (01:00) discussing and is about Gibran, who is an eFishery founder, and he made a confession. Explain how he faked the results in this $300 million meltdown for his e fishery unicorn.

(01:14) And this was published on Bloomberg, and so I was like who else would be a good lawyer to discuss this with? 

(01:18) Rachel Wong : First, I'm just surprised that he's making such a public confession when I think that investing are probably ongoing and it's probably, he either wants it in or he thinks it's a good tactic to

(01:30) get sympathy votes. But I have no idea who's advising him. Other than that, it's just pure stupidity. 

(01:36) Jeremy Au: Why is it pure stupidity from your perspective? 

(01:39) Rachel Wong : We often hear these statements being made by people who are under investigation, or our lawyer has advised us not to say anything to the media pending investigations perspective.

(01:51) I would expect that he's exposed to both to criminal and civil investigations. People are doing the right things, criminal because if he (02:00) has picked the books, then I would imagine that he has definitely. At the very least, be held, accountable for fraud. And civil because he would have been a party to a shareholder's agreement with lots of contractor obligations, including, for example, undertaking that he runs the company to the best of his abilities, making the court representations and warranties when the investors were doing due diligence.

(02:24) And I wanted him to be able to come up story to the media before these investigations are closed because we are very careful about what is being like. We call it the discovery process, whereby people give evidence to the other side and say, okay, what's going on at a time, what were you saying?

(02:43) How are you defending yourself? So, it's rather brave of him to come up with to Bloomberg. Maybe he was offered a huge amount of money for this article. I would be, I would imagine the cost getting himself out of trouble, be more than what I remember. 

(02:57) Jeremy Au: It's going to that, right?

(02:58) Because (03:00) he literally, in this article says that he plugged in the fake numbers into his financial report 

(03:06) Rachel Wong : Exactly. 

(03:07) Jeremy Au: was given. Yes. He literally said this. It's like mind blown when I read it because like you said, SBF at FTX very much was like, I wasn't aware. Yeah. And you know it, there is actually a history of him to be like very hands off with financial management, everything. Yes. Those lawyers are busy, but like I directly did A, B, and C. And so, I was just like mind blown that he literally said I did it. And then after that he said that he looked himself in the mirror and he said, quote unquote, "when you do something wrong, you know that you're not proud of yourself."

(03:34) And so, I thought it was just so weird that. Legally he chose to confess and say that he did it. So, this is the discovery phase of the any investigation. 

(03:43) Rachel Wong : Yes. To be honest, when I first heard about this news, I had some doubts because as a CEO, you can't be expected to look into every single line item.

(03:53) Sometimes there are times when it's purely just negligence, but gross negligence is just a (04:00) much higher threshold. Sometimes it's just pure, you're running a company, it's growing so fast, you cannot help it. But when you do admit very publicly that you have cheated and in a very black and white fashion, the only person I can think about suing right now, if you wanna get yourself out of this trouble is

(04:18) the reporters to say that they misquoted you or something. Short of that, I think you have got yourself into some hot suit, but there could be some reasons why he's saying it. Maybe he just wants to share his story, but it could be naive for him to think that the most negative consequence has already come.

(04:34) It could also be a case of enforceability. Because a lot of the companies that invest in him are international investors. They are based outside of Indonesia. He's probably still in Indonesia at this point in time. So, he might be thinking as well maybe. It's a case of, hey, I can talk about this story, gain more media attention, maybe even have a following from that.

(04:54) I don't think the law enforcement agencies are able to go past the (05:00) direction of enforcement. For example, they're holding companies in Singapore in a judgment. It's released in Singapore. The people who want to enforce the monetary or criminal sort of like penalties would have to try to seek a cross-border enforcement process, which is not so e some of the things that were, he went through his mind when he felt so comfortable sharing his story.

(05:21) 

(05:21) Jeremy Au: tricky, yeah, I think, go ahead. 

(05:22) Rachel Wong : The tricky part with investing Indonesian companies in Indonesia. I, I myself think that you do need to have a Bahasa translation of the version or always override the English version.

(05:34) There's a potential that if you want to have an agreement with an Indonesian party, it has to be governed by Indonesian law, knowing the legal uncertainties, but then recognizing the economic potential that a country like Indonesia with huge population and young population has, a lot of investors have come into the market. 

(05:53) But when it comes to enforcement, enforcement comes into play when we say, hey, you did something wrong. (06:00) We're gonna either freeze your bank accounts or put you in jail or send you to this long criminal trial or civil trial. It may get a bit more difficult if these companies don't have an asset.

(06:10) Let's say a country like Singapore or in the countries where they are based. 

(06:13) Jeremy Au: Yeah. So, let's talk about some of the things that he mentioned that he felt were contributing factors. The first thing that he said was that he felt that in Indonesia, everybody else was also doing it.

(06:25) He said that, quote unquote, "he had done a deal that had bought him time, but still no other VC else agreed to join." And so, he was dejected and asked federal Indonesian founders how they'd managed to raise newfound. The tips were vague and coded, but the answer Gibran took it was essentially to fresh the numbers.

(06:42) They told me that they massage the numbers and that they have some supposed growth hacking initiatives that they do, and usually they do it prior to the fundraising. He knew he was wrong, but he felt that everyone else is doing it and they're still doing okay and never got caught. You question if it's really (07:00) wrong.

(07:00) Rachel Wong : Yeah, I love the fact that they used the word massage. I actually love massages, but not when it's using this context. You got to beat me. It's just say as, I could marry for example, oh, everyone is cheating on their spouses, therefore, I'm allowed to cheat on their spouse. I think it's,

(07:14) that these are the parameters I play with. This is where I hope to be, versus massaging their numbers to say that, this is, this is something that they're, this, they're actually experiencing. But coming from someone who has been in VC for a while and found out a startup yourself. 

(07:31) Jeremy Au: So, I think there are two parts that he's saying, right?

(07:33) The first part is his defense, right? Which is saying, everyone else is doing it, therefore I do it. And I always remember, like my mom, you know, scolding me, right? It's, 'Hey, if everybody else is jumping off a cliff, do you also jump off a cliff?' And then I'll be like, no. It's a bit of a rhetorical question, right?

(07:48) You get asked, right? And I think that's like a clear, like attempt at a moral defense, which is like moral equivalent I think, on this one side. And then I think the second part that you go one level deeper is like, is (08:00) it true? Is it true that fraud is more prevalent in Indonesia and a lot of them don't get caught?

(08:05) In other words, it is a commonly accepted behavior. And I think the part that has like a nugget of truth to it in the sense that as a VC, I have seen founders with frankly bad books. So, I've seen that, and I'll say that level of accounting mismanagement and I look at it from a good faith perspective, from external perspective, does seem to be more prevalent

(08:28) indonesia compared to Singapore and startups. But like you said, it is a function of multiple reasons. I think one level is, startups in Indonesia tend to be younger. Two, there aren't a lot of good CFOs or accountants who are startup understanding. And then a lot of these businesses are quite complex because they're handling like physical farmers, distributed physical assets.

(08:47) So, to some extent you were a lot of moving pieces and obviously the digital infrastructure in Indonesia. And they also, they tend to be technology enabled businesses, right? So, it's like accounting times construction, startup growth rate. So, to some (09:00) extent, from the outside in, you're just like, okay, this doesn't match, but.

(09:03) I think that's the part is that he's basically saying, and his claim is that there's a lot more fraud in Indonesia startup ecosystem. 

(09:09) Rachel Wong : Do you think that's true? Do you see startups in Silicon Valley also like boosting their numbers quite a fair bit, or that's just something that you think is localized too?

(09:20) Jeremy Au: I think what's true is that for you to raise venture capital, you need startup growth rates. And that means like doubling or tripling every year. So, I think that incentive ecosystem, 'cause that's just the VC funding milestone that people have, right? 

(09:36) Rachel Wong : Yeah. 

(09:36) Jeremy Au: And if it's longer, then it takes longer for you to grow into the valuation.

(09:40) But really, I think that the freight is what, is the range that VCs. And we have seen fraud in America. We saw that with Theranos, where they made RD claims and product claims and were not able to get there. I think we've seen a fraud also happen in the US ecosystem as well. We've also seen that in the southeast Asia and Singapore itself has its own fair (10:00) share as well.

(10:00) So, I think that's a bit of a tricky component where, yeah, I think fraud can happen in any ecosystem. If you like invert a question and say is their fraud in startup in every ecosystem? Even Wirecard. Yes. Which is a German billion-dollar darling payments, it was brought down by, a Singaporean lawyer whistleblower called Pav Gill.

(10:19) So, to some extent I think that's the crux of, I understand the moral equivalence argument, so be it. Then, is there fraud in the startup ecosystem? Yes. Because of the incentive structure and all of these startup founders tend to be young, foolish reading to cut the rules, times lack governance controls or financial controls and accounting advice.

(10:39) And then the last layer is he's saying that it's prevail in the Indonesian ecosystem. 

(10:43) Rachel Wong : Yeah. So, I think it's just maybe a little bit unfair for him to say that this is prevailing in the Indonesian ecosystem suite of example, where this is really gonna become a terminology here happens not just in developing countries, but also in other places (11:00) as well.

(11:00) And I think it's just doing a bit of discredit to the culture, foreign investors with not much knowledge of what happens on the ground. It's all together because these numbers are not verifiable. But in essence, the problem that needs to solved is, as you mentioned, clearer accounting standards that fits the country.

(11:21) It could be difficult to get local fishermen to key in numbers accurately. So how do we solve that? How do we increase confidence in investors when they see the numbers that you're seeing? Is there like a certificate that needs to be applied on top of? So, the common rule is you don't need a digital account and to reach a certain threshold so that it to be tightened and doing its additional certificates.

(11:46) That sits with the culture, or it is a trend for all my peers. And others also see a lot of good startup founders who work really hard to try to achieve the milestones or somebody simply just don't push (12:00) back to investors and say, "this is not something we can achieve at this point in time." I do understand that with VC investments, there is an expectation for very high growth rates. And I think,

(12:11) then we just have to be fair because not willing to invest unless they see the growth rates and they expect the startup founders to be selling that story, then these as should also be coming in with their eyes open. So, it's a two-way system where if you want to expect these things and you want to hear this story, you have to be able to understand that not all these stories are going to be true because the reality that

(12:37) adult should understand is that it's just harder to achieve this need to see is a clear roadmap to try and achieve those numbers. And then with all types of investments, we're playing with the risk. Have the act to take the risk if some of the assumptions that we're applying are wrong. And I think it's a little bit unfair to now put all the blame on the founder without having the same blame on investors for having maybe (13:00) sometimes, but I'm not sure.

(13:01) We're still figuring ourselves. 

(13:03) Jeremy Au: Yeah. I love what you said about how it's unfair to all Indonesian founders. I think what I would say is that in every ecosystem there's always bad apples, right? There are Singaporean court cases going on today for Singaporean startup founders or large cardiology founders that are committing fraud.

(13:18) There's a Singaporean guy in America who stole, like I know a lot of crypto, they're exactly right. So, I think there's a lot of bad apples in any ecosystem. And I think what I'll say to be fair is that I think in Indonesia there's a sense that my Indonesia friends say is if you're a bad apple, there are less consequences, right? Yes. If you are in America, if you're a bad apple, then there's a strong enforcement system, yes, the SEC can go after you, the government will prosecute, and you don't have to do a civil case. You can do criminal charges. So, I think in a sense that bad apples can get away with it more

(13:50) in emerging less mature ecosystems. I think that's number two. But I think he basically targets it as the whole ecosystem. Yeah, and I think that's so frustrating because there's so many good founders that are working (14:00) their asses off. 

(14:01) Like you, 

(14:01) I think all of their funding just evaporated for the next two years because if I was a European VC or American VC, I would be like, oh my gosh, all the local VCs.

(14:09) Did their due diligence. And they had auditors as well, and they didn't catch this. Like, why? What can I, exactly. Why would a growth stage investor feel like they can trust it? There's a chain of trust where they expect early stage VCs to put up the governance, to put in the financial controls, to have a clear point of view.

(14:25) Rachel Wong : Yeah. 

(14:26) Jeremy Au: And you know all that field. Yeah. 

(14:28) Rachel Wong : I think you touch on a nice point about enforceability, as it sounds like it's a boring conversation, which puts people to sleep. It's not the rule of law, and that's why people choose to invest in certain countries with a higher sort of like perception of the rule of law.

(14:45) Truth is, you're poor as if you do something badly. C-I-A-F-B-I, your law enforcement agents, the lawyers will be breathing down your neck gonna get away too easy unless you run away and never ever step back in the US. And even then, they're (15:00) just gonna breathe down your neck anywhere you go . In places like developing countries or even non developing countries in some cases where the rule of law is not so strong.

(15:09) People think that it can get away and to the point of like, why would he say these things to a very international news agency, is probably gonna be getting away with it as well. Yeah. 

(15:21) Jeremy Au: Yeah. It's, at the ending of the article, he says that, right now he is at home having a holiday.

(15:27) Yeah, he started a frozen business with shrimp, and I was like, wait, he's still, I thought he would be hunkered down. I know. 

(15:35) Rachel Wong : Yeah. 

(15:36) Jeremy Au: And he is having a normal life right now. Yeah. After a billion- dollar company evaporated from the fraud and hundreds of millions of dollars of investor money getting evaporated.

(15:44) Rachel Wong : Yeah. I think. It's not a case where we say, 'Hey, something went really wrong and probably wanna wipe it from the ecosystem.' The other part of the article that called out to me was when he said that the systems that they built actually really helped local fishermen, (16:00) and they're different. I've also seen startups who come up with ideas, which really don't help anyone else other than their own case.

(16:06) There is a clear use case for what they do, ecosystem for ideas which actually help people. It seems like a bit of a pity for me. I think the lessons that we can take for instances like this is to put in the checks and balances and the rules of law and we haven't made when it comes to these things.

(16:25) So, if we are working in an ecosystem whereby the traditional mode of enforcement is not gonna work within. As an ecosystem and alternative enforcement, that will help boost investor confidence, be various to look into it. I'm just being creative over here. I've not seen it in practice, but perhaps a an escrow account system that like a bit of a security

(16:50) from the founders to investors, that could be one example. For example, we see we could have like founders perhaps mortgaging their own personal act, security (17:00) for the investment coming in better financial and accounting standards. There is an accepted financials accounting standard that is common in developing countries.

(17:11) But then having a person who is certified and trusted to comment. Typically, they're called audited in the Western developed countries, but if we can't call them audited, because these auditors don't actually understand how the local systems, then we have to come up with a new sort of way to boost investor confidence and get to the same point in a different method.

(17:34) So, I do think it's a great pity we don't come up with solutions, but it's gonna take a while to get that confidence in. 

(17:41) Jeremy Au: Yeah. I think, what's interesting is that I agree with you, social impact, because he's helping these farmers to get from point A to point B, and they talk some beautiful stories in there about how they help a farmer who used to have to do this manually to use automated fish feeders and so forth.

(17:58) I just think that there was an (18:00) interesting dynamic that he just talks about auditors, and I think the article talks about it, which is that, VCs did try to audit, and the way they were doing it was that they had brought in PWC to do auditing on the financial side. Yeah. And for the VCs, they did visit farmers, right?

(18:14) So, 20 separate farmers were visited for the series B, and 70 farmers were visited for the series C. Yeah. And so that's actually, if you think about it, it's a bit a lot of work and I think acknowledge that it's quite difficult because these are rural fish farms and so these VCs are paying for people to visit all these farms.

(18:30) But what this guy was doing, they said was, they curated a database to be a smaller subset. And then he gave the local managers the facts, IE the false numbers to train the local farmers. And then the local fish farmers gave those rubbish numbers. I think the first thing we talked about was like, hey, oh, he just fudge it a little bit, but now I'm, you're like.

(18:52) This is a very systematic effort to deceive. And there is actually, effectively like 90 farmers in total that visited and (19:00) maybe more in earlier rounds. This is really systematic approach to their fraud. It's like the difference between like serious massage, Thai massage and I know the intensity of the massage of these numbers is like industrialized, in this level.

(19:12) Rachel Wong : I have no idea. I would love to hear your perspective, but. In my opinion, these advisors simply didn't do their job well. Definitely whatever he has done is definitely wrong, but can we say that the auditors didn't do any wrong for me? Gross negligence, they have to be held accountable, in my opinion.

(19:30) Would be getting there one day, but their due diligence was not up to park. If a guy who started off as a fisherman is able to put together sophisticated, not even a, I don't even think this is sophisticated ecosystem to draw parameters to fit your due diligence required, then I would say it's the problem of the guys who did the due diligence, and I would actually empathize with the guys who did due diligence before because I used to sit in this ivory tower.

(19:57) When I was working international law (20:00) firms and we were asked to do legal due diligence on very local companies, we are sitting in Ivory Castle. We have never run a business before. We don't actually know what we're looking for. Textbook says there's one to 10 that you have to take to 10, or we fix the three, bought it with assumptions and risk mitigation and stuff like that.

(20:20) But, are we actually to really do due diligence when we have never run a business before? We actually don't know what we're looking for. And actually, if I could be very honest, the things we pick up are very academic. Like for example, as a lawyer, we'll be looking into things like as a constitution up to date, is it registered members?

(20:37) Are we seeing the share sets? But does it go into the core of the problem, which is this business actually a real business? 'cause share assets can be fixed, how this can be updated, but are we really looking into. Whether, for example, contracts, so I'll just bring up another example where I was a bit bolder by then 'cause I was perhaps seven, eight years into practice.

(20:58) I was a little bit bold because (21:00) I had the ability to curate my own style, and I actually told the investor not to do the deal. And the thing that I picked up was not legal, the thing that I was only engaged to do legal due diligence. I looked at the contract and I, you guys are investing half a million dollars into this company.

(21:17) The founders, when you add their compensation together, pays themself half a million dollars each a year. Are you sure your money's going where it's going? It's simple things like that you don't actually pick up until you start running your own business and you start understanding little bit more about financial statement a little bit more.

(21:35) If I had to do it sitting in an ivory tower, I would not have picked up these things. I'll be like, okay the contract I'm looking at, I'll be looking at the termination provisions. How long is it gonna stay for? Does it have good IP clause or academic things up?

(21:50) Get down and dirty, and maybe then this is an experienced thing because a lot of the fun houses. Also hired people with zero experience running (22:00) businesses. Not their fault because There wasn't an ecosystem in the past, but perhaps now with the lessons that we learned, these guys who founders can spot and ask the right questions.

(22:09) So, in my opinion, it was Grant Dante's fault, getting the auditor books. So, I have no idea. I think it's a 360 problem. 

(22:15) Jeremy Au: Yeah. I think it's really not easy at all because for example, Wirecard also was audited as well for many years successfully as a publicly listed company. That was a tricky part.

(22:25) But I think the physical checks to me show how intense the fraud was. And I don't know if there was an AI software that would probably be the software for somebody to build. 'cause like you said, maybe humans just can't do it enough individually. But if I was looking at the most common type of fraud, I think it's round tripping, which is basically you take investor money.

(22:45) And then you circulate it back to yourself. You pay somebody, you recycle that money to buy your own revenue, then you cycle it multiple times to make that. I feel like that was the same type of fraud that you saw in Wirecard. You saw that e fishery. He said that Gibran said Hey, by setting up a web of subsidiaries and controlling the accounts of (23:00) farmers and network, the business became so complex that transactions could be pet.

(23:03) At Will. This became five separate companies with over 5,000 accounts being used for transactions such as buying fish feed and selling fish. So, I would say that this could be a good AI startup. I would say, I'm just brainstorming here just to be like, okay, can we pull up, I don't know your top, suppliers and your top, customers and then can you see if there's come up some kind of relationship between all of them?

(23:28) That's gonna be, I think probably the approach because it can. Like you said, I think the problem is that if the business becomes large enough and transactions is large enough that a junior person is accounting, a certain of transactions, they can be like dumb. Absolutely. They know like this thing is a bit weird, but they're like, eh, not my problem is someone else's problem.

(23:44) And everybody's touching a different part of the elephant, yeah. And then they never pull it together to be like, okay, it's not good. 

(23:49) Rachel Wong : I think that's absolutely right. Not by my, but as part of a collective done. The hundred due diligence reports easy by now, and you're right, you're always touching a little bit of the (24:00) elephant, and you don't actually even know whether it's an elephant at the end of the day because it could be a rhinoceros.

(24:04) Okay. And there's no one person that could put the things together and really understand the big problem issues. The funny thing is actually these due diligence reports, I'm sure these auditing reports cost a lot of money. they actually take out a lot of time, and don't even think that as part of this due diligence process, the world has evolved so much.

(24:25) These due diligence process haven't caught up with. The types of new transactions that we're seeing or the volumes of transactions we're seeing. So definitely I think a system that's able to consolidate these things in a very rapid manner to paint that overall picture is important. To this particular sort of round tripping situation, you're talking about.

(24:45) There should have been reps and warranties about affiliated party transactions or connected person transactions or companies that you set up or have affiliations with, or even like what we call non-market standard, non-art length (25:00) transactions. Those from a legal perspective, if it was actually disclosed properly from a financial perspective, I would imagine that would help the auditor.

(25:08) To spot these issues, to put the blame on a single person or a single institution. simply put, the truth is the systems for due diligence haven't caught up with the complexity of modern transactions. And that's something we need to look at. 

(25:21) Jeremy Au: Yeah. I wanna turn us to his argument about utilitarian morality and, the good that he felt about doing it.

(25:29) And so, he mentioned exactly like you said, that he felt like he was helping farmers. And so, he felt like at the end of the day, he felt quote unquote, the decision I faced was a morality problem. Be honest or inflate the numbers and keep the show on the road for employees and the farmers. It's like a trolly problem and is never an easy choice.

(25:47) My moral compass is quite mathematical. If the number of impact that I can create at a give a time, outsizes, a potential risk and damage that might be created and it's still net positive. 

(25:56) Rachel Wong : Wow, what can I say? Anyone who buys the argument (26:00) needs to go back to school. Earlier in the article, during Covid, just shortly after, COVID eFishery didn't need any more money.

(26:07) So, there was no morality problem there, right? They had enough money to run the business to help the fisherman. It's just that. He got excited that SoftBank was interested, right? Yeah. And then after SoftBank got interested according to his story, and then he even got a call from someone very important, a bunch of other people or Sequoia got interested as well.

(26:27) Oh, at that point was he thinking about morality and oh yeah, actually I even have money to run my business. I can actually help local fishermen. Oh, he was not thinking that. So, this guy is very good at. Okay. I'm not, I don't know him, but based on the stories that's put together in his article, he seems to be gaslighting himself, which is something that, having done a couple of criminal cases with swung from time to time, sometimes people convince themselves into believing.

(26:55) They are morally correct. I know of a founder whose name I'll (27:00) not met, who literally guess likes himself and tells people that he's the most moral person. Being moral and being, having lots of integrity is the most important thing. But I've caught blatant lies before and these are the scariest.

(27:15) Moral people because they're actually highly immoral and they guess like themselves into selling a story that they're the most, the people with the most integrity and morality. In this case, I would have imagined if the thinking is correct and I don't know him personally, so I do not want to say anything that I think is not good.

(27:33) But based on the excerpt, the article, if I had to. Put a proper piece together to this person is, and of course I still do not know him, so it is not right for me to jump to this conclusion then. It seems like he's a guy who has gaslighted himself so much so that he wants to talk about the goodness that he's done and how, even though he's, but he was thinking about being like, the first excuse is, hey, everyone did it.

(27:57) Therefore, I was right in doing it, (28:00) that he had up all his peers who are in Indonesia. Fast working really hard. Hey, help other people like it's glorious of me to help the fish, but he didn't think about it when he did not need money. He was just excited to see, to actually help back by the big, and then third.

(28:16) To even do this article actually.

(28:17) Jeremy Au: Like what are you trying 

(28:19) Rachel Wong : to get out of this? Like a fan following or what? A cult or, yeah. So, I don't know. 

(28:24) Jeremy Au: Yeah, I think the tricky part, right? Because I think he gives Utilitarians a bad name and as somebody who studied economics, I was a big fan of utilitarian philosophy in my undergraduate days, and I was like, this is exactly. Why all the people who criticize utilitarian philosophy, I say that if you believe too much in this utilitarian philosophy, you end up committing fraud and horrible things. And this is, funny 'cause now I'm like, 20 years down the road, I'm literally watching this guy quote utilitarianism and I'm just like, oh my gosh, this guy is proving my professor.

(28:54) In the sense that, this is just a flawed way of thinking if he truly believes it, and, but like you said, yeah, it doesn't (29:00) hold up anyway because in the context of that, he had multiple times to have come clean, and there were times when he have stopped raising more money and been able, like you said, to avoid the consequences already.

(29:10) Raising the first round. Sure. You can say you're three months away from failure. You have no choice to do it, then Yes, 

(29:16) Rachel Wong : correct. You could be like, still wrong. Good. 

(29:18) Jeremy Au: hard, and then you're like, okay, this is gonna be the Robin Hood argument from his own self perspective, so be it. But then, yeah, like you said, there's several rounds of financing afterwards where he had more than enough money for the company and the company was no longer gonna go bankrupt.

(29:31) Rachel Wong : This also didn't enjoy how he name dropped, specifically in this article, he says oh, he got a text from that Temasek CEO. And he was like, wow! It made Dilan look silly in his article by name, dropping his name specifically didn't talk about the director that did it.

(29:48) He had to name the CEO, made it look like it was Temasek CEO's fault from my perspective, right? The everyone play are all human beings, but. He was just doing (30:00) his job. He years of a good opportunity. He has to, was it the guys will do the water, the ground, they're expected to do due diligence, but you.

(30:10) Can't be name dropping a guy after you've done so much wrong. That is wrong. It's yeah, it's like saying, 'Hey, I'm actually married, but I did not tell anyone.' But then Gisele Bündchen called me, and it was her fault because she called me. It's not right 

(30:25) Jeremy Au: To take this money. Oh, the soft framing of that article, and he basically sound like all the people are coming to me and they're pitching me. I'm victimized, and I took the money. That's just the framing of that whole narrative. And I think, 

(30:35) Rachel Wong : yeah. 

(30:36) Jeremy Au: The reality is that it was an active effort by him.

(30:39) Yeah. To falsify the numbers, to manage at least 12 individuals, to manage shell companies, to falsify invoices, to shut them down and payments around, and then coach Pharma. To say the right things when they're approached by due diligence, it's not as if he's just sitting back and then money comes and all he did was (31:00) hit the electronic signature button.

(31:01) He is there managing this group of people. For those who've seen the internal audit reports that have been through the media that was leaked, there were multiple people who are pushing back against, and he was pressuring employees to falsify and Photoshop invoices when they didn't do it. So, this guy was not, the money was, you are doing a lot.

(31:19) Rachel Wong : Jeremy, at this point, there's so much fake everywhere that I'm not sure whether maybe this Bloomberg reporter wrote something fake. I'm not sure. Because the other thing that sometimes we hear about is, 'cause I wanna give the people some credit as well. I wanna understand all the potential blind spots that we are having and try not to point a finger.

(31:38) Maybe he was misquoted, maybe the story. Yeah. Maybe when he was being able, it was interview he sits. Things in a certain way. The reporters pick and choose certain parts that were more juicy and publish it that way. Then perhaps one of the blind spots could be the reporter who did it, report it, like clearly or reported it from a bias standpoint, (32:00) which is normal because we are all human beings.

(32:01) We're all biased But, yeah, I think if, whatever has been reported is objective and as close to what he said as much as possible, then I think this guy owe an apology. 

(32:13) Jeremy Au: Have you said, sorry, 

(32:15) Rachel Wong : I gonna control F and oh, IF sorry. That was a zero result. 

(32:19) Jeremy Au: check for, apologize. 

(32:20) Rachel Wong : Oh, He did.

(32:20) He did. I just want to say my deepest apology for everyone impacted, especially the farmers because that's the reason why I do this. No, I think he needs a bit more than that. You don't, 

(32:30) Jeremy Au: I wanna hear what you say. 

(32:30) Rachel Wong : No, I was just reading the line above. He says he wants to stay publicly.

(32:34) He didn't steal money, and he wants to make it clear that his employees weren't, aware of what's happening. I think in his head, he didn't steal money because he, in his mind, and I'm not even sure that it's true, he didn't pocket the money to buy himself a Ferrari perspective. He feels like he's born really just, but I think.

(32:53) He stealing is more than that. Yeah, 

(32:55) Jeremy Au: So, I think the internal consulting audit (33:00) by FTI suggested that some employee siphon money and Giran did draw a salary and bonus commensurate of a much larger company. He did seem to live a fairly modest life, so quote unquote, he says that none of his detectors has produced evidence.

(33:12) He embezzled money, but I think, which is this guy was owning equity, so you could say that he didn't transfer cash out. Of the system. Yeah. And obviously if there is a criminal or civil case comes out, maybe the evidence will find out whether it is true or not true. But even he is benefiting from an equity perspective, is holding all this equity.

(33:33) So, there is a financial gain that he thought he was having by becoming a billion- dollar company, effectively, assuming that he owned a quarter of the company at a billion dollars, his equity was at least a hundred million dollars' worth. So, I just find it a little bit like, what's the word?

(33:48) It's doesn't 

(33:48) Rachel Wong : make sense. 

(33:49) Jeremy Au: make sense. I mean at first, you're like, oh, at least he didn't embezzle money. And you're like, but he's holding equity. So, the people value that money was going up. 

(33:55) Rachel Wong : Yeah. Because he stole money from the LPs. And Temasek is (34:00) a fund that was created originally by our forefathers, right?

(34:04) The income tax. They're paying whatever investments that we made. So, he stole money from funds. 

(34:10) Jeremy Au: Yes. Yeah, it to his employees, his farmers, and he was in a paper valuation gain. So, he basically saying, I didn't steal cash from the company because I wasn't allowed to cash out yet. 

(34:20) Rachel Wong : Exactly.

(34:21) Jeremy Au: That's what I'm just saying. So, you're like, then the government, caught the criminal before the money was transferred out. It's oh, like I never pulled it out the. ATM. So you know, the criminal never benefited from the scam, right? What? No, it's your entity, it's your control.

(34:35) The subsidiaries that are holding this round, tripping cash's under your control, the employees that are, you are paying off your bonuses to manipulate these invoices and manipulate these payments are under your control. So I just find it, I thought it was a good point that you raised, but I'm just saying dude, like 

(34:51) Rachel Wong : how?

(34:52) Much of a blind spot that is, something, it's ignorant 

(34:55) Jeremy Au: because I honestly didn't catch that on the first reading. 'cause even when I first read it the first (35:00) time around, I also was like, oh, he only driving a Hyundai Ionic five. Wow. 

(35:05) Rachel Wong : not how feeling cash work.

(35:07) Jeremy Au: Yeah, exactly. 

(35:07) Rachel Wong : Just like to wrap up the conversation a little bit, one of the things we talked about before is. Whether or not this slowdown is systemic or cyclical, systemic being, there's just no room for investments in startups in a region like this possible to trust. Or is it cyclical whereby we're gonna learn that we are seeing in this cycle in terms of the integrity of the numbers and solutions to get, not get around it, but understand those numbers a bit better. Understanding from both sides because in the last cycle that both of us lived through some of the young VC employees were absolute dicks or go up to founders being all braggy and disgusting.

(35:51) And it creates an ecosystem whereby also the founders feel like they have to either live up to a certain standard or be pushed to a certain (36:00) position. So, whether or not we learn from these mistakes and also. On the founder side, we also had absolute dicks who, because they came from like a good pedigree became really arrogant about.

(36:14) So, I hope that this cycle, these mistakes, results in a healthier ecosystem the next cycle, rather than it being systemic. 

(36:24) Jeremy Au: My perspective, and I would love to hear your reaction to it. Is that the difference between structural or cyclical is whether there are consequences for this founder?

(36:34) Rachel Wong : Oh, 

(36:34) Jeremy Au: So, my perspective is that if there is no enforcement action against a public confession, clear facts, clear paper trail in his own words, explains how he did it and why he did it. And if nobody investigates him in either Indonesia. Because that's where the company was Doma South or Singapore, where its Golden Company was and where the significant investors, yeah.

(36:55) Then I think Southeast Asia ecosystem, the regulators will (37:00) suddenly fine. Oh wait, there is now a systematic lack of trust because bad apples walk away scot free. And so that's interesting. I think my perspective is. I think there's an opportunity now if, look like you have prosecution, right?

(37:14) And then you have defense, and then you have a judge. So let the judge figure out what's true, right? Because I still can say like maybe there's some other evidence has come up, but with this clarity that he said it himself, and obviously not only has these notes, he probably has the Bloomberg has probably written notes of what exactly he said, et cetera.

(37:31) Like to me it's probably to the prosecution looks like a slam down case because you just, PDF the article and you just put it into your discovery thing. And then if you are the defense, you are like, I don't know, think to yourself like, oh my gosh, why? Like, how do you defend this guy when this guy, just said, how he did it and why he did it.

(37:50) So anyway, I'm just saying like you have sovereign wealth funds from around the world, from Europe, from Singapore. You have local Indonesia investors. You have Middle (38:00) Eastern, you know you have SoftBank. I'm just saying everybody's there. Everybody has money. Yes. If there are no consequences, yes, then I think everyone's just gonna be like, 

(38:08) Rachel Wong : That's true. What do you think about that? I am hundred percent agree with you actually these are things we're gonna learn in the next cycle to fix it in this cycle. And to your point, I think it's not just about the founder, it's about holding the auditors accountable, holding.

(38:22) The guys who did do the accountable accountability doesn't mean stripping them of their ability to, but there has to be some sort of a pain, right? Whether it's a financial pain or a temporary suspension, or at least an investigation for accountability on how do you guys actually sign off on these numbers?

(38:38) Some shouldn't. Did a report that was highly scoped, made it clear that, okay, we're only referring to these fishermen that, that we're talking about, that at least we know in the next cycle that we can't rely on. The scoping by the founders, we have to randomly pick them ourselves. So, I think that's a really important point.

(38:56) And I hope that we pick this up. And we survive. 

(38:58) Jeremy Au: And I think that the, if, I mean (39:00) at one point is that I empathize with why. Individual private parties do not feel the incentive to conduct a civil investigation, right? Because if you are a vvc, you lost 85 cents on a dollar. 

(39:12) Are you really gonna spend more so expensive? Yeah, just spending so expensive, like Rachel and all these other people may not have much assets because he only has a Honda Ionic five that I was just saying. The ROI of litigation. Yes. Extract more from it.

(39:26) So I just wanna identify that, I think that's probably the calculus from the individual parties. And also there's a lot of different parties, right? So everybody else will look at each other and say, why don't you do it? Why don't you pay for it? Because nobody wants to like coordination problem, right?

(39:36) And there's no class action lawsuit, mechanism as easy as America to roll up. You can imagine the fish farmers as a group doing a class action lawsuit if they're in America saying that the loss. Obviously productivity and money from working a fishery. So, I think basically this is

(39:52) coordination problem. I wouldn't be shocked if something does really happen unless there's maybe some smaller people who are just rich enough and they say they're gonna do the right thing (40:00) and write it from their own checkbook. The other part is that criminal piece, right?

(40:03) Where the Singapore, I hate to say the call Singapore government police, right? The sovereign wealth was defrauded, which is taxpayer money. Or you can look at Indonesia. There's also a lot of capital. The local police force. Again, I'm not saying that we know what outcome of this investigation is. But I think there has to be some kind of investigation to figure out the truth of this matter.

(40:21) There's a big confession has been made. 

(40:23) Rachel Wong : Yeah. 

(40:23) Jeremy Au: Let evidence shake out. But I think that expectation is, if a regulator, I'm just saying hypothetically, a Singapore regulator says this is a Singapore holding company. It is fraud. We're willing to investigate this. We let a thing go churn, justice and the system, and then, after several years we figure out what the situation is, right?

(40:41) The truth of the matter, which includes this Bloomberg article in both the prosecution and the defense evidence. Let the court make a decision, and then Indonesia can choose whether to extradite him. To Singapore, but at least at the end of that process, if you were a Singapore vc, you would be like, okay, if I invest in a company that's a Singapore holding company, and if Singapore is (41:00) supposed to be the Delaware of Asia, not the Southeast Asia, but India, China, if it's supposed to be this Delaware court, then yeah, justice.

(41:08) Protecting all minority shareholders has been part of the Delaware thing because if not, then what's the point? Then you might as well not have a Singapore holding company because the only reason why I have a Singapore holding company is just because it's easier to wire money in US dollars. You what I mean?

(41:21) That's 

(41:22) Rachel Wong : a really good standpoint. I've been struggling and asking myself why continue being a lawyer every single day now? I think I found the answer. What we study in the textbooks actually makes sense. 

(41:31) Jeremy Au: Yeah, I said, I'm not asking you for an investigation, that's all I'm just saying and, but I'm also pointing the other side, which is.

(41:37) Man, like supposedly a Singapore holding company is because they have Singapore court, and Singapore rule of law. Yeah. 

(41:42) Rachel Wong : Yeah. 

(41:43) Jeremy Au: And so far as crickets, right? So yeah. Awesome. Oh fingers crossed. I hope that is cyclical. It is not structural. And then, that's what we hope for, 

(41:51) Rachel Wong : and investigations will. Comments properly, 

(41:55) Jeremy Au: justice be, and if he is innocent, let it, innocent. If he's guilty, then be (42:00) guilty and then let it sort out from there, right? But at least then the system knows that he's not gonna be set under the rug. 

(42:05) These are the paramedic. Okay, on that note. Peace out. See you, Rachel. 

(42:09) Rachel Wong : See you.