4 former VC execs sentenced to prison in TaniHub corruption case

TaniHub office / Photo credit: TaniHub

Four former executives of Indonesian state-backed VC firms have been sentenced to prison in connection with a corruption case surrounding investments in agritech startup TaniHub.

The Jakarta Corruption Court on Thursday sentenced former MDI Ventures CEO Donald Wihardja to five years in prison and fined him 500 million rupiah (US$28,000), with a substitute sentence of six months in detention if the fine is unpaid.

Aldi Adrian Hartanto, former MDI Ventures vice president of investment, was sentenced to two years in prison and fined 250 million rupiah (US$14,000), with a substitute sentence of three months in detention.

The court also handed prison sentences to former BRI Ventures CEO Nicko Widjaja and former BRI Ventures vice president of investment William Gozali.

Widjaja was sentenced to three years in prison and fined 350 million rupiah (US$19,600), with a substitute sentence of 110 days in detention if the fine is unpaid. Gozali received a two-year prison sentence and a 250 million rupiah (US$14,000) fine, with a substitute sentence of 90 days in detention.

The four executives were charged over investments that MDI Ventures and BRI Ventures made in TaniHub.

Prosecutors alleged that the defendants approved the investments without performing adequate due diligence and relied heavily on information provided by the company.

Authorities said the MDI Ventures investment resulted in state losses of around US$20 million, while the BRI Ventures investment led to losses of approximately US$5 million.

In a statement, Widjaja’s legal team said it respected the court’s decision but disagreed with both the factual findings and the application of the law in the case.

The lawyers argued that BRI Ventures had followed its internal investment procedures and that venture capital investing inherently involves risk, particularly when backing startups that may not yet have audited financial statements or a long operating history.

The legal team also pointed out that BRI Ventures halted its participation in TaniHub’s Series B funding round and pursued a divestment after identifying negative developments at the startup.

The lawyers said prosecutors failed to prove that Widjaja personally benefited from the investment or received any proceeds from the transaction. They maintained that he acted solely in his capacity as an investment professional representing BRI Ventures.

Founded in 2016, TaniHub raised funding from several local and international investors. It has raised US$92.5 million in total disclosed funding, including the US$65.5 million in 2021 which MDI Ventures and BRI Ventures were among of the investors.