Indonesian textile giant Sritex collapses in $1.6B fraud scandal

A major financial scandal has led to the collapse of Indonesian textile giant Sritex. The company was declared bankrupt in late 2024 after failing to repay a US$1.6 billion (RM6.2 billion) debt. Its former CEO now faces a lengthy prison sentence for fraud and money laundering. The case centres on Iwan Setiawan Lukminto, the ex-CEO of Sritex, who was sentenced to 14 years in jail. Between 2017 and 2019, he falsified financial reports to secure loans from two state-owned banks. The lenders included a regional bank controlled by the Jakarta provincial government and Bank Pembangunan Daerah Jawa Barat dan Banten, owned by another provincial authority.

The loans were supposed to clear Sritex’s existing debts. Instead, Lukminto diverted the funds back into the company through fake invoices. A portion of the money was also used to buy personal assets, including land and rice fields. The fraud caused estimated state losses of 1.3 trillion rupiah (RM293 million). Despite legal challenges, Sritex officially ceased operations on March 1, 2025, after losing its final appeal against the bankruptcy ruling.

The bankruptcy marks the end of Sritex’s operations, leaving creditors with massive losses. Lukminto’s conviction highlights the scale of the deception, which involved fabricated documents and misused public funds. The case has drawn attention to financial oversight in Indonesia’s state-owned banking sector.