…as SA court exposes more “rot”
Moorosi Tsiane
FUGITIVE former CGM Group director, Madhav Vasant Dalvi, has suffered another major legal setback, this time in the High Court of South Africa, which ordered the forfeiture of three Ladybrand properties linked to what the court described as unlawful activities and laundering of textile giant’s monies.
The ruling comes barely a fortnight after the Court of Appeal of Lesotho dismissed an appeal by Dalvi-linked company Denimagic and effectively confirmed what the Directorate on Corruption and Economic Offences (DCEO) has described as a sophisticated scheme to siphon millions from CGM Group and its subsidiaries Presitex and now defunct United Clothing.
In the latest judgment delivered on 20 May 2026, South African Acting Judge Thompson ordered that three properties in Ladybrand — 37 Mauershoek Street, 9 Collin Street and 13 Prinsloo Street — be forfeited to the South African state under the Prevention of Organised Crime Act (POCA).
The court found that the properties were “the proceeds of unlawful activities” and were also used as “instrumentalities of an offence”.
The judgment arose from an application by South Africa’s National Director of Public Prosecutions (NDPP) against Dalvi, his wife Sushama Madhav Dalvi and their company, Alchemy Textiles.
Judge Thompson said the evidence showed that after becoming sole director of the CGM Group in 2015, Dalvi orchestrated transactions designed to personally enrich himself and his close associates.
“Taking the above into account, I cannot fault the applicant’s submission that it was only after the resignation of the other directors, Dalvi as sole director started to misappropriate and siphon funds from the CGM Group for his personal gain and for the benefit of family and acquaintances,” the judge ruled.
“On a balance of conspectus of all the facts and evidence, I cannot but agree with the applicant (NDPP) that all of the above was orchestrated by Dalvi to benefit him and those close to him.”
The judgment paints a damning picture of how the properties were allegedly acquired through unlawful board resolutions, fictitious consultancy agreements and improper lease arrangements.
The court scrutinised a 2017 resolution which purportedly awarded Dalvi a “special bonus” worth over M9.6 million for handling tax disputes involving the Lesotho Revenue Authority (now Revenue Services Lesotho).
A 20 October 2017 resolution, purportedly passed during a management meeting of the CGM Group — comprising CGM Industrial and Presitex — awarded Dalvi a “special bonus” equivalent to two percent of a M481 million tax liability dispute involving the LRA.
According to the minutes cited in the judgment, the meeting praised Dalvi for handling criminal and civil proceedings arising from the tax dispute after other shareholders allegedly abandoned the company. The resolution stated that Dalvi had “single-handedly” dealt with the LRA crisis, criminal charges and the revival of the company after shareholder Adrian Ci-Ta Chang fled Lesotho.
The meeting consequently resolved to reward him with a payout of M9 633 321.02.
But Justice Thompson found that the resolution was fundamentally unlawful and riddled with conflicts of interest.
The court noted that the supposed board meeting was attended not by shareholders or properly constituted directors, but largely by company employees and close associates, including Sharmala Roya, Asitha Medawewa and Jatesh John Babu.
Crucially, the court accepted evidence from Mr Chang who swore under oath that he never authorised the purchase of the properties or approved the “special bonus”.
The judge found that Dalvi personally participated in a transaction from which he stood to gain financially, without declaring his interest as required by Lesotho’s Companies Act.
“Dalvi did in fact stand to benefit from the Resolution and still took part in taking such Resolution and he furthermore signed it,” Justice Thompson ruled.
The court stressed that no evidence had been produced showing that Dalvi disclosed his personal interest to shareholders or obtained proper authorisation before proceeding.
“No declaration of interest was provided by the respondents showing that Dalvi disclosed his interest in the matter. No proof was provided that the shareholders authorised Dalvi to vote on the matter or attend the meeting of directors at which the matter arose.”
The court further observed that none of the people present at the meeting — apart from Dalvi himself — were shareholders or directors legally empowered to approve such a transaction.
Justice Thompson said the arrangement violated sections 61, 65, 66 and 67 of Lesotho’s Companies Act, provisions designed to prevent directors from secretly enriching themselves through company transactions.
“The Resolution was thus not lawfully passed by a properly constituted Board of Directors of the CGM Group or its shareholders.”
The court also found that the disputed properties at 37 Mauershoek Street and 9 Collin Street were later used as part of what it considered a broader scheme to disguise the movement of funds.
The properties were leased back to Presitex and Alchemy Textiles, with rental payments flowing directly into the personal bank accounts of Dalvi and his wife, Sushama.
Justice Thompson said the arrangement appeared designed to create “clean income” from properties acquired through unlawful means while concealing the source of the funds.
“It was carefully orchestrated that Sushama conveniently received the rental from Presitex (Dalvi being a director of this company) and Dalvi received the rental from Alchemy (Sushama being a director and shareholder of this company) to conceal the true nature of the transactions and the origin of the funds.”
The court found it particularly suspicious that Presitex was allegedly paying rent for South African premises despite conducting its operations in Lesotho.
The judgment also tore into the operations of Alchemy Textiles, a South African company linked to the Dalvi family.
According to the ruling, Alchemy concluded a Selling Agent Agreement (SAA) with Presitex in 2017 under which it claimed to provide services such as sourcing customers, negotiating contracts, arranging shipments and handling retailer relations.
However, the court found there was no evidence that Alchemy actually performed any of those functions.
“What is also striking is that no proof was provided that any of the services agreed upon in the SAA was indeed delivered.”
The court accepted evidence from former CGM financial manager, Rodney Esther, who testified that invoices issued by Alchemy were fictitious and were generated monthly based on Presitex sales that had actually occurred in Lesotho.
Judge Thompson found that Alchemy nonetheless received more than M60 million through the agreement.
The court ruled that the arrangement was effectively a vehicle to siphon funds from Presitex and CGM into South Africa.
“The SAA was therefore unlawful and it too was created by Dalvi and Sushama to further defraud Presitex and CGM and thereby siphon funds into Alchemy in South Africa.”
The judge further accepted the NDPP’s argument that the arrangement amounted to “a sophisticated form of money laundering that obfuscated the destination of the funds”.
In one of the most damning findings of the judgment, the court concluded that Dalvi used his position as sole director of the CGM Group to enrich himself and those close to him after other shareholders had left the company.
“Dalvi as sole director started to misappropriate and siphon funds from the CGM Group for his personal gain and for the benefit of family and acquaintances,” the court found.
The South African judgment follows closely on the heels of Dalvi’s defeat in Lesotho’s Court of Appeal in the Denimagic forfeiture case.
In that matter, Justice Petrus Damaseb said there was overwhelming evidence of “an insidious pattern of less than transparent conduct” by Dalvi and his associates.
The appeal court confirmed findings that “the Dalvi family used Denimagic as a conduit through which they laundered Presitex’s funds and stole its property”.
Dalvi, wife Sushama and their son Chaitanya, Roya, Medawewa, Babu, Presitex employees; Tseko Alphonce Bohloa and ‘Mathabo Klass have been charged for the M700 million money laundering, corruption and fraud in the Maseru Magistrates Court on 15 May 2024.
They stood accused alongside their other bogus companies; Alchemy (Pty) Ltd, Chane Merchants and Nazimada Textile FZE.
However, the Dalvi family members remain fugitives after failing to appear before the Maseru Magistrates’ Court.
The rest were released on M10 000 bail deposit and M100 000 surety each by Chief Magistrate ‘Matankiso Nthunya.