Staff Reporter
MASERU — China Garments Manufacturers (CGM)’s chief executive, Madhav Dalvi, has been charged in South Africa for allegedly employing illegal immigrants.
Dalvi is also under investigation for fraudulently acquiring a South African work permit and visa.
South Africa’s immigration department raided Dalvi’s house in Ladybrand on Wednesday morning and arrested his maid and gardener who are Lesotho citizens.
The two were convicted and fined for working without permits.
They were detained until Thursday when they failed to pay the fines.
This paper understands that they were only released on Thursday afternoon after CGM came to their rescue.
They have since been deported to Lesotho.
On Friday morning, around 10 am, Dalvi was asked to report to the Ladybrand Police Station where he was charged with employing and harbouring illegal immigrants.
He was however allowed to go home an hour later but is expected to appear in court tomorrow morning.
If convicted he could be deported back to India, his home country.
He could also be sent back to Lesotho where he has a valid work permit.
But even if he manages to wriggle out of this case tomorrow he faces more trouble from the immigration department.
This paper understands that during the raid at his home the immigration officers seized Dalvi’s passport.
His wife’s passport was also confiscated.
It is alleged that when they checked Dalvi’s passport they discovered that his South African work permit had been issued under a company called Manhood Clothing in Botshabelo.
Officials at Manhood Clothing first told the investigators that they did not have an employee called Madhav Dalvi but later changed their story after further probing.
They told the investigators that Dalvi was employed at the factory as a line manager.
When they were asked for records to prove that Dalvi was indeed an employee at the factory the officials said Dalvi had not been coming to work because he had been sent to Lesotho for training.
Dalvi’s work permit in Lesotho says he is a director of CGM and not a trainee from Manhood Clothing.
His troubles in South Africa only add to the serious problems he has been facing with the Lesotho Revenue Authority (LRA).
The LRA suspects that CGM has been avoiding tax by paying expatriates’ salaries into their foreign accounts.
It is suspected that expatriate employees get one third one of their salaries in a Lesotho bank and the remainder is transferred into their foreign accounts without being taxed.
The salaries are allegedly first transferred to front companies in Hong Kong from which they are then deposited into accounts in India, Philippine, Pakistan and Sri Lanka.
It is estimated that Lesotho has been prejudiced of nearly M300 million through this scheme.
For the past four months the LRA has been investigating allegations that CGM could have evaded tax over the past 24 years it has been operating in Lesotho.
In February tax officials raided the company’s offices in the Thetsane Industrial Area.
They confiscated files and computers.
Those files and computers have been handed to an international audit firm to help with the forensic investigation.
Dalvi has in the past vehemently denied that the company has been evading tax.
He has also maintained that CGM does not transfer staff salaries into foreign accounts.
While pressure from the LRA has been mounting the company is also facing a fresh crisis.
On Thursday several expatriates told the Sunday Express that they have not been paid the overseas portion of their salaries for the past three months.
They said Dalvi has told them that he is not sure when they will get their salaries because the company is going through a rough patch.