MASERU — The Lesotho Revenue Authority (LRA) is preparing to charge the chief executive of China Garments Manufacturers (CGM), Madhav Dalvi, for allegedly dodging tax and externalising millions of maloti.
Charges will also be preferred against the other senior managers of CGM.
The LRA raided the company’s offices on Monday as they searched for evidence that the company could have evaded tax and externalised millions in the past 24 years.
The investigators confiscated computers, servers and boxes of documents in a sting operation that lasted from 3pm to around 1 am.
This paper understands that the LRA had planned to charge CGM’s top management soon after the raid but was advised to wait until the bulk of the evidence they seized had been analysed by their IT department.
That analysis is almost complete, according to a source close to the investigation.
The source said the LRA will “certainly charge Dalvi and his senior managers this week”.
He said the investigators were also worried that if they don’t charge the management this week some of them might skip the country.
“So far the evidence that has been unearthed is very strong. So we have to move in quickly or some might just disappear,” the source said on Friday.
“The idea is to have them charged and then they surrender their passports so that they don’t run away.”
The LRA’s chief information officer, Pheello Mphana, said the authority was carefully analysing the evidence to ascertain whether Dalvi should be arrested and put on trial for crimes involving tax evasion, externalisation and fraud.
“No charges have been preferred against the CGM management as yet,” Mphana said on Friday.
“Our team of investigators is working tirelessly to make sure that there is enough evidence to pin the company to the suspected crimes.”
The LRA believes that CGM, which is Lesotho’s biggest textile firm by way of employees and volumes, could have prejudiced the country of nearly M300 million in potential tax and foreign currency revenues.
It suspects that the company which makes jeans for Levi Strauss, an American clothing brand has been paying its expatriate workers’ salaries directly into their foreign accounts.
This, investigators suspect, was being done by under-declaring each expatriate’s taxable income.
CGM currently employs about 200 expatriates who are alleged to be paying tax only on a third of their salaries.
The other two thirds is transferred into their foreign accounts without being taxed.
Meanwhile this paper was told on Friday that a senior compliance official from Levi Strauss visited CGM on Thursday to investigate a fatal accident that happened at the firm in December.
The accident left one employee dead and two others seriously ill.
It is suspected that the three workers suffocated from paint fumes while painting a water tank at the factory.
The management has since rejected allegations that the three were working without adequate protective clothing.
The Levi Strauss official is expected to file a full report on his investigation into the incident next week.
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