Hopolang Mokhopi
IT was a mixed bag of emotions when the Ministry of Trade, Industry, and Business Development, alongside the Lesotho National Development Corporation (LNDC), reopened the once-great textile factory, CGM, in Ha Thetsane, Maseru, on Friday.
Amid the government and?workers’?joy over the retention of jobs, it was an emotional experience for CGM Group’s founder, Euginia Chang, who almost lost her factories to former employees. These employees allegedly defrauded the company of close to M1 billion, forcing it to shut down in July last year.
Professor Chang started the company in 1986 with just 100 employees, eventually expanding to open two subsidiaries: United in 1993 and Presitex Enterprises in 2000. Together, the three companies employed over 10 000 Basotho.
Problems began in 2009 when Prof Chang left for the Far East?for cancer treatment. It is alleged that Madhav Vasant Dalvi, who was left in charge of the three factories, believed Prof Chang would not survive the cancer.
He allegedly then created shell companies?-?involving his wife, Sushama Madhav Dalvi, his son, Chaitanya Madhav Dalvi, CGM employee Asitha Medawewa, Presitex Manager Jitech John Babu, and Presitex employees Tseko Alphonce Bohloa and ‘Mathabo Klass?-?and used them?as conduits to defraud CGM of nearly M1 billion over several years.
The Directorate on Corruption and Economic Offences (DCEO) has since uncovered how these shell companies were involved in a money laundering, corruption, and fraud scheme. These companies were fraudulently listed as “suppliers” of raw materials to CGM, when in reality, they were merely brokers justifying payments to themselves.
While Dalvi, his wife, and son remain fugitives, others involved have been charged in the Maseru Magistrates Court on 15 May 2024. They were released on M10 000 bail and M100 000 surety each by Chief Magistrate ‘Matankiso Nthunya.
Dalvi first shut down United in 2012 before launching the alleged looting spree. On 19 October 2022, he fraudulently transferred 999 of the 1000 issued shares of CGM and Presitex to himself. Prof Chang successfully overturned this transfer on 5 June 2023 and reported the matter to the DCEO in July 2023.
CGM’s former finance and administration manager, Sharmala Roya, through her company Nazimada Textile FZE, had also successfully petitioned the High Court in Maseru to liquidate Presitex, based on claims that Presitex owed Nazimada USD $2,242,619 (M39,798,413.82). However, the liquidation application, granted by Justice Moroke Mokhesi, was based on fabricated facts. The newly appointed liquidator, Kenneth Hlasa, is now challenging the legitimacy of the debts that led to the company’s liquidation in September 2023. This matter is still pending before Justice Mokhesi in the Commercial Division of the High Court.
The Friday the 13th rebirth of CGM was seen as a fresh start for Prof Chang, who said she intends to restore CGM Group to its former glory within three years. The reopening began with 300 employees, with plans to return to the 10 000-employee mark.
“This factory is where it all started, so I find it fitting to restart at our roots. This is the beginning of rebuilding the CGM empire. We want to make CGM a textile hub, not only producing fabric but also training Basotho to open their own factories,” Prof Chang said.
She?said?when she returned to Lesotho in 2022, she?was?barred from entering her own factories by Dalvi. It was only on Monday that she was able to enter the premises, only to discover that the machinery had been sold, allegedly by Dalvi. She had to source new equipment.
“I went through legal processes to regain this factory. It was not easy, as I lost some cases. However, I would like to thank law enforcement agencies, particularly the DCEO, for uncovering the corruption and bringing the culprits before the courts. I also want to express my gratitude to the Minister of Trade (Mokhethi Shelile) and his LNDC team for helping us get back on our feet.”
The reopening of CGM is part of the government and LNDC’s ongoing #ReBulaLifeme (we are opening factories) campaign aimed at revitalising the textile sector. The campaign, which will run until December this year, was launched by Mr Shelile and LNDC interim Chief Executive Officer, Molise Ramaili, last month in Maputsoe, Leribe, where they reopened Ever Unison Factory.
Addressing the crowd on Friday in Ha Thetsane, Mr Shelile expressed excitement over the reopening of CGM, highlighting the new jobs and economic growth it brings to Lesotho.
“This reopening represents our commitment to ensuring private-sector-led job creation, so workers can provide for their families. As a government, we look forward to thriving businesses and economic growth for our country.
“We are working tirelessly to revive the textile industry, which is a significant employer in Lesotho. CGM is currently hiring 300 people to restart production. Our goal is to help them regain the over 10,000 jobs they once provided.
“Additionally, we have arranged for 80 of their machines to be used to train 126 Basotho to produce garments independently. Our plan is to empower Basotho to penetrate the textile market. Currently, there are fewer than 10 Basotho in the textile business. Through the #ReBulaLifeme initiative, we aim to indigenize the industry and establish more Basotho-owned factories,” Mr Shelile said.
Advocate Ramaili added that their mandate?was?to bring investors into Lesotho, and the reopening of CGM was one step towards?creating jobs for Basotho.
“From last month (August 2024) to December 2024, we will be opening factories, each expected to employ between 300 and 1500 people at peak capacity. We have done extensive groundwork since 2022 to resolve issues that were deterring investors from opening factories in Lesotho, and we are also reopening those that shut down due to challenges in Lesotho’s investment climate.
“Last month, we opened Ever Unison in Maputsoe, which started with 240 employees and will reach 1500 by December. Today, we are opening CGM in the Thetsane Industrial Area in Maseru, which will start with 300 employees and grow to 1000 by December.”
Speaking on behalf of workers, Ramotšabi Letsie, who began working at CGM in 2005 when it?still?had 10 000 employees, said he was excited to have retained his job and was optimistic that more Basotho would also find employment.