…as lawyer narrates how biggest con in Lesotho’s history was done
Mohalenyane Phakela
SHAREHOLDERS of textile giant, CGM Group, appear to have lost big.
Their employee, Madhav Vasant Dalvi, siphoned about M1 billion from the company through bogus shelf-companies he established overseas in the names of his relatives and cronies. He would then make payments to these companies, pretending that they were legitimate brokers for the CGM group.
By so doing, he pocketed nearly one billion maloti. The extent of the fraud appears to be far bigger than the Sunday Express previously reported.
The CGM Group, and its subsidiary Presitex Enterprise, which was also used to steal millions, are owned by Solandra Inc and Eugenia Chang.
The fugitive Dalvi of Indian origin has now disappeared from Lesotho. He was not at the initial court appearance where his accomplices where charged. Efforts to trace him have been unsuccessful. Lesotho’s law enforcement authorities would have to engage other international law enforcement agencies if he is ever to be found.
Dalvi allegedly created shell companies using his wife Sushama Madhav Dalvi, son Chaitanya Madhav Dalvi, CGM administration manager Sharmala Roya, CGM employee Asitha Medawewa, Presitex Manager Jitech John Babu, Presitex employees; Tseko Alphonce Bohloa and ‘Mathabo Klass.
The Directorate on Corruption and Economic Offences (DCEO) unearthed the first M700 million money laundering, corruption and fraud web and charged some of the aforementioned in the Maseru Magistrates Court on 15 May 2024.
They stood accused alongside their bogus companies; Denimagic (PTY) Ltd, Alchemy (Pty) Ltd, Chane Merchants and Nazimada Textile FZE.
However, Dalvi, his son and wife were a no show. They are now effectively fugitives from justice after they disappeared from Lesotho. The rest were released on M10 000 bail deposit and M100 000 surety each by Chief Magistrate ‘Matankiso Nthunya.
According to CGM shareholders’ lawyer, Attorney Kuili Ndebele, Mr Dalvi had been employed as the group’s chief executive officer and director in 2009 and started defrauding the company in 2017.
“There were two other directors when Dalvi was hired. However, those left the country in 2017 without the knowledge of the shareholders, leaving Dalvi as the only director. That was when the shenanigans began,” Mr Ndebele told the Sunday Express in an exclusive interview on Friday.
“Before 2017, CGM sourced raw materials such as cloths in bulk from manufacturers overseas. Then Dalvi created five shell companies in Dubai through his wife, son as well as CGM and Presitex staff members. However, his son controlled all the bank accounts of these companies.
“They would sign illegal agreements between these companies and CGM whereby Dalvi would sign on behalf of CGM and others for these businesses which existed only in name……
“The illegal agreements made these shells appear as brokers and would charge CGM double the amount it used to pay the manufacturers for the materials. For instance, if CGM used to pay M5 for a metre of a cloth, they charged M10 and obtained the balance for their ‘brokerage work’.
“Through this scam, they were able to defraud CGM around USD$10 million (M190 million) between 2017 and 2022.”
Apart from shipping products to the United States through the African Growth and Opportunity Act (AGOA), CGM also receives orders from South Africa.
Mr Ndebele said Mr Dalvi moved to create another shell company in South Africa, Alchemy (PTY) Ltd, where his wife, son and Ms Roya appeared as shareholders.
“CGM and Presitex would get orders from South Africa and payments would be made directly into the Presitex bank account. This Alchemy and Demimagic companies and others were also made brokers which appeared as if they were sourcing clients on behalf of CGM and Presitex, thus, they charged the Group commissions of more than?M700 million. The other amounts financed Dalvi’s rentals, cars, living expenses and international trips among others.
“They further created another bogus company in Lesotho called Denimagic which was solely owned by the wife. This was used to steal CGM’s retail outlet situated in Ha Thetsane. They signed an illegal contract whereby CGM leased the 2000sqm factory outlet, and everything in it, to Denimagic for M15 000 monthly rentals…… Through this, they pocketed around M10 million annually.”
Mr Ndebele said Mr Dalvi sold CGM’s machinery and then “rented” the same from his cohorts at inflated fees. He said CGM needed around USD$20 million (M378 million) to replace the sold machinery which includes boilers.
He also said Dalvi’s fraudulent schemes also involved liquidating Presitex as a means to steal its business and assets through another bogus company.
“A company, Nazimada,?purported to be in Dubai, owned by Sharmala, moved to liquidate Presitex. They claimed Presitex owed that business over M40 million.”
This was a mere scheme to facilitate theft as there was no underlying legitimate debt to warrant the liquidation.
On 23 May 2024, the DCEO charged Messrs Dalvi and Bohloa for defrauding CGM of M78 712 323.44 through the purported liquidation. They were charged alongside lawyers, Moroesi Tau Thabane and Paul Mosoeu, who allegedly facilitated the liquidation order in the Lesotho High Court.
They were released on M2000 bail and M100 000 surety by Senior Resident Magistrate Peter Murenzi. Dalvi was a no show again despite appearing as one of the accused on the charge sheet.
“The plan, which was at the stage of execution, was to steal Presitex’s business after liquidating it.
“Presitex had never been declared insolvent by its shareholders. Whenever the shareholders, who do not stay in the country, would call Dalvi to convene an annual general meeting, he would come up with several technical excuses.
“The (fraud) discovery was made by the shareholders in 2023 when they then reported the matter to the DCEO. They applaud the DCEO for the marvellous job it did to unravel this unbelievable scam. They also thank a colleague, Louis Rodney Esther, who is assisting with information regarding the commission of the fraud.
“My clients are fighting tooth and nail to restore the status at these factories which employee quite a large number of Basotho. Jobs have been lost due to this horrible corruption done by these people,” Mr Ndebele said.
The DCEO’s spokesperson, ‘Matlhohonolofatso Senoko, told this publication yesterday that investigations were still ongoing which may reveal more theft and fraud apart from the two cases the DCEO had already taken to court.
