CGM chief denies tax evasion claim

Lesotho Times
6 Min Read

MASERU — China Garment Manufacturers (CGM) now claims the evidence showing it evaded tax and externalised millions of maloti from Lesotho is the work of rogue employees who manipulated the company’s systems.

CGM chief executive Madhav Dalvi made the sensational claim yesterday at a press conference he called to deny allegations that the company could have evaded tax, externalised and laundered millions of maloti.

His claim that some workers could have tinkered with the system to fabricate incriminating evidence against CGM comes a week after the Lesotho Revenue Authorities (LRA) raided the company as it sought evidence of tax evasion, money laundering and externalisation.

The revenue authority took CGM’s servers, documents and computer hard drives in a raid that had been triggered by a tip off from a former company director who has turned into a whistleblower.

The Lesotho Times broke the story of the raid last week in a report that relied on e-mails, pays slips and other documents showing that the company could have been involved in tax fraud and externalisation.

But in his wide-ranging presentation at the press conference Dalvi sought to portray CGM as a victim of circumstances and the whistleblowers as dubious and bitter characters who had fallen out with the company.

During his presentation Dalvi zeroed in on the allegation that the company was under investigation for money laundering.

He said that allegation was hurting the business because some buyers like Levi Strauss had already raised concerns and threatened to cancel their orders with CGM.

“There have been serious concerns from the buyers. They have said money laundering is a serious crime and they might cancel their
orders with CGM if the matter is not clarified,” Dalvi said.

He however said he did not want to talk about the allegations of tax fraud and externalisation as that would “preempt” the LRA’s

But when the Lesotho Times asked why he was only refuting money laundering allegations and not those of tax fraud and externalisation, Dalvi said it was because money laundering was a criminal offence and his buyers were concerned.

When asked if that meant he is admitting to the allegations of tax fraud and externalisation Dalvi said, “No”.

When the Lesotho Times gave him e-mails, bank transfer schedules and pay slips showing how the expartiate employees were being paid as well as how money was being moved from Lesotho to countries like Taiwan, Dalvi said he knew nothing about the documents.

He said he would only discuss documents that bear CGM’s letterhead.

“I don’t know what you are talking about. I deny all these e-mails,” Dalvi said confidently.

But when pressed further he then alleged the documents had been generated by disgruntled workers who manipulated CGM’s information system.

“There are some disgruntled employees who manipulated our system to write the letters,” Dalvi said, without elaborating on what could have happened.

“What I can tell you is that CGM has never deposited money into foreign accounts of expatriates. That has never happened.”

Some of the documents that CGM claims were “manufactured” include pay slips that this paper got from current and former employees of the company.

They also include an e-mail that one of Dalvi’s colleagues in the management wrote to a prospective employee clearly stating that he would only pay tax on less than half of his income and the rest would be transferred into his foreign current account outside the country.

Also amongst the documents that Dalvi now alleges were“cooked up” is an internal e-mail that a senior CGM manager wrote explaining how money will be moved from Lesotho through Hong Kong until it was transferred into expatriates’ accounts.

Dalvi also sought to discredit Krish Moodley, the former CGM director who is now the LRA’s key informant.

Moodley, a South African, left CGM last year but he claims the company owes him M2.6 million in severance package.

Dalvi however said by giving information to the LRA, Moodley is trying to get back at the company after the board of directors asked
him to resign due to poor performance.

Under Moodley’s management, Dalvi said, CGM was making huge losses.

He said Moodley is now refusing to vacate a company-rented house in Ladybrand and surrender the firm’s BMW.

As for Ranil Yapa, another whistleblower who was deported two weeks ago, Dalvi said his work and residence permit had been cancelled and he should have gone back to Sri Lanka.

He claims the company has nothing to do with Yapa’s deportation.

Meanwhile this paper was told this week that the LRA’s investigation into CGM has reached an advanced stage and the charges could be preferred against its management soon.

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