—as one of his schemes which cost CGM US$11 million is outlined
Staff Reporter
ONE of the charges against Madhav Vasant Dalvi – the fugitive former director of textile giant CGM Group – is orchestrating an elaborate scheme to siphon over USD$11 million (about M210 million) from the company.
According to the company’s finance manager, Rodney Esther, one of Dalvi’s tactics was to create a shell company, Deniexperts, in Dubai, United Arab Emirates, purportedly for “sourcing material on behalf of CGM”.
However, this setup was a scam to enable Dalvi to skim millions from the company.
Mr Esther states this in his affidavit filed with the Directorate on Corruption and Economic Offences (DCEO) as part of evidence against Dalvi who stands accused of fraud, money laundering and theft of close to M1 billion from the CGM factory and its subsidiary Presitex Enterprises.
The CGM Group began with the Chang family, who launched their first textile business, Basotho Jeans, in Lesotho in 1986.
Under the leadership of Professor Eugenia Chang, the family venture marked the beginning of a textile empire.
Prof Chang was the original shareholder along with her two brothers, and in 1992, the family decided to restructure the company. They transferred all shares to Solandra Inc, a company registered in the British Virgin Islands to consolidate the family’s global interests, with one share retained by Ci-Ta Chang to represent the Group’s interest in Lesotho. Since then, Solandra was the legitimate majority shareholder of the CGM Group in the Ministry of Trade’s registered company records.
CGM’s growth led to the establishment of three significant subsidiaries: CGM Industrial Pty Ltd, established in 1987, United Clothing Pty Ltd, established in 1993, and Presitex Enterprises Pty Ltd, established in 2000.
Together, these companies employed over 10,000 workers, both permanent and casual, making CGM a substantial player in Lesotho textile industry and a significant employer in the southern African region.
Around 1998, Prof Chang encountered Dalvi in Mauritius, where he worked at Arvind Limited. Impressed by his competence, she employed him at her South African factory, Denim Textiles in Durban in 2000, but was later transferred to Lesotho, where he became CGM’s director and chief executive officer in November 2008. While Ms Chang took indefinite leave in 2012, the other director was forced to resign in 2017, leaving Dalvi as the sole operator of the CGM Group.
Upon assuming sole control, Dalvi allegedly engaged in a series of illicit activities, diverting company funds for personal gain.
Deniexperts was just one of several shell companies and other schemes Dalvi created to siphon funds from CGM. His other co-conspirators were his wife, Sushama Madhav Dalvi, son Chaitanya Madhav Dalvi, CGM administration and finance manager Sharmala Roya, CGM employee Asitha Medawewa, Presitex Manager Jitesh John Babu and employee ‘Mathabo Klass, as well as CGM auditor Tseko Alphonce Bohloa.
The shell companies were not suppliers of CGM but used as “brokers” to justify payments to them.
All the aforementioned – except Dalvi, his wife and son – were charged in the Maseru Magistrates Court on 15 May 2024.
Dalvi and his family members are now fugitives after fleeing Lesotho. The Maseru Magistrates Court has since issued their warrants of arrest.
Those charged were released on M10,000 bail and M100,000 surety each by Chief Magistrate ‘Matankiso Nthunya. Their trial will proceed before the High Court on a date yet to be confirmed.
Deniexperts was established in 2017 established to act as an intermediary to procure materials ostensibly for CGM but adding a 40% markup on costs.
A bank account for Deniexperts was opened with The National Bank of Ras Al Khaimah in Dubai at the same time. Chaintanya allegedly orchestrated the administrative aspects, including controlling the bank’s online system.
“Following Dalvi’s instructions, the Dubai company was registered, with Chaintanya Madhav Dalvi, Dalvi’s biological son, supervising the process.”
According to Mr Esther, the online banking system was issued and the account’s contact details, including cell number and email address, were for his son (Chaitanya), ensuring Dalvi’s family had exclusive access to funds that flowed into Deniexperts.
“It later became apparent that this setup was designed to funnel money out of the Group of Companies (CGM and Presitex).”
The deceit ran deep, with CGM employees in Maseru, acting on behalf of Deniexperts to handle orders and payments between CGM and fabric mills. While fabric was directly shipped to Lesotho from India, invoices went through Deniexperts, allowing Dalvi to “invoice the Lesotho company through third-party invoicing”
“I began to question Mr Dalvi’s integrity and honesty,” Mr Esther revealed, suspecting that funds were being funnelled out of the company.
Mr Esther discovered that Deniexperts had been paid highly inflated prices — up to 45% above cost — for fabric from India. The true intent of the setup became apparent as Mr Esther discovered the existence of two previous shell companies, DA Vinci Enterprises Limited and GT Fabrics Limited, also registered in Dubai under the name of a third party, Gopal Kanubhai Thakkar. Thakkar was an associate of Chaintanya and Sushama, suggesting they had orchestrated similar schemes prior to Deniexperts. And now Thakkar claims to be a director of Nazimada – the same company which liquidated Presitex.
“I learned that the two previous CGM suppliers registered in Dubai, namely DA Vinci Enterprises Limited and GT Fabrics Limited, were both under the name of Gopal Kanubhai Thakkar, who was employed by Highlife Clothing (Pty) Ltd, a registered Indian company owned by Chaintanya and Sushama.
“My awareness of this situation arose after changes in Indian Government tax regulations, which made residents with businesses registered outside of India liable for tax obligations.
“I began to feel uneasy about the situation and expressed my discomfort with this arrangement as the manager of the company (CGM). It became evident that Mr Dalvi developed personal issues with me, as he then, through other members of the management team, attempted to make me redundant within the company. As time passed, I suffered significant prejudice.
“Around 2021, two other senior managers were instructed to replicate what was done in 2017 by registering Deniexperts Limited.
1. Sharmala Roya, holding the position of Finance and Administration Manager, registered a company in Dubai named Nazimada Textiles (FZE) on 8 July 2021. Subsequently, all fabric purchases were diverted to Nazimada Textiles, cancelling and reducing any orders placed with Deniexperts Limited.
2. Asitha Medawewa, Senior Manager, also registered a company in Dubai named Blue Platinum Enterprises (FZCO) on 8 June 2023, to continue the procurement of fabric from India.
“Both companies allegedly operated under the supervision of Dalvi and Chaitanya. This appeared to be a scheme aimed at siphoning and laundering money out of the company and the country.”
Nazimada allegedly made a turnover of USD$9,064,047.21 while Blue Platinum made M2,731,665.55.
This revelation raised alarm within CGM. When shareholders sought financial clarity, Dalvi actively obstructed them, ordering staff to deny shareholder representative, Prof Chang, entry to company premises.
“I took it upon myself to disclose all relevant information to the shareholders of the Group. I informed them about the suspicious and dubious transactions conducted by Mr Dalvi and extended my support in their efforts to investigate and uncover the funds misappropriated by him. The shareholders were made aware of the extent of the assets and money unlawfully withdrawn by Mr Dalvi. I conveyed to them the existence of the registered companies in Dubai.
“While pretending to be still subject to Mr Dalvi’s control, I embarked on a trip to Dubai.”
“Subsequently, upon receipt of the bank statements, I engaged a forensic audit firm in Dubai to perform a comprehensive examination of Deniexperts Limited’s bank statements for the period spanning January 2018 to April 2023.
“The audit report uncovered unauthorised transfers made from Deniexperts Limited’s account to individuals and entities that had no legitimate business ties with Deniexperts Limited. These illicit money transfers from Deniexperts Limited’s bank account amounted to an excess of USD$11,282,622.80.
“Furthermore, the audit reports unveiled substantial sums of money directly transferred to Mr Dalvi’s account in India, as well as to his wife, Mrs Sushama Dalvi, and his son, Mr Chaitanya Dalvi.
- USD$597,520 to Mr Chaintanya Dalvi,
- USD$162,963 to Mr Madhav Dalvi,
- USD$725,800 to Mrs. Sushama Dalvi,
- USD$3,350,000 to Platinum FS LLC,
- USD$1,755,835.27 to Hong Kong Selection International, among others.
“The audit also exposed certain payments corresponded to invoices from Jindal Denims Inc., with inflated markups. For instance, invoices DX002222300156 and DX002222300152 bore markups of 45%, indicative of the scheme’s scale.”
Mr Esther’s disclosures led to his abrupt dismissal on 12 June 2023, for alleged “gross misconduct” and “gross negligence.”
Dalvi accused him of an M8 million fraud, a claim Mr Esther firmly denies, attributing it to retaliation for exposing the fraud.
Ironically the same person, Tseko Bohloa, who claimed Mr Esther had defrauded CGM, was also charged alongside Dalvi for defrauding CGM. Bohloa had been hired by Dalvi as the CGM auditor and claimed to have “uncovered” the M8 million. Fraud.
“I was not contacted nor interviewed for this (purported audit which claimed the M8 million theft). The content of the report clearly shows payments for the construction of a house in Masowe – the same house which forms part of the DCEO investigations as it appears to be sublet to Denimagic by Presitex. Mr Bohloa is also the auditor of Denimagic.
“I placed my trust in Mr Dalvi and his son, believing they were genuinely working for the benefit of the Lesotho company. It was a painful realisation that their motives were solely self-serving,” Mr Esther said.
Dalvi had on 1 June 2023 opened a criminal case against Mr Esther at the Police Headquarters in Maseru, accusing him of defrauding CGM over M8 million. However, Dalvi withdrew the case against Mr Esther on 2 January 2024.
The case was obviously a hoax, hence the withdrawal.
Despite efforts by Dalvi to redeem and vindicate himself elsewhere in the media, all available evidence proves that he is the real crook, who prejudiced a textile giant that was once one of the largest employers in Lesotho’s textile industry. Which explains why he won’t come to stand trial.
Thousands of Basotho lost their jobs as a result of his scams. The owners of CGM are nonetheless trying to rebuild. With determination and grit, they will succeed.
