£1billion fraudster disappears – Sunday Express

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…Lawyer tells how the biggest scam in Lesotho history happened

Moharni Pachella

Shareholders of textile giant CGM Group appear to have suffered huge losses.

Their employee, Madhav Vasant Dalvi, embezzled about RM1 billion from the company through fake shell companies set up overseas in the names of his relatives and close friends. He then paid these companies, pretending that they were legitimate brokers of the CGM Group.

By doing this, he made nearly 1 billion Maloti. The extent of the fraud appears to be far greater than Sunday Express This has been reported previously.

CGM Group and its subsidiary Presitex Enterprise, owned by Solandra Inc and Eugenia Chang, were also used to steal millions of dollars.

Indian fugitive Dalvi is now missing from Lesotho. He did not attend the initial court appearance where his accomplices were charged. Efforts to track him down have been unsuccessful. If he is to be found, Lesotho law enforcement authorities must collaborate with other international law enforcement agencies.

Dalvi allegedly created shell companies using his wife Sushama Madhav Dalvi, son Chaitanya Madhav Dalvi, CGM administrative manager Sharmala Roya, CGM employee Asitha Medawewa, Presitex manager Jitech John Babu, Presitex employees; Tseko Alphonse Bohloa and ‘Mathabo Klass.

The Directorate General of Corruption and Economic Crime (DCEO) has uncovered the first money laundering, corruption and fraud network involving Maseru dollars 700 million and filed charges for some of the above crimes in the Maseru Magistrates Court on May 15, 2024.

They were charged along with their fake companies Denimagic (PTY) Ltd, Alchemy (Pty) Ltd, Chane Merchants and Nazimada Textile FZE.

However, Dalwe, his son and his wife did not turn up. They have effectively become fugitives after their disappearance from Lesotho. The rest were released on bail by Chief Magistrate Matangiso Ntunya on a bond of 10,000 Malawian Kwacha and 100,000 Malawian Kwacha.

Mr Dalwe was hired as the group’s chief executive and director in 2009 and started defrauding the company in 2017, according to Kuili Ndebele, a lawyer for CGM shareholders.

“When Dalwe was hired, there were two other directors. However, these individuals left the country in 2017 without the consent of the shareholders, leaving Dalwe alone as a director. From that point on, the scam began,” Ndebele told Sunday Express In an exclusive interview on Friday.

“Before 2017, CGM procured raw materials such as cloth in bulk from overseas manufacturers. Subsequently, Dalvi set up five shell companies in Dubai through his wife, son and employees of CGM and Presitex. However, his son controlled all the bank accounts of these companies.

“They would sign illegal agreements between these companies and CGM, with Dalvi signing these nominal businesses on behalf of CGM and other companies…

“These illegal agreements allowed these shell companies to appear to be brokers and charge CGM twice what it paid the manufacturer for the materials. For example, if CGM used to pay 5 marks for a meter of cloth, they would charge CGM 10 marks and receive the balance for their ‘brokerage work’.

“Through this scam, they defrauded CGM of approximately US$10 million (RM190 million) between 2017 and 2022.”

In addition to shipments to the United States through the African Growth and Opportunity Act (AGOA), CGM has also received orders from South Africa.

Mr Ndebele said Mr Dalwe had created another shell company in South Africa, Alchemy (PTY) Ltd, in which his wife, son and Ms Roya were shareholders.

“CGM and Presitex would receive orders from South Africa and payments would be made directly to Presitex’s bank account. Alchemy and Demimagic, among other companies, also acted as brokers, appearing to be looking for clients on behalf of CGM and Presitex, and they collected more than RM700 million in commissions from the group. Other payments were used to pay for Dalvi’s rent, cars, living expenses and international travel.

“They also set up another fake company in Lesotho called Denimagic, which was wholly owned by his wife. They used this company to steal the CGM retail store in Ha Thetsane. They signed an illegal contract whereby CGM rented the 2,000 square metre factory outlet store and all its contents to Denimagic for a monthly rent of RM15,000… In this way, they could earn about RM10 million a year.”

Mr Ndebele said Mr Dalvi sold CGM’s machines and then “rented” them from his associates at high prices. He said CGM needed about US$20 million (RM378 million) to replace the machines sold, including boilers.

He also said Dalvi’s fraudulent plan also included liquidating Presitex as another way to steal its business and assets. Fake company.

“A company called Nazimada, allegedly based in Dubai, Sharmala started liquidating Presitex. They claimed that Presitex owed the company more than RM40 million.”

This was nothing more than a scheme to facilitate theft, as there was no legitimate debt to warrant its liquidation.

On May 23, 2024, the DCEO charged Mr Dalvi and Mr Bohloe with defrauding CGM of Rs78,712,323.44 through the alleged liquidation. They were charged along with lawyers Moroesi Tau Thabane and Paul Mosoeu who allegedly assisted in the liquidation order of the Lesotho High Court.

Senior magistrate Peter Murenzi released them on bail of 2000 Marks and surety of 100,000 Marks. Dalvi was again absent, although he was one of the accused named in the indictment.

“The plan, currently in its execution phase, is to liquidate Presitex and steal its business.

“Presitex has never been declared bankrupt by shareholders. Whenever shareholders who are not in the country ask Dalvi to call an AGM, he gives several technical excuses.

“The shareholders discovered (the fraud) in 2023 and subsequently reported it to the DCEO. They commend the DCEO for his outstanding work in uncovering this incredible scam. They also thank their colleague Louis Rodney Esther, who was assisting in providing information about the fraud.

“My clients are desperately fighting for the reinstatement of these factories which employ a large number of Basotho people. The horrific corruption of these people has led to the loss of a large number of jobs,” Mr Ndebele said.

DCEO spokesperson Matlhohonolofatso Senoko told this publication yesterday that investigations were ongoing and more thefts and frauds might be uncovered in addition to the two cases the DCEO has already taken to court.