MINISTER of Trade, Industry, and Business Development, Mokhethi Shelile, has lauded the reopening of textile giant CGM Group and its subsidiary, Presitex Enterprises, after they were defrauded of nearly M1 billion by former employees.
Mr Shelile said CGM Group is currently rehiring 350 Basotho as it relaunches production.
The two Thetsane-based textile producers were once among the country's largest employers, with a workforce exceeding 10 000. This success was disrupted when former CGM and Presitex director, Madhav Vasant Dalvi, along with other employees, allegedly fabricated debts for CGM and Presitex while funnelling money into a shell company they established in Dubai.
According to Mr Shelile, the reopening is part of his ministry's efforts and the Lesotho National Development Corporation's (LNDC) #ReBulaLifeme (We Are Opening Factories) initiative, aimed at revitalising the textile sector.
"CGM began in the 1980s as Basotho Jeans and grew to employ over 10 000 Basotho. It was one of the few companies that designed and produced garments from scratch, unlike others that only cut, make, and trim (CMT)," Mr Shelile explained.
"CGM's problems were artificially created by former management to bankrupt the company and take over operations. The director (Dalvi) even inquired at LNDC about the procedures for purchasing the company. In the state they left it, they could have bought it for almost nothing.
"When we identified the money laundering scheme, we froze the company's account and mandated that LNDC manage it, approving transactions for materials and employee payments. Instead of complying, Dalvi and his associates fled."
Dalvi allegedly 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, using 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 used 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.
On 19 October 2022, Dalvi fraudulently transferred 999 of the 1000 issued shares of CGM and Presitex to himself. The real shareholders of Presitex, Solandra Incorporated and Ci-ta Chang, who own 99% and 1% respectively, 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, successfully petitioned the High Court in Maseru to liquidate Presitex. This was 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.
Mr Shelile also said the government was committed to rescuing textile factories that had struggled in the wake of the COVID-19 pandemic. He said the government had helped CGM reclaim its business.
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"We are working tirelessly to revive the textile industry, which is a significant employer in Lesotho. Last week, we were in Cape Town, South Africa, meeting with buyers, and I can confirm that CGM is currently hiring 350 people to restart production. Our goal is to help them regain the over 10 000 jobs they once provided.
"Additionally, we have arranged to use 80 of their machines 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 indigenise the industry and establish more Basotho-owned factories."
The #ReBulaLifeme campaign is a collaborative drive between the Ministry of Trade, Industry and Business Development and the LNDC. The campaign, which aims to reopen factories across the country, was launched on 30 August 2024 and will run until December this year.
