Lesotho: Lesotho, SA Courts Freeze Assets in M700m Clothing Industry Fraud Case

What the report says

Courts in Lesotho and South Africa have ordered the forfeiture of assets linked to an alleged M700 million fraud at CGM Group and its subsidiary Presitex, but the orders have not yet been carried out because appeals have been filed. According to GroundUp, the assets include a house in Maseru, three properties in Ladybrand in South Africa, and about M177,000 in cash. The case is part of a wider cross-border investigation into funds allegedly diverted from one of Lesotho’s largest clothing manufacturers.

The reported allegations center on former Presitex chief executive Madhav Vassant Dalvi, his wife Sushama, and associates. A whistleblower and shareholder, Eugenia Shi-Chang, raised complaints with Lesotho’s anti-corruption agency after returning to the company in 2023. The investigation led to criminal charges including fraud, theft, money laundering and abuse of office, though the criminal proceedings are separate from the forfeiture rulings and remain stalled pending extradition efforts involving India, the UAE and South Africa.

In May, the Lesotho Court of Appeal upheld forfeiture of the Maseru property and cash, while the Free State High Court later ruled that the Ladybrand properties were also proceeds of crime. The courts said the properties were bought with unlawfully diverted company money, including funds linked to a large bonus payment to Dalvi. GroundUp reported that the National Prosecuting Authority and Lesotho’s DCEO view the rulings as an important test of cross-border asset recovery, especially in a sector that employs thousands of workers in Lesotho.