Lesotho’s Directorate on Corruption and Economic Offences secured two separate forfeiture rulings in May, yet three months on, not a single asset has changed hands. Appeals filed by respondents have effectively frozen implementation of both orders, leaving the enforcement machinery of two jurisdictions in a holding pattern.
The Lesotho Court of Appeal and the Free State High Court in South Africa each issued forfeiture rulings within five days of each other, targeting properties and cash connected to a scheme that diverted approximately M700 million from CGM Group and its subsidiary Presitex. On 25 May, Lesotho’s Court of Appeal upheld a high court order forfeiting a property in Masowe, Maseru, valued at about M1.6 million, along with approximately M177,000 in cash. Five days later, the Free State High Court ordered the forfeiture of three properties in Ladybrand worth R5.75 million.
Both courts determined that the properties and cash constituted proceeds of criminal activity.
The underlying scheme involved the systematic diversion of funds from Presitex, which employs approximately 3,000 people, and related CGM Group companies. Former chief executive Madhav Vassant Dalvi, his wife Sushama, and associates orchestrated the diversion into entities they created or controlled. Criminal charges against Dalvi, his wife, their son Chaitanya, other former employees and managers, and clothing companies including Denimagic and Alchemy Textiles include theft, fraud, money laundering and abuse of office.
The DCEO investigation was triggered when Eugenia Shi-Chang, a whistleblower and shareholder of Presitex, filed complaints with the directorate after returning to the company in 2023. Shi-Chang had left Presitex in 2009 and discovered upon her return that Dalvi and his associates had been running the diversion scheme for years.
Before they could be remanded, Dalvi, his wife, his son, and several other accused fled the country. Extradition processes were triggered in February 2024 and served to South Africa and the embassies of India and the United Arab Emirates in South Africa. The DCEO reports that only South Africa has responded to a request for mutual legal assistance, and extradition proceedings have not yet begun.
The May judgments addressed a narrower question: whether the properties were sufficiently connected to unlawful conduct to justify forfeiture, not the underlying criminal case itself. In the Lesotho matter, the Court of Appeal examined the circumstances surrounding a house in Masowe registered in the names of Maneo and Clark Poopa. The property was being subleased to clothing company Denimagic for 82 years at a nominal rental of M1 per year, while Presitex was simultaneously paying Denimagic M24,000 monthly to occupy the same property. Dalvi’s son Chaitanya was living in the house. The court described this arrangement as commercially irrational. The court also rejected Denimagic’s claim that seized cash came from legitimate clothing sales, finding no evidence supporting those transactions.
The Court of Appeal’s ruling has not been implemented because Presitex has lodged an application to exclude its interest in the property.
By contrast, the Free State High Court’s analysis centred on a M9.6 million “performance bonus” paid to Dalvi while he was chief executive of Presitex. Dalvi had participated in the board resolution approving the bonus from which he personally benefited, rendering it unlawful. On that basis, the court declared three Ladybrand properties acquired with those funds forfeitable. Two were registered in the names of Madhav and Sushama Dalvi; a third was registered to Alchemy Textiles, a South African company partly owned by Sushama and established to procure textile accessories for the CGM Group in Lesotho.
The National Prosecuting Authority has appointed a curator while awaiting court directions on the filing of heads of argument and, if necessary, a hearing date, as Dalvi and Sushama have applied for leave to appeal, according to reporting available at https://groundup.org.za/article/lesotho-sa-courts-freeze-illicit-assets/.
DCEO director-general Mantso Sello characterised the judgments as demonstrating that proceeds of crime can be traced across borders, helping combat corruption, money laundering and other economic offences. The Dalvi family, their lawyers, Denimagic, Alchemy and Presitex did not respond to requests for comment.
Whether the extradition requests to India and the United Arab Emirates will eventually produce a response, and whether the criminal charges can proceed while key accused remain abroad, are the questions that will determine whether the forfeiture orders amount to more than frozen paperwork.