1
SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this
document in compliance with the law and SAFLII Policy
IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
Not reportable
Case no: 5102/2024
In the matter between:
THE NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS APPLICANT
and
MADHAV VASANT DALVI FIRST RESPONDENT
SUSHAMA MADHAV DALVI SECOND RESPONDENT
ALCHEMY TEXTILES (PTY) LTD THIRD RESPONDENT
Neutral citation: NDPP v Dalvi and Others (5102/2024) [2026] ZAFSHC 295
(20 May 2026)
Coram: THOMPSON AJ
Heard: 20 N ovember 2025
Delivered: This judgment was handed down electronically by
circulation to the parties’ representatives by email and released to SAFLII. The
time and date for hand-down is deemed to be 10h00 on 20 May 2026.
Summary: Prevention of Organised Crime Act 121 of 1998 –
forfeiture order – s 50(1) – proceeds of unlawful activities – instrumentality
of an offence – evidentiary burden – Lesotho Companies Act 18 of 2011 –
director’s interest – board resolution – money laundering.
ORDER
2
1 An order is granted in terms of the provisions of s 50 of the Prevention of
Organised Crime Act 121 of 1998 (POCA), declaring forfeited to the state the
properties listed below which are presently subject to a preservation of property
order granted by this Honourable Court, under the above case number on 12
September 2024, namely:
1.1 Erf 9 […] , situated at 3[ …] M[…] in Ladybrand, with Title Deed
number: T16[ …] , registered at Bloemfontein Deeds Office in the names of
Sushama Madhav Dalvi with identity number: 5[ …] and Madhav Vasant Dalvi
with identity number: 5[…].
1.2 Erf […] , Portion 2 situated at […] C[…] Street in Ladybrand, with
Title Deed number: T97[ …] , registered at Bloemfontein Deeds Office in the
names of Sushama Madhav Dalvi with identity number: 5[ … ] and Madhav
Vasant Dalvi with identity number: 5[…] .
1.3 Erf 4[…] , Portion 3 situated at 1[…] P[…] Street in Ladybrand, with
Title Deed number: T21[ …] , registered at Bloemfontein Deeds Office in the
name of Alchemy Textile (Pty) Ltd with registration number: 2013/192279/07.
2 Costs of the Office of the State Attorney, which includes costs of Counsel
on scale C.
3 This order will be executed under the supervision of and control of the
curator bonis. Representatives of the applicant may accompany the curator
bonis in order to represent the applicant’s interest in the execution of this order.
The state may deal with the property as set hereunder.
4 In terms of s 42(1) (a) of POCA, Johan Francois Engelbrecht
(Engelbrecht) of Icon Insolvency Practitioners (Pty) Ltd (Icon) an
insolvency company , is hereby appointed as curator bonis subject to the
applicable provisions of POCA and, save where otherwise provided in POCA,
the provisions of the Administration of Estates Act 66 of 1965 (as amended), as
well as supervision of the Master of the High Court.
5 After obtaining letters of curatorship the curator bonis shall:
5.1 assume control over the properties.
5.2 take care of the said properties.
5.1 assume control over the properties.
5.2 take care of the said properties.
5.3 administer the said properties and do any act necessary for that
3
purpose.
5.4 order any person holding the properties subject to the preservation of
property order, to surrender forthwith such properties into the custody of the
curator bonis.
6 The objectives of POCA will be properly met if Engelbrecht takes control
of the properties listed in paragraph 1 above, and for the said Engelbrecht or a
person authorised by him in writing, to sell the properties and make the
following payments:
6.1 Pay 10% of the proceeds of the sale into the Criminal Asset
Recovery Account ( CARA) number: 80303056 established under s 63 of
POCA, held by the South African Reserve Bank.
6.2 Pay 10% of the proceeds of the sale into the FNB Lesotho
account in the name of the Directorate on Corruption and Economic Offences
with account number: 6[…] .
6.3 Pay the balance to CGM Industrial (Pty) Ltd held with Standard
Lesotho Bank under account number: 9[… ].
7 Payment to the victims shall be deemed to be payment to the State in
terms of POCA.
8 Any person whose interest in the properties concerned is affected by the
forfeiture order, may within 45 days after he or she has acquired knowledge of
such order, set the matter down for variation or rescission by the Court.
9 The said Engelbrecht, or the person authorised by him, shall as soon as
possible, but not later than a period of 90 days of this order coming into effect,
file a report with the applicant on the manner in which he:
9.1 completed the administration of the property mentioned above,
and
9.2 complied with the terms of the order.
10 The Registrar of the above Honourable Court is hereby directed to
publish as soon as is practicable a notice of this order in the Government
Gazette.
11 The respondents’ application for the exclusion of their interest in the
properties is dismissed with costs.
12 In terms of s 42(2) of POCA, it is ordered that the fees of the curator
bonis and all disbursements be paid from the forfeited property.
4
In terms of s 75(2) and 75(3), read with s 75(4) of the POCA, any person who
intentionally refuses or fails to comply with this order shall be guilty of an
offence and shall be liable on conviction to a fine or to a period of imprisonment
of up to 15 years.
JUDGMENT
Thompson AJ
[1] On 12 September 2024 , this Court granted a preservation order in
terms of s 38(1) of the Prevention of Organised Crime Act 121 of 1998 (POCA),
on an ex parte and urgent basis. The mentioned order involved three
properties, to wit 3[...] M[...] Street, [...] C[...] Street and 1[...] P[...] Street in
Ladybrand, Free State Province. The M[...]- and C[...] Street properties are
registered in the names of the first and second respondents, whilst the P[...]
Street property is registered in the name of the third respondent.
[2] In November 2024, the three affected parties filed a notice in terms of s
39(3) of POCA to oppose the relief sought against them. Additionally, and as
required, the respondents also filed the necessary affidavits in terms of s 39(5)
of POCA. The National Director of Public Prosecutions (the NDPP) is the
applicant, and she was represented by Adv ocate SS Jonase on instructions of
the State Attorney , Bloemfontein. The affected persons that objected to the
preservation order were represented by Advocate WJ Edeling SC instructed by
Barnard & Venter Inc , Ladybrand, with Lovius Block, Bloemfontein as local
correspondents.
[3] The forfeiture order is sought in terms of s 50(1) of POCA, subject to
the provisions of s 52 , in that on a balance of probabilities the properties in
question are instrumentalities of an offence referred to Schedule 1 and the
proceeds of unlawful activities. The applicant accordingly seeks an order
declaring the properties which are currently subject to the preservation order,
forfeited to the State.
5
Companies involved in forfeiture application
[4] CGM Industrial (Pty) Ltd (CGM), Presitex Enterprise (Pty) Ltd (Presitex)
and United Clothing (Pty) Ltd ( United) are companies duly registered and
incorporated under the laws of Lesotho whose main business activities are
mainly the manufacturing of textiles. The said companies are collectively known
as the CGM Group of Companies (CGM Group). The first respondent, Madhav
Vasant Dalvi (Dalvi), is a director of the CGM Group. At all relevant times,
Adrian Ci-Ta Chang (Adrian) and Solandra Inc. (Solandra) were the original
shareholders of both CGM and Presitex.
[5] The third respondent, Alchemy Textiles (Pty) Ltd (Alchemy) , is a South
African registered company with its main purpose to assist the CGM Group to
buy textile accessories in South Africa. The second respondent and wife of the
first respondent , Sushama Madhav Dalvi (Sushama), and Sharmala Roya
(Roya) are and were at all relevant times directors and shareholders of
Alchemy.
3[...] M[...], Ladybrand; and [...] C[...] Street, Ladybrand
[6] As mentioned above, the first and second respondents (Dalvi and
Sushama) are the registered owners of the M[...]- and C[...] Street properties.
The said respondents served their s 39(3) notice and s 39(5) affidavit(s) on the
applicant on 29 October 2024 as well as an answering affidavit to the forfeiture
application on 17 February 2025.
[7] The highwater mark of the first and second respondents ’ case or
opposition to the forfeiture order in respect of the two properties is
encapsulated in the Board Resolution (the Resolution) annexed to the papers
as Annexure B17. In a nutshell, it is averred by the respondents that in 2012
when CGM and Presitex were facing tax disputes with the Lesotho Revenue
Authority (LRA) the main shareholder Solandra abandoned the company and
the remaining shareholder Adrian fled to Taiwan, leaving Dalvi to manage the
aftermath. As a result of the above, the respondents allege that the two
aftermath. As a result of the above, the respondents allege that the two
mentioned properties were awarded to Dalvi as part of a performance related
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bonus for sorting out the CGM Group’s tax related issues.
[8] The applicant vehemently disputes the validity of the Resolution and
contends that when Dalvi became the sole director of the CGM Group in 2015
he embarked on activities that were in conflict with the CGM Group and were
designed to benefit him and those close to him.
1[...] P[...] Street, Ladybrand
[9] Alchemy is the registered owner of the property situated at 1[...] P[...]
Street, Ladybrand. It is Alchemy’s case that th is property was bought by it
through payments received in the normal course of its business by rendering
various services to inter alia the Edcon Group and through the renting of trucks.
Alchemy claims that its bank statements show the flow of funds and provided
proof of payment for the property , which transaction reflects on its bank
account.
[10] On the other hand, the applicant contends in support of the forfeiture
order that Alchemy concluded an unlawful Selling Agent Agreement (SAA) with
Presitex on 1 August 2017, to enable it to purchase the 1[...] P[...] Street
property. According to the applicant, Alchemy did not render any of the services
stipulated in the SAA entered into with Presitex, nor was there a valid resolution
passed by Presitex and/or the CGM Group to conclude the SAA with Alchemy.
Based on the aforesaid, the applicant contends that the SAA was unlawful and
a tool created by Dalvi and Sushama to defraud Presitex and CGM and thereby
siphon funds into Alchemy in South Africa. According to the applicant Alchemy
received M60,179,391.00 in terms of the unlawful SAA despite having rendered
no services. Amounts of M1,193,963.23 and M221,592.91 from Presitex, and a
further M1,399,486.24 from CGM , were used to facilitate the purchase of the
1[...] P[...] Street property. The aforesaid amounts were received from the CGM
Group shortly before the 1[...] P[...] Street property was purchased.
Legislation and authorities
Legislation and authorities
[11] Section 50(1), read with s 48(1) and s 53 of POCA , sets out the
jurisdictional requirements for a forfeiture order as follows:
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‘The High Court shall, subject to section 52, make an order applied for under section
48(1) if the Court finds on a balance of probabilities that the property concerned-
(a) is an instrumentality of an offence referred to in Schedule 1;
(b) is the proceeds of unlawful activities; or
(c) is property associated with terrorist and related activities.’
As alluded to herein above, the applicant relies on (a) and (b) above, alleging
that the properties were the proceeds of unlawful activities and/or are
instrumentalities of an offence.
[12] It is trite that t he applicant bear s the onus of establishing that the
respondents had committed or undertaken unlawful activit ies, that the
properties were connected to the commission or suspected commission of an
offence, and that the propert ies were obtained, derived or received in
connection with or as a result of any unlawful activity carried out by the
respondents.1
[13] In National Director of Public Prosecutions v Moyane ,
2 the court held
that a respondent bears an evidentiary burden to show that the proceeds used
to purchase the property emanated from a legitimate source. Section 52 of
POCA places an onus on the party seeking to exclude the interest from the
operation of the order to show that such interest has been legally acquired.
There is indeed a duty on such party to adduce evidence pertaining to the
legitimacy of the acquisition. Therefore, the respondents need to support their
allegations with proof if they want their veracity to be accepted as tenable.3
[14] Against the above setting, I will now turn to deal with the evidence.
An evaluation of the evidence
[15] The applicant contends that the purported Resolution ‘entitling’ Dalvi to
the two immovable propert ies, 3[...] M[...] and [...] C[...]s Stree t, was not
properly passed since the parties constitut ing the Board were not present , nor
1 National Director of Public Prosecutions v Kajane (3229/2024) [2025] ZAFSHC 373 (23
November 2025) para 10.
November 2025) para 10.
2 National Director of Public Prosecutions v Moyane [2022] ZASCA 79 para 29.
3 National Director of Public Prosecutions v Ramolahloane [2025] ZAFSHC 96 para 10.
8
were they represented at the meeting when the decision was taken. The
applicant furthermore contends that the Resolution was signed by Dalvi as
Director, who stood to benefit from it and contends that Dalvi failed to provide
proof that the Resolution was signed by the Board of the CGM Group.
[16] In support of the above, t he applicant procured and attached an
affidavit from Adrian declaring that during his tenure as shareholder of the CGM
Group, he never authorised the purchase of any of the three immovable
properties that forms the basis of the current dispute and neither did the
shareholders know of such transactions . Considering the aforesaid, 3[...] M[...]
and [...] C[...]s Street , Ladybrand are therefore instrumentalities of offence and
proceeds of unlawful activities as contemplated in s 50(1) of POCA according to
the applicant.
[17] Section 1 of POCA defines proceeds of unlawful activities as ‘any
property or any service, advantage, benefit or reward which was derived,
received or retained, directly or indirectly, in the Republic or elsewhere, at any
time before or after the commencement of the Act, in connection with or as a
result of any unlawful activity carried on by any person, and includes any
property representing property so derived’. Property is described as ‘money or
any other movable, immovable, corporeal or incorporeal thing and includes any
rights, privileges, claims and securities and any interest therein and all
proceeds thereof ’. Unlawful activity means ‘any conduct which constitutes a
crime, or which contravenes any law ’ whether such conduct occurred before or
after the commencement of POCA and whether such conduct occurred in the
Republic or elsewhere.
[18] It is trite that the unlawful activity need not have been committed by the
holder or owner of the property, but it is sufficient for it to have been committed.
The guilt or wrongdoing of the owner or possessor is of no relevance to these
The guilt or wrongdoing of the owner or possessor is of no relevance to these
proceedings as recorded in National Director of Public Prosecutions and
Another v Mohamed NO.
4 In National Director of Public Prosecutions and
4 National Director of Public Prosecutions and Another v Mohamed NO and Others [2002]
ZACC 9; 2002 (9) BCLR 970 (CC); 2002 (4) SA 843 (CC); 2002 (2) SACR 196 (CC) para 17.
9
Another v RO Cook ,5 the court having to determine whether property formed
part of proceeds of unlawful activities, held as follows:
‘Bearing in mind that the objective of the Act is to render forfeit the returns that might
accrue from unlawful activity, we consider that the ‘connection’ the definition envisages
requires some form of consequential relation between the return and the unlawful
activity. In other words, the proceeds must in some way be the consequence of
unlawful activity.’
[19] The term unlawful activities, as envisaged in POCA , does however not
refer to any contraventions of the law which do not amount to criminal conduct.
In this regard the Supreme Court of Appeal (the SCA) held in Bobroff and
Another v the National Director of Public Prosecutions6 (Bobroff), as follows:
‘… The purpose of s 50(1) of POCA, as read with the definition of ‘proceeds of unlawful
activities’, in the context of the known developments worldwide in relation to
transnational crime, is to strip offenders of the proceeds of their crime wherever they
may retain it.’
[20] The SCA in National Director of Public Prosecution v Seevnaranyan, 7
considered the interpretation given by the court a quo to ‘proceeds of unlawful
activity’. Griesel J in the court a quo held that a restrictive interpretation must be
given to ‘proceeds of unlawful activity’. The SCA stated that:
‘For this approach he relied on the Act’s short title (‘prevention of organised crime’),
and noted that its long title suggested that it was intended to “combat organised crime,
money laundering and criminal gang activities ”. From this and the preamble he
concluded that evasion of personal income tax by a single individual could not be
considered ‘organised crime’ and that “the Act was never intended to be applied in
situations such as the present’. For these and other reasons he applied a restrictive
approach.8
5 National Director of Public Prosecutions and Another v RO Cook [2004] ZASCA 36; 2004 (2)
5 National Director of Public Prosecutions and Another v RO Cook [2004] ZASCA 36; 2004 (2)
SACR 208 (SCA) para 72 (Cook).
6 Bobroff and Another v the National Director of Public Prosecutions [2021] ZASCA 56; [2021] 3
All SA 1 (SCA); 2021 (2) SACR 53 (SCA) para 17 (Bobroff).
7 National Director of Public Prosecutions v RO Cook Properties (Pty) Ltd; National Director of
Public Prosecutions v 37 Gillespie Street Durban (Pty) Ltd and Another; National Director of
Public Prosecutions v Seevnarayan [2004] ZASCA 38; [2004] 2 All SA 491 (SCA); 2004 (8)
BCLR 844 (SCA); 2004 (2) SACR 208 SCA (Seevnarayan).
8 Ibid para 64.
10
[21] The SCA did not agree with this construction by the court a quo,
holding that it radically truncates the scope of the Act. The SCA said further that
‘[i]t leaves out portions of the long title, as well as the ninth paragraph of the preamble.
These show that the stature is designed to reach far beyond “organised crime, money
laundering and criminal gang activities ”. The Act clearly applies to cases of individual
wrong-doing’.9
[22] It has become well established in our law that a criminal prosecution
and conviction are not a requirement or condition precedent for the granting of
a forfeiture order. In this regard the SCA held in Prophet v National Director of
Public Prosecution
10 that:
‘a prosecution, followed by a conviction and sentence is no bar to the invocation of
Chapter 6 [therefore]… a criminal conviction is not a condition precedent to forfeiture in
terms of our Act’. On appeal, the Constitutional Court confirmed this position.11
[23] To determine whether the two properties are proceeds of unlawful
activities the Resolution dated 20 October 2017 needs closer scrutiny. It
appears ex facia the Resolution that the attendees at the ‘ Meeting held by the
management of the CGM Group (CGM Industrial and Presit ex Entreprises) ’
were: Mr M Dalvi ( Group Managing Director ); Mrs Sharmala Roya ( Group
Admin Manager / Company Secretary ); Mr Jatesh John Babu ( Group Head of
Production); Mr Asitha Medawewa ( Group Sales Manager ); and Mr Jemsheed
Marikkar (Group Merchandising Manager).
[24] It was specifically noted at the meeting , as it appears in the minutes ,
that the LRA had i ssued a demand of M481,666,050.96 against the CGM
Group and instituted criminal and civil proceedings against the company
directors. Roya therefore requested the opinion of t he other attendees at the
meeting for a special bonus to be awarded to Dalvi as CEO , in view of his
contribution in handling all the relevant tax issues in respect of the c riminal
contribution in handling all the relevant tax issues in respect of the c riminal
proceedings instituted against him and Adrian. The minutes disclose that a t
9 Ibid para 65.
10 Prophet v National Director of Public Prosecution [2005] 94; 2005 (2) SACR 670 (SCA) paras
32 and 43.
11 Prophet v National Director of Public Prosecutions [2006] ZACC 17; 2007 (2) BCLR 140
(CC); 2006 (2) SACR 525; 2007 (6) SA 169 (CC) paras 42 and 23.
11
such time Adrian was holding 1 share in the CGM Group (CGM and Presitex)
and went back to China in the year 2011, and because of the criminal and civil
cases, he did not return to Lesotho. Adrian subsequently resigned as Director of
the CGM Group on 3 August 2015.
[25] The minutes of the meeting continues to state that the criminal case
against Dalvi was withdrawn on 28 August 2015. Dalvi single-handedly took on
his head all the criminal charges in his capacity as Group Chief Executive
Officer and had to go through a lot of mental torture. Based on the above and
the view that Dalvi as the Group CEO / Managing Director had to face the entire
responsibility on his own (including: criminal charges and civil charges; the fact
that no shareholder was presented in the country ; and Dalvi resolving the LRA
tax disputes and reviv ing the CGM Group) , it was consequently decided to
honor him with a special bonus of 2% of M481 666 050,66 (tax liability), which
amounted to M9 633 321,02. As stated above and evident from the Resolution,
the signatories thereof were Dalvi, Roya, Jatesh John Babu, Asitha Medawewa,
and Jemsheed Marikkar in their capacities as mentioned above.
[26] Section 65 of the Companies Act 18 of 2011 (the Lesotho Companies
Act) states:
‘(1) A director of a company, who has an interest in a transaction or proposed
transaction with the company, shall immediately, after becoming aware of it, cause the
nature and full extent of his or her interest to be entered in the register of directors and
if the company has more than one director, disclose it to the board.
(2) If a director fails to comply with subsection (1), the director –
(a) Commits an offence and on conviction shall be liable to a fine of M50,000 and
imprisonment to a term of 10 years of both; and
(b) Shall reimburse the company for any loss suffered by the company through
the transaction with the other company.’
[27] In addition to the above, s 66 of the Lesotho Companies Act in relevant
[27] In addition to the above, s 66 of the Lesotho Companies Act in relevant
parts states:
‘(1) Subject to subsection (2), a director or executive officer of a company has an
“interest” in a transaction to which the company is a party if the director –
(a) is a party to, or will or may derive a material financial benefit from the
12
transaction;
(b) has a material financial interest in another party to the transaction;
(c) is an officer, auditor or trustee of another party to, or person who will or may
derive a material financial benefit from the transaction, not being a party or person that
is-
(i) the holding company of which the company is a subsidiary;
(ii) a wholly owned subsidiary of the company; or
(iii) a related company;
(d) is a close relative of another party or person who will or may derive a material
benefit from the transaction;
(e) is otherwise directly or indirectly materially interested in the transaction.’
[28] Section 67 of the Lesotho Companies Act, also provides that:
‘A director of a company who is interested in a transaction entered into or to be entered
into by the company, and who has disclosed his or her interest in compliance with
section 65, may–
(a) vote on a matter relating to the transaction;
(b) attend a meeting of directors at which a matter relating to the transaction arises
and be included among the directors present for the purpose of a quorum;
(c) sign documents relating to the transaction on behalf of the company; and
(d) do any other thing in his or her capacity as a director in relation to the
transaction, as if the director was not interested in the transaction:
Provided that –
(i) the board is satisfied, on reasonable grounds, that the company will satisfy the
solvency test after the director has done the things in paragraphs (a), (b) and (d);
(ii) the articles of incorporation of the company expressly authorise the director to
do the things in paragraphs (a), (b), (c) and (d); or
(iii) the shareholders have authorised him or her to do the things in paragraphs (a),
(b), (c) and (d).’
[29] Furthermore, s 61(1) of t he Lesotho Companies Act provides that a
company shall not enter into a major transaction unless the transaction is
approved by special resolution or contingent upon the approval of the
approved by special resolution or contingent upon the approval of the
shareholders by special r esolution. In s 61(3), it provides that a major
transaction shall include an action affecting shareholders and shall be approved
by special resolution.
13
[30] Adrian, who was a Shareholder of Presit ex and CGM , fled from
Lesotho at the end of 2011 and never returned (on the respondents’ own
version). When the purported Resolution was therefore passed Adrian could not
have been present nor have signed the R esolution or approved the award as
shareholder. The respondents therefore tacitly acknowledged that the passing
of the purported R esolution was in contravention of the law. Adrian’s testimony
on oath, which stands uncontroverted, is accordingly accepted and favors the
granting of the order of forfeiture.
[31] Having regard to the above, I am in agreement with the applicant that
the Resolution was not properly passed. Dalvi did in fact stand to benefit from
the Resolution and still took part in taking such Resolution and he furthermore
signed it. No proof was provided by the respondent that the Resolution was
signed (or taken) by a validly constituted Board of the CGM Group. Neither of
the other persons present at the purported Board meeting were Shareholders
or Directors of the GCM Group. Dalvi was the sole Dire ctor of the CGM Group
at the time the Resolution was taken, and he had a financial interest in the
matter. No declaration of interest was provided by the respondents showing that
Dalvi disclosed his interest in the matter . No proof was provided that the
shareholders authorised Dalvi to vote on the matter or attend the meeting of
directors at which the matter arose , or to sign anything in relation to the
transaction. In the premises, the Resolution was thus not lawfully passed by a
properly constituted Board of Directors of the CGM Group or its shareholders.
[32] The above actions of Dalvi contravenes, inter alia , s 65 read with
ss 61, 66 and 67 of the Lesotho Companies Act, which actions constitute an
offence in term of s 65(2) of the Act, and on conviction shall be liable to a fine of
M50 000 and imprisonment to a term of 10 years or both. Dalvi’s actions also
M50 000 and imprisonment to a term of 10 years or both. Dalvi’s actions also
violate clause 81.2 of the Memorandum of Incorporation (MOI) of Presitex,
which clause expressly states that it is not permissible for a director to preside
over an issue that affects him. In the premises, I accordingly find that the 3[...]
M[...] and [...] C[...]s Street properties are proceeds of unlawful activities as
contemplated in POCA.
14
[33] This is however not where the buck stops. The applicant furthermore
contends that the two properties are likewise instrumentalities of an offence and
should also be forfeited to the State on this basis. Notwithstanding the above
finding in favor of the applicant, I will also deal with th is contention of the
applicant for completeness’s sake, if my finding above is incorrect.
[34] An instrumentality of an offence as per s 1 of POCA is defined as ‘ any
property which is concerned in the commission or the suspected commission of
an offence at any time before the commencement of [ such] Act, whether
committed within the Republic or elsewhere’ . It is trite that the expression
‘concerned in’ requires that a close link must exist between the property and the
crime. The property must in some way facilitate or make possible the
commission of the offence. The SCA went further to say that what is meant by
this is that the property must play a reasonably direct role in the commissioning
of the offence. In a real or substantial sense, the property must facilitate or
make possible the commission of the offence.
12
[35] Property can also be an instrumentality of an offence by being used
repeatedly to commit offences. In National Director of Public Prosecutions v
Parker,
13 Cameron JA held that where evidence of adaptation or storage is
lacking, and the police case depends principally on the frequency with which
the property serves as a venue for criminal conduct, the correct characterisation
of the property as a criminal instrumental ity necessarily becomes a question of
degree14. There the SCA held that the repeated drug sales were not incidental
occurrences that happened to take place there but rather represented a pattern
of sustained activity that reveals the use to which the premises were put and
there instrumental character in the crimes committed there.
15
[36] The repeated use of the properties becomes a relevant factor when
12 Cook and Seevnarayan para 31.
12 Cook and Seevnarayan para 31.
13 National Director of Public Prosecutions v Parker [2005] ZASCA 124; [2006] 1 All SA 317
(SCA); 2006 (3) SA 198 (SCA); 2006 (1) SACR 284 (SCA) para 38.
14 Ibid para 43.
15 Ibid para 42.
15
dealing with the two lease agreements entered into in respect of the properties
situated at 3[...] M[...] and [...] C[...]s Street . The two properties belonging to
Dalvi and Sushama were rented out to Alchemy and Presitex through a Real
Estate Agency and the rental was paid into the personal bank accounts of Dalvi
and Sushama, respectively.
[37] Insofar as 3[...] M[...] Street is concerned it is averred that Alchemy did
not render any services from the said leased premises, nor is there evidence of
its employees occupying the leased premises. Dalvi received an amount of
M1,531,935.00 as rental from Alchemy in terms of the said lease over a period
of 2 years.
[38] Regarding [...] C[...]s Street, it is contended by the applicant that Presitex
is based in Lesotho and does not conduct business in South Africa and was
there no need to lease a premises in South Africa. No resolution was provided
which was passed by Presitex to enter into the lease agreement with Dalvi and
Sushama, yet Presitex paid an amount of M726,000.00 as rent into Sushama’s
bank account. According to the applicant this lease is a sophisticated form of
theft, whereby Presitex paid for a service it did not require nor receive.
[39] Dalvi facilitated the lease agreements as d irector of the CGM Group and
held personal interest s in both leases. He did not enter such in the register of
directors, nor did he disclose it to the Board. The applicant therefore contends
that Dalvi acted in contravention of s 65 of the Lesotho Companies Act in this
regard as well and submits that such conduct falls squarely within the ambit of
the definition of unlawful activity in that the properties were used as
instrumentalities of an offence to defraud Presitex and Alchemy . The above
submissions apply equally to Sushama as director of Alchemy and th e other
lease agreement entered into with Presitex.
[40] There is therefore merit in the submission of the applicant that the lease
[40] There is therefore merit in the submission of the applicant that the lease
agreements facilitated in providing ‘clean income’ from illegality obtained
properties while disguising the disposition and movement of said income. I
therefore find that the two properties were also used as instrumentalities of an
16
offence as contemplated in POCA in sofar as the purported lease agreements
are concerned and should therefore be forfeited to the state.
[41] In conclusion on the topic of the 3[...] M[...] and [...] C[...] Street
properties, t he evidence furthermore shows that the two properties owned by
Dalvi and Sushama were renovated with funds of CGM and Presitex after
registration. An amount of R 1 000 000,00 of Presitex’s funds were used for
renovations to [...] C[...]s Street and R 500 000,00 of CGM funds were used to
renovate the 3[...] M[...] Street property. The applicant accordingly contends that
the amounts used to renovate the two properties are proceeds of unlawful
activities.
[42] There was no resolution or other evidence attached to the court papers
to justify the renovations paid for by the CGM Group to properties belonging to
Dalvi and Sushama in their personal capacities, and if it was done in terms of
the Resolution that forms the cornerstone of the first and second respondents’
opposition to the forfeiture application, it is equally unlawful and constitutes
proceeds of unlawful activities. This issue of the renovations was not dealt with
by the respondents.
[43] In the Bobroff matter, the court considered the issue of renovations and
the source thereof (amongst others), and made the following statement:
16
‘Where proceeds of crime have been laundered with the very purpose of disguising the
origin and identity thereof, they may be mixed with other assets which may not be the
proceeds of crime, and they may be converted into other forms of asset s which
technically are not direct proceeds of crime. In the case of money, this would typically
be the case. The definition of the concept in s 1 of POCA therefore includes ‘any
property representing property so derived’. In Botha, a corrupt relationship existed
between Ms Botha, at the time the head of the Northern Cape Department of Social
Services and Population Development, and Trifecta Investment Holdings (Pty) Ltd
Services and Population Development, and Trifecta Investment Holdings (Pty) Ltd
(Trifecta). Trifecta executed and paid for renovations to Ms Botha’s family home. The
renovations cost R1 169 680,49. After Ms Botha had died, the NDPP sought to recover
the value of the benefit as proceeds of crime from her estate, in terms of s 48(1) and s
16 Bobroff para 40.
17
50 of POCA. The Constitutional Court held that the amount paid by Trifecta in respect
of the renovations represented the proceeds of crime, in the hands of Ms Botha, and
ordered, in terms of s 50(1) (b), that an amount equivalent to the benefit received be
paid from Ms Botha’s estate to the State.’
[44] Premised on the above, I find that the amounts used for the renovations
are proceeds of unlawful activities and that the properties were also used as
instrumentalities of an offence as contemplated in POCA insofar as the
renovations are concerned and should be forfeited to the State.
1[...] P[...] Street, Ladybrand
[45] It is the applicant’s main contention that Alchemy concluded an
unlawful SAA with Presitex which enabled it to purchase the 1[...] P[...] Street
property. The terms of the SAA entailed rendering the following services on
behalf of Presit ex: locating suitable customers and retailers and introducing
them to Presit ex; gathering and arranging the delivery of pre- production
samples of goods from Presit ex to retailers for consideration and liaising with
retailers on any changes including obtaining fabric and trim approvals and the
entire sample approval process ; compiling market information relevant to
goods; communicating with the customers / retailers on behalf of Presit ex and
following up to get the order discussion record (ODR) ; placing confirmed orders
for the goods with Presit ex accordance with the customers / retailer written
instructions; negotiating with customers on behalf of Presit ex; concluding
contracts for the purchase and supply of goods with the relevant customers on
behalf of Presit ex; arranging for the inspection and / or packaging of goods ;
arranging the shipment and delivery of goods ; assisting Presit ex in and
enforcing the terms of the purchase contract against customers, retail for no
additional charge; assisting to consolidate order from customers/ retailers for
additional charge; assisting to consolidate order from customers/ retailers for
Presitex; and arranging for customers / retailers to visit the Presitex factory.
[46] The applicant avers that the Alchemy did not render any of the above
services nor was there a valid r esolution to have concluded the SAA with the
Presitex and / or the CGM Group. The SAA was therefore unlawful and it too
was created by Dalvi and Sushama to further defraud Presit ex and CGM and
18
thereby syphon funds into Alchemy in South Africa. According to the applicant
Alchemy invoiced and received M60,179,391,00 as a result of the alleged
unlawful SAA despite not having rendered any services, of which R1 193
963.23 and R221 592,91 from Presit ex, and a further R 399 486,24 from CGM
was used to facilitate the purchase of the property,1[...] P[...] Street, Ladybrand.
[47] As alluded to above, Adrian , one of the shareholders of the CGM
Group stated under oath that he was not aware, neither did he authori se the
purchasing of the properties (including 1[...] P[...] Street) or the concluding of
the SAA. There is no evidence furnished by the responden ts to the contrary
illustrating that the shareholders were aware of the transactions , and moreover
the conclusion of the SAA . What is also striking is that no proof was provided
that any of the services agreed upon in the SAA was indeed delivered. It also
needs mentioning and reiteration that the SAA was concluded between Presitex
and Alchemy and CGM was not a party thereto. Notwithstanding the aforesaid,
the respondents admitted that R 399 486.24 of CGM funds paid in terms of the
SAA contributed to the purchase of the 1[...] P[...] Street property.
[48] It was averred by the applicant that all business activities of Presitex
have always been done in Lesotho by its employees, who are also based in
Lesotho and that Presitex clients were not aware that Alchemy was an agent.
Despite the aforesaid, Dalvi fraudulently invoiced for these services as though
these services were rendered by Alchemy according to the applicant. The
applicant asserted that Dalvi used Alchemy as a conduit to channel funds from
the CGM Group to the value of M60 179 391.00, with only the purchase of the
property under discussion being traceable. This was a sophisticated form of
money laundering that obfuscated the destination of the funds and has gone
undetected in the applicant’s view.
undetected in the applicant’s view.
[49] Rodney Esther (Esther), Financial Manager of the CGM Group , was
responsible for creating receipts and processing payments pertaining to the
fictitious invoices issued by Alchemy to the CGM Group and he would prepare
the invoices monthly in line with the sales report of CGM and Presitex (CGM
Group) for sales that occurred in Lesotho. The invoices were for ‘commission
19
and consultancy charges ’. It is because of his role within the CGM Group , that
Esther attested on oath to the illegality of the SAA as well as payments
emanating f rom it . In my view , the respondents did not provide anything
tangible to gainsay the above, save for attempting to discredit Esther. The latter
did not assist the respondents at all insofar as the forfeiture application is
concerned. The respondents also did not deny that a portion of the funds that
was used to purchase 1[...] P[...] Street was from CGM, despite said company
not being a party to the SAA. The aforesaid alone constitutes an unlawful
activity. As alluded to above, the respondents did not provide any evidence as
proof that they provided any of the services stipulated in the SAA.
[50] The respondents only provided an email that illustrates that Alchemy
was registered as a vendor of the TFG Group but that does not advance the
respondents’ case in my view. The reference to Edcon also does not assist the
respondents as a Service Level Agreement was entered into between Edcon
and CGM, incorporating Presitex in 2013, before the advent of the SAA. Neither
the TFG nor Edcon partnerships were facilitated by Alchemy. At least nothing to
that end was established on the papers. As alluded to above, Adrian in any
case stated on oath that the SAA was not authorised and/or approved by the
shareholders of the CGM group. The SAA constitutes an action or major
transaction that affected the shareholders and required their approval by
special resolution as contemplated in s 61(3) of the Lesotho Companies Act.
[51] Dalvi in concluding the SAA between Alchemy and Presitex did not
disclose that he has a financial interest in Alchemy, in that his wife is a director
and shareholder of Alchemy. A declaration of interest was not furnished nor
valid resolution of the Board. This is once again in contravention of the Lesotho
Companies Act and constitutes an offence punishable by a fine or
Companies Act and constitutes an offence punishable by a fine or
imprisonment. I therefore find that the property situated at 1[...] P[...] Street,
Ladybrand was bought with, and is, the proceeds of unlawful activities.
Conclusion
[52] All the above actions, i e the purchase of the three properties , and the
conclusion of the SAA transpired after Dalvi became the sole director of the
20
CGM Group in 2015. Sushama and Roya played a pivotal role in assist ing Dalvi
to defraud the CGM Group. Roya as Group Admin Manager / Company
Secretary of the CGM Group and director and shareholder of Alchemy,
facilitated the special bonus that was ‘awarded’ to Dalvi. Roya, Sushama and
Dalvi was instrumental in the SAA being entered into between Presitex and
Alchemy. Sushama also became the co -owner of the M[...] and C[...] Street
properties and later landlord (together with Dalvi) of Alchemy and Presitex. It
was carefully orchestrated that Sushama conveniently received the rental from
Presitex (Dalvi being a director of this company) and Dalvi received the rental
from Alchemy (Sushama being a director and shareholder of this company ) to
conceal the true nature of the transactions and the origin of the funds.
[53] Taking the above into account, I cannot fault the applicant ’s
submission that it was only after the resignation of the other directors, Dalvi as
sole director started to misappropriate and siphon funds from the CGM Group
for his personal gain and for the benefit of family and acquaintances.
[54] Dalvi is not a shareholder of the CGM Group and entered into large
transactions without special resolutions of the shareholders and/or their
approval. He, as sole d irector of the CGM Group, understated the financial
statements of the CGM Group in contravention of the Lesotho company laws for
him to acquire the company at a lower value. Lethuka Sephalane (Sephalane),
a Chartered Accountant at LETACC Firm of Char tered Accountants, who was
appointed by Adrian to audit the books of the CGM Group stated on oath that
she enquired on numerous occasions about the absence of the shareholder(s)
in the companies and their dealings.
[55] According to Sephalane, Dalvi informed her that Adrian ‘ is positive
towards selling him some of his shares’. Subsequent to the aforesaid disclosure
the business was revalued and a revaluation report provided to Sephalane to
the business was revalued and a revaluation report provided to Sephalane to
audit. Sephalane, however, found that the financial statements reflected a lower
figure than that in the valuation report. Sephalane thought that it was an error
but according to her Dalvi informed her that he still has the intention to buy the
company and does not want to include the correct amount as the business
21
would have a higher valuation.17 An analysis of the Annual F inancial
Statements of the CGM Group also revealed that the property purchases ( 3[...]
M[...] and [...] C[...] Street) have been recorded as costs of sales, which is
clearly false and could only been intended to deceive as well as conceal the
true nature of the expenses and/or the source of the funds.
[56] On a balance of conspectus of all the facts and evidence, I cannot but
agree with the applicant that all of the above was orchestrated by Dalvi to
benefit him and those close to him.
[57] The respondents did not support their allegations with proof for the
veracity thereof to be accepted as tenable. Consequently, t he respondents
failed to discharge their evidentiary burden to show that the proceeds used to
purchase these properties emanated from a legitime source or have been
legitimately acquired as contemplated in POCA. I therefore find on a balance of
probabilities that all three properties that forms the subject matter of this
application are the proceeds of unlawful activities and were used as
instrumentalities of an offence(s), hence the application for forfeiture succeeds.
There is no compelling reason why costs should not follow the event.
[58] I therefore, make the following order:
6 An order is granted in terms of the provisions of s 50 of the Prevention of
Organised Crime Act 121 of 1998 (POCA) , declaring forfeited to the state the
properties listed below which are presently subject to a preservation of property
order granted by this Honourable Court , under the above case number on 12
September 2024, namely:
1.4 Erf 9 […] , situated at 3[ …] M[ …] in Ladybrand, with T itle Deed
number: T16[…] , registered at Bloemfontein D eeds Office in the names of
Sushama Madhav Dalvi with identity number : 5[…] and Madhav Vasant Dalvi
with identity number: 5[…].
1.5 Erf […] , Portion 2 situated at [ … ] C[… ] S[…] in Ladybrand, with
1.5 Erf […] , Portion 2 situated at [ … ] C[… ] S[…] in Ladybrand, with
Title Deed number : T97[…] , registered at Bloemfontein Deeds Office in the
17 See: p 214, Annexure NM10, Preservation Application.
22
names of Sushama Madhav Dalvi with identity number : 5[… ] and Madhav
Vasant Dalvi with identity number: 5[…] .
1.6 Erf 4[…] , Portion 3 situated at 1[…] P[ …] Street in Ladybrand, with
Title Deed number : T21[…] , registered at Bloemfontein Deeds Office in the
name of Alchemy Textile (Pty) Ltd with registration number: 2013/192279/07.
7 Costs of the Office of the State Attorney, which includes costs of Counsel
on scale C.
8 This order will be executed under the supervision of and control of the
curator bonis. Representatives of the applicant may accompany the curator
bonis in order to represent the applicant’s interest in the execution of this order.
The state may deal with the property as set hereunder.
9 In terms of s 42(1) (a) of POCA, Johan Francois Engelbrecht
(Engelbrecht) of Icon Insolvency Practitioners (Pty) Ltd (Icon) an
insolvency company , is hereby appointed as curator bonis subject to the
applicable provisions of POCA and, save where otherwise provided in POCA,
the provisions of the Administration of Estates Act 66 of 1965 (as amended), as
well as supervision of the Master of the High Court.
10 After obtaining letters of curatorship the curator bonis shall:
12.1 assume control over the properties.
12.2 take care of the said properties.
12.3 administer the said propert ies and do any act necessary for that
purpose.
12.4 order any person holding the properties subject to the preservation of
property order , to surrender forthwith such propert ies into the custody of the
curator bonis.
13 The objectives of POCA will be properly met if Engelbrecht takes control
of the properties listed in paragraph 1 above, and for the said Engelbrecht or a
person authorised by him in writing, to sell the propert ies and make the
following payments:
13.1 Pay 10% of the proceeds of the sale into the Criminal Asset
Recovery Account ( CARA) number : 80303056 established under s 63 of
POCA, held by the South African Reserve Bank.
POCA, held by the South African Reserve Bank.
13.2 Pay 10% of the proceeds of the sale into the FNB Lesotho
account in the name of the Directorate on Corruption and Economic Offences
23
with account number: 6[…] .
13.3 Pay the balance to CGM Industrial (Pty) Ltd held with Standard
Lesotho Bank under account number: 9[… ].
14 Payment to the victims shall be deemed to be payment to the S tate in
terms of POCA.
15 Any person whose interest in the propert ies concerned is affected by the
forfeiture order, may within 45 days after he or she has acquired knowledge of
such order, set the matter down for variation or rescission by the Court.
16 The said Engelbrecht, or the person authorised by him, shall as soon as
possible, but not later than a period of 90 days of this order coming into effect,
file a report with the applicant on the manner in which he:
16.1 completed the administration of the property mentioned above,
and
16.2 complied with the terms of the order.
17 The Registrar of the above Honourable Court is hereby directed to
publish as soon as is practicable a notice of this order in the Government
Gazette.
18 The respondents’ application for the exclusion of their interest in the
properties is dismissed with costs.
19 In terms of s 42(2) of POCA , it is ordered that the fees of the curator
bonis and all disbursements be paid from the forfeited property.
20 In terms of s 75(2) and 75(3), read with s 75(4) of the POCA, any person
who intentionally refuses or fails to comply with this order shall be guilty of an
offence and shall be liable on conviction to a fine or to a period of imprisonment
of up to 15 years.
D R THOMPSON
ACTING JUDGE OF THE HIGH COURT
Appearances:
For the applicant: SS Jonase
Instructed by: State Attorney,
Bloemfontein
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For the Respondent: WJ Edeling SC
Instructed by: Barnard & Venter Inc.
c/o Lovius Block Attorneys,
Bloemfontein.