Agencies
mumbai, May 27: The chief executive of Amway India has been arrested for the second time in a year, following a complaint about the direct selling business’s trading model.
William Pinckney, who leads India’s largest direct selling consumer goods business by sales, was arrested on Monday at the company headquarters in Gurgaon, after a legal practitioner filed a complaint against the company under the Money Circulation Schemes Banning Act.
“We are aggrieved and shocked at the sudden and unwarranted act of detention of our official,” Amway India said. “The allegations mentioned in the FIR [First Information Report] are frivolous and give a misleading impression about our business.”
Pinckney has since been transferred to Andhra Pradesh, where the complaint was initially lodged in December.
“The advocates are moving for bail and we are asking for police custody for at least one week for further questioning,” said Raghuram Reddy, superintendent of police in Kurnool district, Andhra Pradesh. Mr Pinckney’s bail application is set to be heard by a court in Kurnool on Wednesday.
Amway India, a subsidiary of Michigan-based Amway, has 500 employees and reported turnover of Rs21.9bn ($371.4m) in 2012.
The company uses a network of agents to distribute products and to sign up new agents without fixed retail outlets, offering 140 goods from cosmetics to homecare products.
Pinckney was arrested in the southern state of Kerala almost exactly a year ago, following complaints involving losses incurred by the agents, who often pay the company for its wares before making a sale. Monday’s arrest is just the latest in a series of troubles for the direct selling industry in India, where businesses have been accused of contravening legislation that bans money circulation schemes – programmes for making quick money in relation to members’ enrolment subscriptions or entrance fees.
“Direct sales and multi-level marketing are all being inadvertently bracketed with pyramid and Ponzi schemes; consequently consumer protection considerations are being imposed on perfectly legitimate and beneficial economic activities,” the Federation of Indian Chambers of Commerce and Industry (FICCI) said last year, recommending that the law be clarified.
India’s direct selling industry employs around 6m people, 70 per cent of whom are women, according to FICCI data.
India’s image as an international investment destination has been tarnished in recent years, following a series of disputes between multinational businesses and India’s tax authorities, with arrest warrants issued for executives at several foreign companies.
Markets have cheered the election of Narendra Modi, India’s new prime minister, who is seen as a pro-business leader eager to promote growth and investment in Asia’s third-largest economy.
“Today is the first official day of the government, and on the other side this is the signal which we are going to communicate to the rest of the world,” said Chavi Hemanth, secretary-general of the Indian Direct Selling Association.
“International companies are reluctant to come to India because of the policy ambiguity in the direct selling industry.” |
