Andhra Pradesh Police have arrested William S. Pinckney, managing director and CEO of Amway India, evoking strong condemnation from the direct-selling firm and the industry body FICCI.
A team of police officials from Kurnool district arrested him late Monday from the company headquarters in Gurgaon following a consumer complaint against the firm.
According to police, a case was booked against Pinckney in Kurnool for unethical circulation of money.
Police said several criminal cases were booked against Amway in Guntur, Vijayawada, Prakasam, Medak, Hyderabad and Cyberabad and investigations were on against the company.
The Crime Investigation Department (CID) had booked a criminal case against Amway in 2006. The CID had filed a charge sheet against the company and the same was taken cognizance by the chief metropolitan magistrate's court at Nampally here.
According to a statement released by police, the Andhra Pradesh High Court in 2007 had declared the Amway scheme as illegal under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. The Supreme Court had upheld the same.
The home department in 2008 had restrained Amway from issuing advertisements and directed police to confiscate the material.
A police official pointed out that Enforcement Directorate also registered a case against Amway under the Foreign Exchange Management Act, 1999 and the matter is under investigation.
Last year, Kerala Police had arrested the Amway CEO and a court had sent him to judicial custody.
Meanwhile, Amway has expressed shock over the "unwarranted detention" of its official. "The case against which the action has been taken was filed in December 2013. The company had no prior information on the same. The allegations mentioned in the FIR are frivolous and gives a misleading impression about our business," a company statement said.
Amway said that as a law abiding corporate, it always cooperated in investigations, and has been responsive to queries and documentation.
"Due to the lack of a legal framework for the direct selling industry, any case filed is being misinterpreted and booked under the Prize Chits and Money Circulation Schemes (Banning) Act 1978 (PCMCS), which is otherwise intended to regulate financial schemes," it said.
"The direct selling industry has been repeatedly seeking an amendment to the PCMCS Act and has been working along with various industry bodies and government for the same. We urge the authorities to take note of the challenges faced by this industry and give us clarity to facilitate its smooth functioning," the company statement added.
Amway claimed that it is a legitimate direct selling FMCG organization operating in the country since 1998, selling more than 140 high quality products. It has made an investment of more than $100 million in a manufacturing facility in the country.
Amway, a 50-year-old manufacturer and direct seller, is operating in over 108 countries.
Meanwhile, FICCI condemned the Amway CEO's arrest. "This move has been initiated by a consumer complaint and could have been easily addressed as a consumer redressal since there was no criminality involved," the industry body said in a statement.
FICCI called for a clear and independent regulatory framework for the direct selling industry in India, urging the authorities to take note of the challenges faced by this sector and give clarity to facilitate a clear distinction between fly by night operators and legitimate businesses.
"This uncalled for action might also have an adverse impact on India-US business relationships," said its secretary-general A. Didar Singh.
