A district court in Andhra Pradesh today sent Amway India MD and CEO William S Pinckney to 14-day judicial custody after he was arrested in connection with a criminal case registered against the direct-selling company.
While Amway India termed Pinckney's arrest -- the second instance in a year -- an "unwarranted act", an association of direct sellers said it sent out wrong signals to global investors on the day the Narendra Modi government took charge at the Centre.
Kurnool Superintendent of Police Raghurami Reddy said Pinckney was arrested in Gurgaon yesterday and brought to Kurnool in Andhra Pradesh on a warrant, in response to a complaint alleging financial irregularities by the company.
"The CEO has been booked under the Prize Chits and Money Circulation Schemes (Banning) Act (PCMCS) besides charges of cheating as well as extortion under relevant sections of the Indian Penal Code (IPC)," Reddy said.
Pinckney was produced in a court in Dhone (50 km from Kurnool) which remanded him to judicial custody until June 7.
After the court rejected a bail petition, Pinckney was shifted to a prison in Kadapa district. The Kurnool police has also filed a petition seeking his custody for 10 days. The case has been posted for hearing tomorrow.
Amway India called the charges against its managing director and chief executive officer "frivolous" and said it gave "a misleading impression" about the company's business.
"We are aggrieved and shocked at the sudden and unwarranted act of detention of our official," Amway India said in a statement.
The case under which action was taken was filed in December, but the company had no prior information, it said.
"The allegations mentioned in the FIR are frivolous and give a misleading impression about our business...Amway is a legitimate direct-selling FMCG organisation operating in the country since 1998," the company asserted.
The India Direct Selling Association (IDSA) criticised Pinckney's arrest under the PCMCS Act, saying it sent out a wrong signal to global investors.
"Today is the first of the new government and you arrest a CEO of an MNC here. What kind of signal does the government want to send outside (overseas investors)?" IDSA Secretary General Chavi Hemanth told PTI.
According to her, the PCMCS Act needs "definitional and operational clarity" as the entire direct-selling industry is suffering in India.
"The PCMCS Act was made for financial instruments and services and it could not be applied on direct-selling activity here," Hemanth said.
