By Ashraf Padanna/Thiruvananthapuram
The Kerala government yesterday ordered a probe into the circumstances leading to the arrest last week of senior officials of global direct selling major Amway.
Amway India’s chairman and chief executive officer, William S Pinckney, a US national, and two other senior officials were arrested at Kozhikode on charges of money laundering and cheating.
Home Minister Thiruvanchoor Radhakrishnan has asked the south zone additional director general of police (ADGP), Shanker Reddy, to investigate the arrest after an apex industry body and the federal corporate affairs ministry questioned the police action.
The Federation of Indian Chambers of Commerce and Industry (Ficci) insisted the arrest would send wrong signals to foreign investors while Corporate Affairs Minister, Sachin Pilot, offered to lay new guidance to protect interests of the fast-growing direct selling industry.
A team of Amway officials also met the home minister and submitted a complaint over their chief’s arrest.
The company insists its business model was being wrongly interpreted by police officers of the crime branch, which had probed three complaints of cheating.
“We will work closely with the concerned ministries and industries to remove the ambiguity in the law (related to tackling fraudulent schemes) as soon as possible,” Pilot said in New Delhi.
The Wayanad district crime branch (economic offences) wing arrested Pinckney and directors Sanjay Malhotra and Anshu Budhraja from Kozhikode on Monday under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, based on complaints filed by distributors in 2011.
A local court in Wayanad granted the trio conditional bail the next day. Radhakrishnan said the company officials were arrested on complaints registered with a local police station by the distributors.
The complainants accused the company of failing to ensure the promised benefits to those who joined the network marketing business. They alleged the company had forced them to buy Amway products - which included cosmetics and protein powder - for huge sums of money. However, the company insisted all their products carry the maximum selling price and the business was being carried out in a transparent manner.
“The police have erred in arresting the Amway officials as they arrived in Kozhikode to appear in court in connection with another case,” Radhakrishnan said explaining the government’s decision to constitute a high-level probe.
Trade unions, cutting across the political spectrum, also submitted representations to the government urging it to protect jobs in the flourishing multi-level marketing industry where a number of fly-by-night operators are also active in the absence of proper guidelines.
“Amway India does not make any abnormal profits. Our contribution to the corporate and sales tax is among the highest from FMCG (fast moving consumer goods) companies in India,” the company insisted.