William S Pinckney, managing director and chief executive officer of Amway India, the direct selling company for various consumer products, arrested by the Andhra Pradesh police at Gurgaon on Monday and taken to the southern town of Kurnool, was remanded to jail till June 7. His bail petition was posted for hearing on Wednesday.
Amway, present in 108 countries, has operations all over India. The arrest comes on a case filed against the company by an advocate in Kurnool, alleging unethical practices of money circulation. A police team from the town went to Gurgaon on Monday and took custody of Pinckney at the company’s corporate headquarters. Police inspector J Babu Prasad, who is investigating the case, told Business Standard the magnate was produced before a magistrate at Dhone in Kurnool district.
The police said charges had been filed against Pinckney under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. This was the second time Pinckney has been arrested in this country. The Kerala police arrested him last year on similar charges.
Amway India stated it was “aggrieved and shocked at the sudden and unwarranted act of detention”. “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 (First Information Report) are frivolous and gives a misleading impression about our business,” it stated on Tuesday.
According to Amway, due to the lack of a legal framework for the direct selling sector, any case filed is being misinterpreted and booked under the 1978 law, which is meant to regulate financial schemes. The direct selling industry had been repeatedly seeking an amendment to the above law.
The Federation of Indian Chambers of Commerce and Industry (Ficci) and the Indian Direct Selling Association (IDSA) have condemned the arrest.
“This move has been initiated by a consumer complaint and could have been easily addressed , since there was no criminality involved,” Ficci general secretary, Didar Singh, stated.
IDSA said the incident highlighted the urgent need to amend the PCMCS Act. IDSA secretary general, Chavi Hemanth said: “Unless amended, the Act will be unable to distinguish genuine direct selling companies from pyramid schemes and regular consumer complaints will continue to attract its provisions.”
May ‘13 Kerala police arrest Amway chief William S Pinckney from Kozhikode under the PCMCS Act
Dec ‘13 Case filed against Amway for alleged unethical practices of money circulation
May 26,’14 Kurnool Police arrest Pinckney at Gurgaon
May 27,’14 Produced before a magistrate who remands Pinckney to judicial custody
May 28,’14 Bail petition to come up in Kurnool regular court