The Enforcement Directorate (ED) said on Monday it has filed a prosecution complaint under the Prevention of Money Laundering Act, 2002 (PMLA) against direct selling firm Amway India.
The complaint has been filed in the Court of the Hon’ble Metropolitan Sessions Judge cum Special Court (PMLA) in Hyderabad, which took cognisance of the matter on the same day.
The ED’s investigation stems from various FIRs registered by the Telangana Police under various sections of the Indian Penal Code (IPC), 1860 against Amway and its Directors.
The allegations suggest that Amway engaged in promoting an illegal ‘Money Circulation Scheme’ under the guise of sale of goods and has been cheating the general public by promising them very high commissions or incentives through simple enrolment of new members and by claiming that these commissions or incentives would continue in perpetuity, the probe agency said.
As per ED’s findings, Amway has been promoting a Pyramid scheme in the guise of direct selling. Instead of selling goods directly to the end consumer, Amway introduced a multi-level marketing scheme with several intermediaries in the form of distributors.
The scheme’s survival relies primarily on enrolling new members, with commissions and incentives increasing for those higher up in the hierarchy.
The ED contends that Amway’s activities constitute a Multi-Level Marketing Scheme and Money Circulation Scheme, leading to the generation of proceeds of crime amounting to Rs 4050.21 crore through the scheduled offence of cheating.
Furthermore, the investigation revealed that over Rs 2,859 crore of money collected from the members has been being siphoned off and parked in the bank accounts of overseas investors in the name of dividend, royalty and payments for other expenses.
The ED said it has attached movable and immovable properties valued at Rs 757.77 crore in connection with this case.
Further investigation in the case is currently underway.
Meanwhile, in response to the ED’s prosecution, Amway India issued a statement through its spokesperson, addressing the investigation that dates back to 2011.
“The prosecution complaint currently filed by the Enforcement Directorate pertains to the investigation dating back to 2011 and since then we have been cooperating with the department and have shared all the information as sought from time to time,” an Amway India spokesperson said, as per PTI.
The spokesperson further added that since Amway began its operations in India 25 years ago, it has been committed to legal and regulatory compliance and has diligently maintained a culture of compliance and integrity to the present day.
“We want to reiterate our continued confidence in the Indian legal and judicial system following the due process of law as we pursue our legal rights. Amway is proud of its rich history in India and will vigorously defend itself, as well as the over 2,500 employees and over 5.5 lakh independent distributors who are critical to its mission of helping people live healthier, better lives”, the Amway India spokesperson stated.
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