ED attaches assets worth over Rs 757 crore of Amway India in money-laundering probe

PTI

New Delhi, April 18

The Enforcement Directorate (ED) has attached assets worth over Rs 757 crore of one of the country’s most known multi-level marketing (MLM) and direct-selling companies, Amway India, as part of a money-laundering investigation.

The federal agency issued a statement on Monday, alleging that the company was perpetrating a “scam” by running a pyramid “fraud” in the guise of direct-selling MLM network.

“The entire focus of the company is about propagating how members can become rich by becoming members. There is no focus on the products.

“Products are used to masquerade this MLM pyramid fraud as a direct-selling company,” the ED alleged.

An Amway spokesperson said they are cooperating with the authorities “towards a fair legal, and logical conclusion of the outstanding issues”.

The ED issued a provisional order under the Prevention of Money Laundering Act (PMLA) for attachment of assets worth Rs 757.77 crore belonging to Amway India Enterprises Private Limited.

It said the company is accused of “running a multi-level marketing scam”.

The attached properties include land and factory buildings of Amway located in Dindigul district of Tamil Nadu, plant and machineries, vehicles, bank accounts and fixed deposits.

Of the total attachment value, immovable and movable properties are worth Rs 411.83 crore, while the remaining amount of Rs 345.94 crore is deposited in 36 bank accounts “belonging” to Amway, the agency said.

Amway said the ED action was with regard to an investigation dating back to 2011 and since then, the company has been cooperating with the agency and has shared all the information sought by it from time to time.

“Amway has a rich history of maintaining the highest levels of probity, integrity, corporate governance and consumer protection, which are much ahead of time in the interest of the consumers at large,” the spokesperson said.

Officials involved in the probe said the company had been operating in the country for years and many people were linked to its MLM scheme.

The agency said the company collected a total amount of Rs 27,562 crore from its business operations during 2002-03 to 2021-22 and of this, “paid” a commission of Rs 7,588 crore to its distributors and members in India and the United States from 2002-03 to 2020-21.

“A money-laundering investigation by the ED revealed that Amway is running a pyramid fraud in the guise of direct-selling multi-level marketing network.

“Without knowing the real facts, the common gullible public is induced to join as members of the company and purchase products at exorbitant prices and are thus, losing their hard earned money,” the federal agency said.

The new members, it said, are not buying the products to use those, but to become rich by becoming members as showcased by the upline members.

“The reality is that the commissions received by the upline members contribute enormously in hike of prices of the products,” it said.

The money-laundering probe found out that Amway brought Rs 21.39 crore as share capital in India during 1996-97 and till the financial year 2020-21, it remitted a “huge” amount of Rs 2,859.1 crore in the name of dividend, royalty and other payments to their investors and parent entities.

Companies like Britt Worldwide India Private Limited and Network Twenty One Private Limited also played a “major role” in promoting Amway’s pyramid scheme by conducting seminars for joining members under the guise of sale of goods by enrolment of members in the chain system, it alleged.

“The promoters are conducting mega conventions and flaunted their lavish lifestyle and used social media to lure gullible investors,” the ED said.

The company spokesperson said the recent inclusion of direct selling under the Consumer Protection Act (Direct Selling) Rules, 2021 has brought in the much- needed legal and regulatory clarity for the industry, while again confirming Amway India’s continuous compliance with the spirit and letter of all laws and regulations in India.

“As the matter is sub-judice, we do not wish to comment further,” the spokesperson said.

The Centre had, in December 2021, banned direct-selling companies from promoting pyramid and money-circulation schemes as it notified new rules for the direct-selling industry.