Amway chief’s arrest comes exactly a year after Kerala police took him into custody

The arrest of Amway India’s CEO William S Pinckney by the Andhra Pradesh police comes exactly a year after the Kerala police arrested Pinckney and two company directors on May 27 last year on the charge of cheating customers and distributors.

Last year’s arrests had attracted a lot of attention and several business and industry organisations had criticised the arrests as, they argued, would send out a wrong signal to international investors.

The then Union Corporate Affairs Minister Sachin Pilot was incensed by the arrests.

He publicly criticised the Kerala police for the way it had handled the arrests of the top brass of the Indian subsidiary of an American multinational corporation.

Following this, the then Kerala Home Minister asked a senior police officer in the rank of additional director general of police (ADGP) to investigate the arrests and find if the police had erred in making the arrests. The officer reported to the government that the police were right in arresting the three.

The police had only executed a court warrant to arrest them, the ADGP pointed out in his report.

The Indian Direct Selling Association (IDSA), of which Amway is a key member, had at the time urged the Union Government to come up with a new law for the regulation of the direct selling industry. Chavi Hemanth, Secretary-General of IDSA, who called a press conference at Kochi to condemn the arrests, asked the Government to properly define the direct selling industry and exclude it from the ambit of the Prize Chits and Money Circulation (Banning) Act.

She had also wanted the government to enact a law exclusively for the direct selling as the industry was fast growing in India.

She had contended that a ‘clear policy framework’ was necessary for removing the operational ambiguities around the direct selling industry.

There was huge confusion among the public and the authorities between the financial pyramid schemes and the direct selling business.

While the pyramid schemes were illegal and attracted the provisions of PCMC(B) Act, she said, the direct selling business was not.

She claimed that since this relatively new business model arrived in India decades after the 1978 Act, it was not anticipated by the Act.

Since there was no clear regulatory environment for the direct selling business, certain functional aspects were being covered by existing general laws, thus leading to several complexities.

The current ambiguities were being exploited by “unscrupulous elements operating under the garb of direct selling business.”

Amway’s business model has been criticised around the world as unethical. Following last year’s arrests, Amway India had launched a publicity campaign highlighting the company’s huge popularity in the country.

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