The Directorate of Enforcement (ED) has filed a prosecution complaint against Amway India Enterprise Pvt Ltd under the Prevention of Money Laundering Act (PMLA) alleging that the company siphoned off more than ₹2,859 crore.
The ED initiated an investigation on the basis of various FIRs registered by Telangana Police under various sections of the Indian Penal Code (IPC) against Amway and its directors. The FIRs alleged that Amway has been 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 money-laundering investigation by the probe agency alleges that Amway is running a pyramid fraud in the guise of direct selling multi-level marketing networks. Instead of selling goods directly to the end consumer, Amway has floated a multi-level marketing scheme of members and has introduced many intermediaries in the name of distributors. The scheme does not focus on sale of products but survives primarily on enrolling members.
"Once a newcomer is convinced to pay money through someone who has referred him to the company, he/she becomes a representative and to earn commission, he/she has to enrol new members and as the number of persons increases down the line, the ones on top get more commission and more incentives like luxurious tours," the ED says.
"Thus, Amway has been operating a Multi-Level Marketing Scheme and Money Circulation Scheme has collected huge amounts from the subscribers. By commission of the scheduled offence of cheating, Amway has generated Proceeds of Crime totalling to ₹4,050.21 crore," the probe agency alleges.
The ED investigation also revealed that more than ₹2,859 crore of money collected from the members has been siphoned off and parked in the bank accounts of overseas investors in the name of dividend, royalty and payments for other expenses. During investigation, movable and immovable properties to the tune of ₹757.77 crore have been attached by ED in this case.
Meanwhile, Amway issued a statement saying, "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. 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."