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The Enforcement Directorate (ED) has attached assets worth ₹757.77 crore belonging to Amway India Enterprises Pvt Ltd, a popular direct marketing company that pretty much started the multi-level marketing(MLM) craze in India by enrolling lakhs of people as its members by offering them lucrative commissions on exorbitantly priced products, as long as they kept adding members below them.
In a detailed statement issued on Monday, ED said Amway India’s “entire focus is about propagating how members can become rich by becoming members”, not on the products. It said the products are used by (Amway) to pass off the MLM pyramid fraud as a direct selling company.
The properties attached under prevention of money laundering act (PMLA) include land and a factory building of the company at Dindigul district, Tamil Nadu, plant and machinery, vehicles, bank accounts and fixed deposits.
The central agency has attached several immovable and movable properties worth ₹411.83 crore and bank balances worth ₹345.94 crore in 36 different accounts of Amway.
Amway India clarified that the investigation dates back to 2011 and claimed that its operations in the country now meet all regulatory requirements. ”The action of the authorities is with regards to the investigation dating back to 2011 and since then we have been co-operating with the department and have shared all the information as sought for from time to time since 2011. We will continue to cooperate with the relevant government authorities and the law officials towards a fair, legal, and logical conclusion of the outstanding issues”.
“The recent inclusion of Direct Selling under the Consumer Protection Act (Direct Selling) rules, 2021, have 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,” it added in the statement.
A money laundering probe against Amway, which has 5.5 lakh direct sellers across the country, was launched in 2011 on the basis of cases registered by Hyderabad police.
The probe revealed that Amway was running a pyramid fraud in the guise of a direct selling network. “It is observed that the prices of most of the products offered by the company are exorbitant as compared to the alternative popular products of reputed manufacturers available in the open market,” ED said on Monday.
It said that without knowing the real facts, gullible people were induced to join as members of the company and purchase products at exorbitant prices.
“The new members are not buying the products to use them, but to become rich by becoming members as showcased by the upline (upstream) members (or the initial members who enrolled the majority members in the scheme,” ED said in its statement. It added that the high commisions received bu upstream members were likely responsible for the high price of products.
The agency found that Amway collected ₹27,562 crore from its business operations from 2002-03 to 2021-22. Of this amount, the company paid commission worth ₹7,588 crore to its distributors and members in India and in the United States between 2002-03 and 2020-21.
“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,” ED added.
The probe revealed that Amway brought ₹21.39 crore as share capital into India in 1996-97 and till 2020-21 remitted ₹2,859.10 crore overseas in the name of dividend, royalty and other payments to investors and parent entities.
ED has accused two other companies, Britt Worldwide India Private Limited and Network Twenty One Private Limited for playing a major role in promoting Amway’s pyramid scheme by conducting seminars where members are induced to join under the guise of sale of goods.
The agency said the promoters of the company conducted mega conventions and flaunted their lavish lifestyle and used social media to lure gullible investors.
An email sent to Britt Worldwide remained unanswered. Network Twenty One representatives could not be located for comment.
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