Amway India CEO William Scott Pinckney arrested
Hot on the heels of sweeping reforms to the MLM landscape and talks of banning the industry altogether in India, news broke yesterday that Amway India’s CEO William Scott Pinckney has been arrested on charges of “financial irregularities”.
Pinckney (right) was arrested by police officers from Meppadi police station in the Indian state of Kerala, along with Amway India Directors Sanjay Malhotra and Anshu Budhraja.
The trio are expected to be presented in court today, being formally charged under India’s Prize Chits and Money Circulation Act (1972), following an investigation into a First Information (FIR) report filed back in 2011.
A top official of Economic Affairs Wing (EOW), Kerala, who was part of the operation that led to the arrests, said:
“With the call of easy money, they have been luring people to invest.
The new members in turn had to get more people and this was leading to illegal money circulation. We had received several complaints against the company.”
Since then, a number of other FIRs have been registered against the compny, including one filed just last year by a distributor named Vishalakshi:
Assistant Sub-Inspector of Police N K Jaganivasan told Mirror that the distributor, Vishalakshi, alleged that she was forced to purchase Amway products worth Rs 1 lakh.
Vishalakshi also alleged that she was made to invest Rs 1 lakh in Am-Sure, the insurance arm of Amway, but she lost the money. Following the complaint, crime branch took over the case.
As the trio appeared before the police with anticipatory bail obtained from the Kerala High Court, they were released. However, Waynad police arrested them in connection with four similar complaints.
During their investigation following the 2012 Vishalakshi FIR,
police found that goods were being sold at overpriced rates. A product worth Rs37 was being sold to consumers at Rs395.
Four complaints plus Vishalakshi puts the total number of known FIRs filed against Amway at five.
The EOW had also conducted raids at Amway’s godown in Kozhikode, Thrissur and Kannur and seized goods worth Rs2.14 crore last year.
Shortly after Pinckney was arrested, Amyway put out its own statement:
A company spokesperson said the trio were “taken into custody by the Wayanad police, Kerala, for another case filed in 2011.
We would like to clarify that with respect to (the) case, the company or its officials were not issued any summons to join the investigation, nor was any information sought by the police.
The company management would have cooperated with respect to the 2011 matter as well, as we always have, as law- abiding corporate citizens.”
Through their involvement in India’s Direct Selling Association, Amway India, the largest operating MLM company in the country, have been pushing for explicit clarification and guidelines for legitimate MLM companies to follow.
As it stands now there’s nothing official for MLM companies to follow or cite in their efforts to differentiate themselves from the plague of scams that have popped up under the MLM banner over the past few years.
As reported last week, things took somewhat of a drastic turn with reports that the Indian government were looking to just ban MLM completely.
The status of those talks and the MLM ban proposal is not currently clear, but I imagine is still being debated and discussed within the Department of Consumer Affairs, the Department of Financial Services and the Indian parliament.
I don’t have a formal review of Amway up on BehindMLM but as I understand it revenues are generated via the sale of Amway’s extensive product lines.
Looking at that inflated price figure quoted above and allegations of investment by affiliates, it appears that a culture of affiliate recruitment and “investment” in products might have become the primary revenue generator for the Amway India, rather than sales to retail customers.
Otherwise I’m not really seeing what the Indian police might have taken objection to, or why former distributors would be lodging FIRs against the company.
If that’s the case well, Amway deserve to be treated no different to any other affiliate-funded scheme operating in India.
Looking at the bigger picture if any of the charges stick, the arrest of the CEO and top Director’s of what is widely seen as a heralding example of a “legitimate” MLM company, probably isn’t going to help the Indian MLM industry’s cause.
If anything it’ll probably guarantee the industry is banned outright with any company using an MLM business model deemed illegal.
Stay tuned…
Update 19th April 2022 – As at the time of this update William Pinckney’s current status is unknown.
Indian authorities are continuing to investigate Amway however, resulting in a $99 million asset seizure.
This is ridiculous. Repeated FIR’s for the same alleged crime means the accused has to run around filing ABA’s for each FIR separately. In one FIR bail is granted ,so they promptly get arrested for another similar OLDER FIR with the same charges pertaining to PCMC act ??
Why wasn’t the investigation completed and chargesheet filed in the FIR of 2011? any complaints of similar nature should nave been tagged to the chargesheet and brought to trial once and for all. this repeated harassment is just inexcusable.
In Andhra Pradesh the chargesheet against amway was filed like 5 years ago. No idea when and if, it will ever reach the trial stage. I guess even the company wont be eager for trial to start because under the current dodo PCMC act they dont have half a chance of winning.
So amway or any other similarly harassed company has to work without any clarity, either by way of the judiciary through a conclusive trial, OR by way of some govt guidelines.
It’s just amazing how the govt cant get off it’s ass and regulate a space which has so much promise for an overpopulated underemployed population like india .SHAME !!
and what is wrong with IDSA which is an amway bastion ? so many years, so much money what have they done ?just holding conferences and giving lectures wont help people, get off your ass and really work the govt if you want results .SHAME !!
soapbox no way the govt’s banning MLM. it will be somewhat close to the guidelines of the kerala govt regarding the direct sales industry:
http://corporatefraudswatch.blogspot.in/2011/10/kerala-govt-sets-guidelines-for-direct.html
I agree the current FIR system appears to be kind of stupid. India would be far better served giving the EOW, CID or similar powers of the SEC/FTC in the US.
That way if Amyway was guilty of anything the CID/EOW can investigate independently of a complaint and following an investigation take appropriate action.
And it goes without saying that after a quick analysis of revenue and the business model, Ponzi schemes like Speak Asia would be shut down and we wouldn’t have the current situation of authorities waiting for changes to the PMCM act to go through before doing anything substantial beyond the initial shutting down of the company.
That of course brings us back to using a 1978 Act to regulate the MLM industry which clearly isn’t working.
One can only hope the amendments to the PCMC Act address this issue.
That link you provided was from 2011, now in 2013 the Department of Financial Services are proposing the government ban MLM via said PCMC amendment. In presenting the proposal I’m sure the DoFS took the guidelines that currently exist in Kerala and elsewhere into consideration.
please!! no more power to uninformed bumbling investigative agencies. some time back the RBI used to be the watchdog agency for MlM type companies, but they shrugged it off and since then the EOW is bumbling it’s way through the mess.
But before giving any power to anyone, there should be guidelines, because abuse of power is rampant .
nonsense. any new guidelines or clarification would not work with any retrospective effect. no one is waiting for anything and investigations are not stalled for any such reason. i am sure you are reading about all the progress in the press 🙂
some crazy tv channel reported this and it is better to disbelieve. there WILL be guidelines, probably state govts will continue to police such companies, no-cash-for-recruitment, buy back policies, protection under consumer act, registration etc blah blah are on the anvil.
i’ll believe it only when the lazy buggers get it done, till then it’s just promises! promises!
The reason the RBI didn’t get involved and why the EOW can be perceived as bumbling are one and the same.
…the investigation isn’t finished.
Good luck with that.
the company SAOL was functional till mid 2011. it can be investigated and/or tried only under guidelines/legislation in force till that period ie the PCMC act, as it stands even today.
Any new legislation/ guidelines CANNOT be used with retrospective effect .
Anjali citing David Brear and his buddy, who wants to ban ALL MLM forever? How interesting!
@anjali
Blahblahblah, the investigation still isn’t finished.
Attempting to pre-empt any amendments to the PCMC act is a pointless excercise. We’ll see the amendments when they’re written and go from there.
Till then, all we have is a proposal from the Indian authorities to parliament that MLM be banned completely, with Speak Asia frequently mentioned as a major catalyst for such calls.
Nothing more, nothing less.
With any luck the amendment(s) will abolish the need for an FIR and then it’s open season on the ringleaders behind the biggest Ponzi scheme India has ever seen.
Now where did I put my popcorn?
eh what ??
there’s already an FIR and already an investigation ongoing into SAOL .’open season’ is already underway, so god knows what you want to luck out on ?
find that popcorn .with any luck it can help mend damaged neural pathways .
PMCM is useless for tackling offshore Ponzi schemes like Speak Asia at the moment. Hopefully the amendment(s) fix this, which it’s looking like they will.
Ideas like popcorn might fix nueral pathways are precisely why two years on you still believe India’s largest Ponzi scheme will somehow return.
The writing is on the wall, India has set the wheels in motion to put a stop to silly scams like Speak Asia. Good riddance.
This is the stuff I hate reading about! These actions impact an incredible industry and creates a domino affect…
Bit of background history on Amway and the authorities in India:
This is why they need to hurry up and amend the PCMC Act. Despite the investigations and complaints, even if shenanigans are occurring the current legal framework appears to be woefully inadequate to combat the magnitude of scammery within India’s MLM industry.
http://timesofindia.indiatimes.com/india/Andhra-Pradesh-cops-going-slow-on-Amway-case/articleshow/20323634.cms
Do you have any measurable results to show us, or is it simply your personal experience? “It worked on me!” CAN be related to a placebo effect. The fact that you seriously seems to believe in that method might be a symptom in itself. 🙂
Read more at: http://indiatoday.intoday.in/story/amway-india-chairman-two-directors-granted-bail-in-kerala/1/273506.html
fishy fishy !case of cheating along with PCMC and such rapid bail ? someone must have received a phone call !
oz , investigations lead to dick. even if a chargesheet gets filed the trial may never see the light of day, so legislation,and urgent at that, is the only way forward .
also, amway is being hounded by shyam sunder of corporate frauds watch, who believes that if he can bring amway down, the entire MLM industry in india will fall apart.
he believes the very concept of MLM marketing is EVIL, and since he is the voice of god, the whole world must capitulate at his feet.
he’s been on amway’s case, about the quality of their products for a long time now, and has racked the matter up to the national commission level.
http://corporatefraudswatch.blogspot.in/2013/02/amway-india-faces-rough-weather-at.html
currently oz is the guinea pig , since anything that works on his convoluted mind might become a eureka moment for neurology. but you may try it too , i dont charge !
Not if they’re done properly.
rumors are afloat that IDSA and amway have been badgering the govt that MLM in india should be regulated separately and outside the purview of the PCMC act. other associations of MLM distributors including AISPA have sent petitions to the various govt agencies with similar prayers.
there is some expectation that the current monsoon session of parliament may bring relief to this harassed sector in india.
here’s hoping !!
Shyam Sundar is a true believe… he believes ALL MLM are evil. He and David Brair run that blog and they “banned” me from commenting there because they don’t allow dissent and any questioning of their train of thought. 🙂
So I’d take anything they write… with a few grains of salt. 🙂
well chang, you know, oz isn’t the only nut case loose on the net! 🙂
it appears william pinkcney, CMD, amway india, is stretching it too thin. Apparently he’s been telling journalists that anmway is an FMCG company!!
C’mon pinky ,don’t be afraid to say ‘MLM’. You’ve got the corporate affairs ministry making calls to get your ass out of jail, and rush to parliament to change the law before your trial starts, so at least have the decency to OWN that you are MLM and proud to be so!
http://corporatefraudswatch.blogspot.in/2013/08/amway-india-cmd-lies-to-journalists.html
I’ve manually added the link this time but in the future anjali please link directly to the source material you’re citing, as opposed to the website itself.
If someone clicks the link a month or more from now the content on the website will likely have nothing to do with what you’re talking about.
okey dokey bossman 🙂
An article about “How to NOT write an article”? 🙂
75% of the article was quoted from another reporter’s article, while 25% was about his own viewpoints about what the other reporter should have done, all the records he should have checked and all the questions he should have asked = “What true journalism REALLY is about”.
Here a couple of rules for wannabe “true journalists”:
1. “True journalism is about asking critical questions, digging up criminal cases and asking the police officers who have investigated those cases. It’s not about citing sources exactly as they have been presented (assume that all people are crooks in the first place)”. 🙂
2. “True journalism is about your own role as a journalist, a way to show the World your own opinions about something, and how able you are to fill the role as a ‘true journalist’.”
The Court document cited in that article describes one of the primary problems in MLM …
The company itself is the one that stimulates to aggressive enrollment, by making it much more favorable to recruit new participants than to sell goods or services to end users.
The Judge has just described what the problem is about, where it is located and (indirectly) how to solve it. “To operate legally in this market, you’ll need to change your own business model to fit within the laws, rather than expecting the laws to be adjusted to fit the needs of your business.”
WHERE the problem is located is inside the company itself, rather than “out there somewhere”. “Inside the company itself” is of course at management level, among the ones who actually have the right to make decisions.
Most MLM companies will TYPICALLY describe the problem to be “out there somewhere”, e.g. in the laws or among anonymous “rogue individuals” in the lowest level of the distributor chain. They have simply not been adjusted to the real World after too long time in “MLM La-La-Land”.
I didn’t fit in there either, i.e. sharing exactly the same belief system. But I found it out before posting anything.
In short, I’m simply not attracted to the idea of having to reflect other people’s belief system over and over again, rather than “talking business”.
norway , journalism can be ‘reportive’ or ‘investigative’.
but both types of journalists should employ at least half a brain when they interview someone .for instance if an amway CMD says his company is FMCG , they should ask him to explain his statement and not report it mindlessly. what if pinkcney had said amway is a terrorist organisation? should the journalist just bat his eyes and report it? 🙂
the order has limited itself to describing how in the amway model the products are camouflage for an ‘ingenious’ money circulation scheme.
the order does not take into account any concept of retail ,and neither would any proven percentage of retail by amway, changed this order because it would STILL remain favorable to recruit new members .This order is NOT about whether it is more favorable to recruit or retail, it is limited by the scope of the PCMC act.
The PCMC act is about incentive to recruit , period. Thus all MLM will fall in the bracket of money circulation. Thus PCMC should be dumped and new laws passed for MLM.
Just recently i heard mary kay has bowed out of india due to regulatory issues and harassment under PCMC. Our ministers need to wake up in a hurry!
shyam sunder of corporate frauds case wont let go of amway ,and posted details of an interview with DGP sajjanar of kerala police,who was responsible for the recent arrest of pinckney, CEO, amway india.
http://corporatefraudswatch.blogspot.in/2013/09/amway-is-doing-illegal-business-asserts.html