In a significant development, the Enforcement Directorate (ED) has taken action by attaching assets valued at ₹757.77 crore in connection with an ongoing money laundering probe against Amway India Enterprises Pvt Ltd. The investigation, initiated in 2011 based on cases registered by Hyderabad police, has brought to light alleged pyramid fraud and financial irregularities within the company.
Amway’s Pyramid Fraud Allegations
According to ED’s detailed statement issued recently, Amway India is accused of operating a pyramid fraud under the guise of a direct selling network. The investigation contends that Amway’s emphasis is more on recruiting members and showcasing how they can become rich, rather than focusing on the actual products. The products, it alleges, serve as a cover for the pyramid fraud.
Assets Attached Under PMLA
The properties attached under the Prevention of Money Laundering Act (PMLA) include a land and factory building in Dindigul district, Tamil Nadu, along with plant and machinery, vehicles, bank accounts, and fixed deposits. The central agency has seized immovable and movable properties amounting to ₹411.83 crore and frozen bank balances totaling ₹345.94 crore across 36 different accounts of Amway.
Amway’s Response and Regulatory Compliance
Amway India, in response to the ED’s action, clarified that the investigation dates back to 2011 and emphasized its cooperation with authorities. The company asserted that its operations now align with all regulatory requirements. The recent inclusion of Direct Selling under the Consumer Protection Act (Direct Selling) rules, 2021, is cited as evidence of legal and regulatory clarity for the industry, reaffirming Amway India’s commitment to compliance.
Financial Transactions and Accusations
The ED’s probe found that Amway collected ₹27,562 crore from its business operations between 2002-03 and 2021-22. Of this amount, ₹7,588 crore was paid as commission to distributors and members in India and the United States from 2002-03 to 2020-21. The agency accused Amway of focusing on recruitment rather than product promotion, alleging that the high commissions received by upstream members contributed to the exorbitant prices of products.
Involvement of Other Entities
ED has implicated two other companies, Britt Worldwide India Private Limited and Network Twenty One Private Limited, for playing a significant role in promoting Amway’s pyramid scheme. These entities are accused of conducting seminars to induce members to join under the guise of selling goods.