Amways India CEO Arrested on Fraud Accusations

Amway's India CEO Arrested on Fraud Accusations

May 27, 2014
William Pinckney was booked under laws banning fraudulent financial schemes as well as for extortion.

NEW DELHI -- William Pinckney, the India chief of  direct-selling giant Amway Corp, which markets its own brands of cosmetics, detergents and other goods, was remanded in jail Tuesday in southern India over fraud allegations, a report said.

Pinckney appeared in court in the Indian state of Andhra Pradesh and was remanded in custody for two weeks, the Press Trust of India quoted police as saying.

"The chief executive has been booked" under laws banning fraudulent financial schemes as well as for extortion, Kurnool police superintendent Raghurami Reddy said, according to the news agency.

Amway, whose name is short for American Way, said in a statement it was "aggrieved and shocked at the sudden and unwarranted act of detention."

The privately held company, which says it had global sales in 2013 of $11.8 billion from operations in over 100 countries and territories, called the accusations against Pinckney "frivolous."

The allegations were made in a "First Information Report" or FIR -- a pre-requisite for any Indian police investigation into whether sufficient evidence exists to lay formal charges. Pinckney was arrested Monday in Gurgaon, a satellite city of the Indian capital New Delhi, and flown to Andhra Pradesh, police said.

Last year, Pinckney along with the Indian unit's chief financial officer and a corporate director were arrested on similar fraud accusations in southern Kerala state that the company denied. The three were later freed on bail.

The company says its Indian network of direct sellers, who go door-to-door, have total annual sales of 23 billion rupees (US$390.6 million) and around 1.5 million direct sellers, according to local media reports.

Amway said there is lack of a legal framework to cover the direct-selling industry in India. It says it has been urging the national government to pass laws to protect the industry from unjustified legal action.

Amway has faced legal scrutiny from regulators around the world. It has been dogged by allegations that it is a pyramid selling scheme which it strongly denies.

Amway, based in Michigan, has been on a drive to increase its sales in emerging markets such as India and China.

Copyright Agence France-Presse, 2014

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