New Delhi: The Enforcement Directorate (ED) has attached assets worth over Rs 757 crore of one of India’s most known multi-level marketing (MLM) and direct-selling companies, Amway India. The move has happened as part of a money-laundering investigation. The Enforcement Directorate issued a statement Monday in this regard. It alleged that Amway India was perpetrating a ‘scam’ by running a pyramid ‘fraud’ in the guise of direct-selling MLM network.
“The entire focus of the company is about propagating how members can become rich by inducting new members. There is no focus on the products. Products are used to masquerade this MLM pyramid fraud as a direct-selling company,” the ED alleged.
An Amway spokesperson said they are cooperating with the authorities ‘towards a fair legal, and logical conclusion of the outstanding issues’.
The ED also said that Amway India is accused of ‘running a multi-level marketing scam’.
The attached properties include land and factory buildings of Amway located in Dindigul district of Tamil Nadu, plant and machineries, vehicles, bank accounts and fixed deposits. Of the total attachment value, immovable and movable properties are worth Rs 411.83 crore, while the remaining amount of Rs 345.94 crore is deposited in 36 bank accounts ‘belonging’ to Amway India, the ED said.
Amway said the ED action was with regard to an investigation dating back to 2011. Since then, the company has been cooperating with the agency and has shared all the information sought by it from time to time.
“Amway has a rich history of maintaining the highest levels of probity, integrity, corporate governance and consumer protection, which are much ahead of time in the interest of the consumers at large,” the Amway spokesperson said.
Officials involved in the probe said the company had been operating in India for years and many people were linked to its MLM scheme. The agency said the company collected a total amount of Rs 27,562 crore from its business operations during 2002-03 to 2021-22 and of this, ‘paid’ a commission of Rs 7,588 crore to its distributors and members in India and the United States for the same period.
“A money-laundering investigation by the ED revealed that Amway is running a pyramid fraud in the guise of direct-selling multi-level marketing network. Without knowing the real facts, the common gullible public is induced to join as members of the company and purchase products at exorbitant prices and are thus, losing their hard earned money,” the federal agency said.
The new members, it said, are not buying the products to use those, but to become rich by becoming members as showcased by the upline members. “The reality is that the commissions received by the upline members contribute enormously in hike of prices of the products,” the ED said.
The money-laundering probe found out that Amway brought Rs 21.39 crore as share capital in India during 1996-97 and till the financial year 2020-21, it remitted a ‘huge’ amount of Rs 2,859.1 crore in the name of dividend, royalty and other payments to their investors and parent entities.