Amway Chief Executive Pinckney in Khammam Police Custody

The Khammam police in Andhra Pradesh took Amway India chief executive William Scott Pinckney into custody on Wednesday following registration of a case against the direct selling company.

Amway is facing nine criminal cases at various places in Andhra Pradesh.

A court in Kurnool district also rejected Mr Pinckney's bail petition and granted his five-day remand to Kurnool police while the Punjagutta police registered yet another case against him.

However, before Kurnool police could take his custody, the Khammam Police obtained a production warrant from a court in Khammam and furnished it to the Kadapa jail authorities on Wednesday evening. A complaint has been filed against Amway by one G Rama Rao in Khammam.

"We have taken him (Pinckney) into custody from Kadapa prison....He will be produced before a court in Khammam district," a senior police official told PTI on Wednesday evening.

Kurnool Superintendent of Police (SP) Raghurami Reddy said they will seek Mr Pinckney's custody from Khammam police by producing the Kurnool court's order. "We may lose one day (of custodial interrogation period) in this process," he said.

"The police were permitted to take him (Pinckney) into five-day custody from tomorrow (by Kurnool court). It (the Amway business) is going on for the past several years. We need to find out the details about the company's revenues and mode of operations," the police official told PTI over phone from Kurnool.

Responding to a complaint alleging financial irregularities in Amway's operations, Mr Pinckney was arrested in Gurgaon by the Kurnool Police. He was produced before a court on Tuesday which sent him to Kadapa district jail on a judicial remand.

Meanwhile, a complaint of cheating was registered against Amway in Punjagutta police station in Hyderabad by a local organisation on Wednesday, said Deputy Commissioner of Police (West Zone) V Satyanarayana.

"The matter has been forwarded to the legal cell seeking its opinion as no victim has come forward with regard to the complaint....the victim has to come forward and tell about the alleged wrongful loss caused by the multi-marketing business run by the company," he said.

Amway faces criminal complaints in Guntur, Vijayawada, Prakasam, Khammam, Warangal and Medak. In addition, there are three cases in Hyderabad.

According to police, the CID had registered a criminal case against Amway in 2006. The company approached High Court seeking a declaration that its marketing scheme does not fall under the provisions of 'The Prize Chits and Money Circulation Schemes (Banning) Act, 1978'.

But the HC held that the scheme is an illegal 'Money Circulation Scheme' and falls within the definition of mischief as described in the Act. The company got no relief from the Supreme Court either, as per the police.

Terming the FIRs as "frivolous and misleading", Amway in a late night statement said Mr Pinckney has been denied bail and the company will move higher court.

It also said the police started moving Pinckney from Kadapa jail to Khammam jail even before the outcome of the bail hearing in Kurnool. This movement was based on another "frivolous" FIR lodged in Khammam some days ago, it added.

"Subsequently, in the evening, the bail application of William Pinckney was denied by the Kurnool court. We will now approach the sessions court."

"We maintain that the allegations mentioned in the FIRs are frivolous and give a misleading impression about our business. We had no prior information about the FIR which was filed way back in December 2013," it said.

The developments highlight the need to amend the Prize Chits and Money Circulation Schemes (Banning) Act 1978 (PCMCS) under which the complaints have been filed against Amway and its CEO, the statement said.

"Frivolous or motivated complaints filed against a legitimate direct selling company like Amway have been misinterpreted and booked under the PCMCS Act. As pointed out by the Secretary General of FICCI yesterday, such instances can potentially damage the country's reputation as an investment destination," it said.

The company ask the authorities to take note of the challenges faced by the direct selling industry and provide guidelines to recognise legitimate direct selling companies. The direct selling industry generates an annual revenue of more than Rs 7,100 crore, it said.

Amway operates its business through the direct selling model in markets with very stringent direct selling and consumer protection regulations like the USA, UK, China, Malaysia, Singapore, Vietnam without challenge or inhibition maintaining the highest levels of probity, integrity, corporate governance and consumer protection standards, it said.