Direct selling firm Amway India on Tuesday termed the arrest of its MD and CEO William Scott Pinckney as an "unwarranted act" on "frivolous" charges that gave "a misleading impression" about its business.
"We are aggrieved and shocked at the sudden and unwarranted act of detention of our official," Amway India said in a statement.
The case in which the action has been taken was filed in December, but the company said that it had no prior information on it.
"The allegations mentioned in the FIR are frivolous and give a misleading impression about our business... Amway is a legitimate direct selling FMCG organisation operating in the country since 1998...," the company asserted.
Pinckney, who was arrested by Kerala Police last year as well along with two directors under similar circumstances, was on Tuesday placed under arrest by the Andhra Pradesh police in connection with a complaint against the direct-selling firm under the Prize Chits and Money Circulation Schemes (Banning) Act, (PCMCS).
He was apprehended in Gurgoan on Tuesday and was brought to Kurnool on a warrant. The arrest was based on a complaint alleging unethical circulation of money through Amway's operations.
Amway India contested the allegations stating that "due to the lack of a legal framework for the direct selling industry, any case filed is being misinterpreted and booked under PCMCS, which is otherwise intended to regulate financial schemes".
It further said: "Till date, Amway has furnished all information and documents sought by the police officials... We have been compliant with all laid down laws and guidelines of Union and State governments."
The company said the direct selling industry has been repeatedly seeking an amendment to the PCMCS Act and has been working along with various industry bodies and government for the same.
"We urge the authorities to take note of the challenges faced by this industry and give us clarity to facilitate its smooth functioning," the Amway statement added.
Amway India said it has invested more than $100 million in a manufacturing facility in the country.
Globally, Amway has operations in countries such as the US, the UK, China, Malaysia, Singapore and Vietnam.
Meanwhile, India Direct Selling Association criticised the arrest of Pinckney under the PCMCS Act again, stating that it sent out a wrong signal on a day when the new government under Narendra Modi has taken charge.
"Today is the first of the new government and you arrest a CEO of an MNC here. What kind of signal the government wants to send outside (overseas investors)," IDSA Secretary General Chavi Hemanth told PTI.
The government wants to portray it as a liberal but the direct sellers are suffering because of the policy ambiguities, she added.
According to her, the PCMCS Act need "definitional and operational clarity" as the entire direct selling industry is suffering in India because of that.
"The PCMCS act was made for financial instruments and services and it could not be applied on direct selling activity here," Hemnath said.