David Brown, Adam Luck and Tom Bawden
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The British subsidiary of the world’s biggest direct selling group may be closed by the Government as a result of an investigation into its business practices, The Times has learnt.
Amway, which has 12,000 agents in Britain and worldwide sales of $6.4 billion (£3.2 billion), will face a High Court petition on Monday to wind up its activities.
Amway’s salespeople have become a familiar sight on doorsteps since they arrived in Britain in 1973. However, the company has been accused of being more interested in selling mo-tivational books, tapes and seminars to its salespeople rather than pushing its merchandise.
The petition, brought on behalf of John Hutton, the Business Secretary, seeks to close the company in the “public interest”. A spokeswoman for Mr Hutton’s department said that a review of Amway’s activities had been carried out by the Companies Investigation Branch. “CIB investigates companies where matters come to our attention and it is considered that a good reason exists to proceed with an investigation,” she said.
Although the company has sales of only £12.5 million in Britain the legal action could seriously damage its reputation. Amway has a sales network of three million people that spans more than 80 countries.
Amway said that it had responded to the investigation by imposing a three-month moratorium on recruitment of new distributors in the UK and a ban on the sale of of motivation-al tapes and literature not produced by the company.
Last month more than 4,000 of its salespeople attended a conference in Birmingham to discuss the future of the company. Mark Beiderwieden, managing director of Amway Europe, told the conference: “We will invest what it takes to remain in this market and build it to its fullest potential.”
A spokesman for Amway (UK) Ltd, said yesterday that the company was facing action on three grounds but denied that they included laws banning pyramid-selling.
In 1983, Amway pleaded guilty to defrauding the Canadian government through criminal tax evasion and paid $25 million in fines.
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In the1980s, the joint owners of 'Amway', Richard De Vos and Jay Van Andel, along with one of their corporate officers in Canada, were charged with defrauding the Canadian people out of a sum estimated at around C$140 millions. Evidence recovered by tax investigators proved that they had maliciously set up, and run for many years, an elaborate racket (including a dummy corporation) to avoid paying sales tax in Canada. Furthermore, when this fraud was uncovered by 'Amway's' own accountants, 'Amway's owners tried to cover up what they'd been doing.
'Amway's' owners failed to attend the ensuing court proceedings and their extradition was sought by the Canadians. Eventually, an out of court settlement was reached that allowed the conviction to stand against 'Amway' rather than against its owners. Including costs, De Vos and Van Andel handed over C$ 75 millions and avoided prison.
'Amway' propaganda present this scandal as a noble sacrifice to protect the 'Amway Business'.
David Brear, Paris, France
Where will I get my washing powder, my Nutrilite, my Artistry Time Defiance? What am I to tell my many customers who rely on Amway's wonderful products? Will the children no longer be able to drink fresh clean purified water?
This could be a catastrophe.
Eva. London. UK
Eva Lester, London, UK
Mr Cunningham, how does a $6.4 billion (£3.2 billion), [or is it $6.4 billion (£3.1 billion), David Brown, Adam Luck and Tom Bawden?] company, [apparently one of the worldâs biggest direct selling groups?] stay in business [selling £12.5 million worth of products] with only 36,000 [David Brown] [or is 12,000? David Brown, Adam Luck and Tom Bawden] IBOs / sales people? [different legal entities?], without training or motivation? I cannot find a single motivational book, tape [who even owns a tape player?] or seminar on any of their websites world-wide [or do they have two catalogues?] and still survive since 1973? Some say its income comes from a recruiting fee of £18 [almost 700,000 new IBOs were recruited last year?]. I think the majority are independent [and do nothing] and pathetically ineffective [and need motivation] and do not get promotion [as in any other sales organisation]. My research shows IBOs cannot be fired, can resign, can get their money back and can make money. Hmmmm!
Allan, Johanesburg, RSA
So,where do I get my Nutrilite from now?.Tesco?
Thomas, Sutton,
Think they should look into how many marriages:families have gone to the wall because of this rip off 'business'
Of course they would have a conference in Birmingham to tell everyone they will 'invest' all they can to keep it going. If I was the fat cats taking the cream off the top of this billion dollar scam, then I too would want to sustain it - obviously!
Keep on trying to fool the people some of the time; that works - but as the saying goes not all of the people all of the time will keep taking this rip off! About timne they were shut down and those whose livelihoods were left in shreds were compensated for their losses. Well done the CIB. Go get 'em!
Dee , Cheshire, UK
There is a distinction between pyramid selling and multi level marketing: Pyramid selling (which, quite rightly in my view, is illegal in many countries) provides goods to people to sell downline adding their own profit at each stage. This means that the unfortunate individual at the bottom of the pile has product that is unsellable because of the price they have to charge to make a profit. Multi level marketing on the other hand, and Amway specifically, make product available to everybody at the same price, and money is made by the profit on the individual item and also by volume of sales generated by the individual.
The shape of any organisation is a pyramid in as much as there are very few people at the top and many at the bottom. Do not confuse the "shape" of the organisation with it's legal defenition.
Amway, in my experience, (and I have been dealing with them on and off since 1979) have always been true to their word and done what they said that they would do.
Peter Jay, Daventry, UKI
Ah Amway! No way.
They exploit social networks through the use of the 'family Trojan horse' to sell to another family member. I endured a friend standing in my lounge giving me a fifteen lecture complete with diagramed calendar. He did not remain a friend for long.suppose
if this isn't Amway pyramid selling then their Canadian tax evasion isn't criminal
TOM, LONDON, UK