Serious Fraud Investigation Office asked to begin prosecution against three direct selling companies

NEW DELHI: Government has ordered Serious Fraud Investigation Office (SFIO) to begin prosecution against three e-marketing or direct selling companies for allegedly running fraudulent schemes.

Besides, investigations by SFIO are underway in case of two other companies -- Speakasia Online Pvt Ltd and Unipay2U group, Parliament was informed today.

"As reported by SFIO under Ministry of Corporate Affairs, government has referred 5 cases of companies running fraudulent schemes for investigation," Minister of State for Consumer Affairs Raosaheb Patil Danve said in a written reply to the Lok Sabha.

"Based on the investigation report, SFIO has been asked to file prosecution under provisions of Companies Act and Indian Penal Code against three companies," Danve said.

These three companies include Goldquest International Pvt Ltd, its group company Questnet Enterprises Pvt Ltd and Abcindya Networks Pvt Ltd, the minister said.

Investigation in respect of other two companies (Unipay2U group of companies and Speakasia Online Pvt Ltd) is under examination, he added.

The minister also informed that at present no official data is being compiled on the sector.

"However, according to the joint study by KPMG and FICCI, size of direct selling industry has grown from Rs 33 billion in 2008-09 to Rs 72 billion in 2012-13," Danve said.

Danve said the government has formed an Inter-Ministerial Committee that will examine the need for separate legislation in respect of direct selling or muli-level marketing.

The committee is chaired by Consumer Affairs Secretary and comprises of representatives from Ministry of Finance, Corporate Affairs and departments of Legal Affairs, DIPP among others.