Parliamentary committee to probe network marketing businesses

Published On: July 30, 2020 09:30 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 30: The parliamentary Industry, Commerce, Labor and Consumer Welfare committee on Thursday formed a taskforce to investigate the controversial network marketing businesses that have recently been granted licenses by the Department of Commerce, Supply and Consumer Protection.

Nature Herbs International, Kumaripati; iboss Global International, Chabahil; New Bibek Enterprises, Ekantakuna; Healthy Living Nepal, Battisputali; Care Matters International, Chabahil; Uturn International, Tokha and Global Oriens Nepal, Balaju, are among the ones that have been permitted to do networking business by the market regulator. In addition, six other companies are in the pipeline, according to the department.

The parliamentary panel has expressed concerns amid burning controversies on whether or not to allow the network marketing businesses that were deemed illegal a decade ago. Chairperson of the parliamentary committee Bimal Prasad Shrivastav said the panel has sought to intervene after finding that almost all the licensed firms were from the ones which were declared illegal in the past.

To investigate the issue, the parliamentary panel has formed a five-member sub-committee led by Member of Parliament Som Prasad Pandey. The taskforce incorporates lawmakers Prakash Rasaili, Amrita Agrahari, Krishna Kumar Shrestha and Sarita Kumari Giri as its members.

In the past, the network marketing companies had been found to cheat their customers, swindling them out of billions of rupees. Unity Life International, Herbo International, Gold Quest International, Crystal Vision International, Best World Business Link and Robious International, among others, had caused people to suffer in the name of networking business a decade ago. Unity Life International alone swindled people out of around Rs 4 billion.

Following the incident, the Supreme Court in May 2010 had issued a verdict declaring the networking business illegal and ordered the government to scrap the Directives on Network Marketing of Commodities. However, the government moved the Supreme Court, seeking an annulment of its decision. The apex court on March 28, 2012, however, upheld its decision, declaring multi-level marketing business illegal.

The Central Investigation Bureau of Nepal Police on June 12, 2017 even arrested 102 people for operating an illegal networking business.

The issue has now dragged the department into controversy, following its dubious role to grant new licenses to seven such companies in the last one month.  Until a few days ago, the department had been asserting that issuing a license for network marketing was a legitimate move. Following the concerns shown by the public forums and the parliamentary panel, the department however has started twisting its previous words, by saying that there could have been some ‘technical faults’ while issuing the license.   

The Direct Sale of Goods (Management and Regulation) Act, 2018 and the concerned regulation endorsed in 2019 talk about protecting the rights and interests of consumers by making any business related to the direct sale or distribution of goods reliable, transparent and competitive. Section 11 of the Act has barred the companies from conducting the pyramid-based networking marketing.

However, the department on the other hand has been defending its action, saying the licenses were issued under the provisions of the Act. Through a press meet organized on Tuesday, the department said it had been tracking some of the licensed companies after finding the companies’ involvement in suspicious activities.

Speaking at a meeting of the parliamentary committee on Thursday, the Minister for Industry, Commerce and Supplies Lekh Raj Bhatta denied the charge that the ministry officials were bribed by the network marketing firms to receive the government permits. 




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