ABSTRACT
Modern interpretations of “crime” typically encompass both civil and criminal offenses. Violent crimes such as assault, dacoity, arson, rape, and disablement often stem from personal grievances. However, offenses are also committed by corporations or individuals using off-the-record data. Perpetrators of white-collar crimes avoid physical violence, relying instead on strategic deception and manipulation. These crimes are committed by high-status individuals and can be as damaging as violent offenses. Notable figures in WCC include Ivan Boesky, Nirav Modi, Vijay Mallya, Richard Nixon, and Bernie Madoff.
Prof. Edwin H. Sutherland coined the term “white-collar crime” in 1939, describing it as crimes committed by individuals of high social standing during their professional activities. Major categories of white-collar crimes include corruption and bribery, food and drug contamination, tax evasion, black-market activities, profiteering, hoarding, human trafficking, and cybercrimes. White-collar crime, a broad term for criminal abuses of trust, poses significant economic, political, and moral challenges and contributes to conventional street crime.
This research paper will throw light upon how a crime that once was vague and not so concrete to be even classify as a crime has now evolved and has been recognized and made aware of. White collar crimes are nowhere mentioned in the code but exists within the society. It is however humorous to ponder upon that this crime is committed by educated and dignified officials. I presume no form of education preaches to commit a crime and “dignity” is very much a pious term to be even associated with WCC’s.
It reveals the underlying causes and essential principles of this crime, identifies the perpetrators, and examines their intricate involvement within the system. Additionally, it analyses the key factors necessary to regulate and address such deceitful activities.
KEYWORDS: White-collar crime, Criminal abuse of trust, High-status offenders, Cybercrimes, Deceitful activity.
INTRODUCTION
To decode the definition provided by Edwin Sutherland i.e. “A crime committed by a person of responsibility and high social status in the course of his occupation”, to sum it up in a nutshell, it is (a) a crime (b) which is done by a person who possesses a respectable position (c) the person is of high social status (d) such crime is done within the course of his occupation (e) such an act is a violation of trust.
White collar crimes are “crimes of the powerful” and as disheartening as it sounds, these kind of crimes barely make it to the trial as the powerful has the means and authority to conceal the crimes within the organizational and professional settings and routines.
Hirschi and Gottfredson (1989) vividly explained the vast patterns of white collar crimes “(1) that the UCR offense categories of fraud and forgery are not appropriate indicators of white-collar or occupational crime because the typical arrestee in these categories committed a nonoccupational crime; (2) that the demographic distribution (age, sex, race) of these “white-collar” crimes is not the same as it is for most ordinary crimes; and (3) that the occurrence of these “white-collar” crimes is not relatively rare”.
A crime has been stereotypically perceived as a crime against a human body, to clearly define it is a “traditional way of crime” which the society is usually habitual of. Traditional and stereotypical types of crimes such as murder, rape, battery, assault, kidnapping and dacoit etc which inflicts harm on human body and is usually committed by lower class of people (a general perception), it is sickening to finally realise that a crime does not discriminate between two classes or two economic classes. There has been an outrageous increase in the organizational crimes especially committed by the professionals from the upper strata.
The “Salaried wrongdoings” or “cubicle wrongdoings” generally goes unnoticed because of their anti-human and anti-social nature. The term “cubicle wrongdoings” was coined by Edwin Sutherland and broadly defined it as “”wrongdoing carried out by a man of respectability and high economic wellbeing over the span of his occupation”. White-collar crimes encompass a range of illicit activities typically committed by individuals in positions of trust and authority. These crimes include violations such as antitrust infringements, various forms of fraud, insider trading, and environmental law breaches. Additionally, acts of public corruption and money laundering are also classified under white-collar offenses, reflecting the misuse of professional or governmental power. Despite ongoing advancements in understanding these crimes, there remains no unified criminological theory that fully explains the complex nature of white-collar criminal behaviour.
These offenders typically occupy high-ranking and esteemed positions, such as CEOs or company directors, leveraging their authority to obscure, deceive, and betray the trust of investors and clients. The rise in such crimes can often be attributed to inadequate or ineffective enforcement of anti-corruption laws. White-collar criminals are involved in various illicit activities, including fraudulent employment practices, black market dealings, medical malpractice, tax evasion, cybercrime, and credit card fraud, all of which can yield substantial financial gains. To “cleanse” these illicit earnings, they frequently resort to money laundering.
Top of Form
Bottom of Form
The main motive to present this research paper is to analyse the evolving nature and the changing landscape of white collar crimes, the earlier we realise the better that it is the ugly truth of the criminal justice system of India that these offenses are nothing but the puppeteers of business mafias and the tycoons who are submerged in the illicit practices of businesses. They are the core reasons to delay the trails at courts and subsequently the culprit is set free in the fresh air. The question is why? Why is such a frivolous act overlooked? Is there any provision to catch the culprit? Let us delve into this paper and find out answers to these questions born out of curiosity.
RESEARCH METHODOLOGY
This study is descriptive in nature and relies on secondary sources for a comprehensive analysis of the changing landscape of white collar crimes in India. It utilizes secondary information sources such as newspapers, academic journals, and websites for its research.
REVIEW OF LITERATURE
Ross (1907) and Sutherland (1949) initially highlighted the general public’s indifference or lack of awareness regarding the damage inflicted by white-collar criminals. Sutherland also observed that corporate offenders are often processed through justice systems that are distinct and potentially more lenient than those for traditional criminals. Modern research into white-collar crime and its sentencing largely stems from public opinion surveys. Over time, studies have explored how citizens perceive the seriousness of white-collar offenses and whether these perceptions have shifted.
In their examination of corporate financial misconduct, Prechel and Morris (2010) utilize organizational-political embeddedness theory to highlight that the relationship between the state and corporations is intertwined. They stated “cannot be separated from one another in modern society because state policy gives form to corporate structures and creates opportunities for managers to engage in financial malfeasance.”
To understand the depth of white collar crimes in India Vishnu S Kumar and Dr. Biju T (2012-2018) emphasized on the term “Fraud Triangles” in order to reach the depth of the occupational crimes and corporate frauds. And, In his study, Chander Mohan Gupta (2018) examines various accounting frauds that have occurred across the country. The paper identifies consistent factors contributing to accounting scandals in Indian businesses from 1995 to 2022.
Mayank Shrivastava analysed major accounting frauds across two distinct periods: the PRE-SEBI era, covering 1947 to 1992, and the POST-SEBI era. During the PRE-SEBI period, the capital market was relatively weak due to the lack of a stringent regulatory authority. In his study, Shrivastava also reviews the scams that occurred after SEBI was established, examining their causes and the subsequent reforms introduced by SEBI. He highlights how SEBI’s regulatory role has transformed the corporate landscape and brought about significant changes in market practices.
STATUS OF WHITE- COLLAR CRIMES IN INDIA
White-collar crimes, including financial frauds, tax evasion, corporate misconduct, and money laundering, have become increasingly prominent in India. These crimes have significant economic repercussions, undermining investor confidence and causing substantial financial losses.
The laws dealing with the legislations of White collar crimes in India are mentioned below:
- Companies Act, 1956.
- Essential Commodities Act, 1955.
- Income Tax Act, 1961.
- Central Excise and Salt Act, 1944.
- Immoral Traffic (prevention) Act, 1956.
- Drugs and Customs Act, 1940.
- Emblems and Names (Prevention of improper use) Act, 1950.
- Foreign Corrupt Practice Act.
INDIA’S POSITION IN VARIOUS INDEX AND REPORTS:
On November 22, 2016, The Business Standard reported on “The Changing Dynamics of White-Collar Crime in India,” revealing that the Central Bureau of Investigation (CBI) had identified 6,533 corruption cases over the past decade, with 517 of these registered in the preceding two years. The report highlighted significant fraudulent activities, including transactions worth 4,000 crores conducted using counterfeit PAN cards. Maharashtra experienced a notable rise in online crime, with 999 cases reported. Additionally, approximately 3.2 million individuals suffered losses due to card details theft from YES Bank ATMs managed by Hitachi Payment Services.
The report also noted that technological advancements have led to a surge in cybercrime, driven by the low risk of detection. Despite these challenges, India’s ranking on Transparency International’s Corruption Perception Index (CPI) has shown improvement. From being ranked 85th in 2014, India moved up to 76th in 2015, and by 2018, it was positioned 78th out of 180 countries, reflecting progress in addressing white-collar crime.
AT PRESENT: As of the most recent update, India is ranked 85th out of 180 countries on Transparency International’s Corruption Perceptions Index (CPI) for the year 2023. This ranking reflects ongoing challenges with corruption, though India has made efforts to improve its position through various anti-corruption measures and reforms.
MAJOR CATEGORIES OF WHITE COLLAR CRIMES
MONEY LAUNDERING: Money laundering remains a critical issue in India, with the Enforcement Directorate handling numerous cases involving high-profile figures (Vijay Mallya, Robert Vadra, Mehul Choksi,Neerav Modi) . Recent efforts include strengthening the Prevention of Money Laundering Act (PMLA) and collaborating with international bodies. Challenges persist due to technological advancements and complexities in tracking illicit financial transactions.
FORGERY: According to the 2022 NCRB report, there were 8,518 cases of forgery and related offenses registered in the previous year. This figure reflects a significant concern, though it is a broad category that includes various types of fraudulent activities. Forgery is dealt within section 336 of Bharatiya Nyaya Sanhita presently.
INSIDER TRADING: The Securities and Exchange Board of India (SEBI) is the primary regulatory body overseeing insider trading. SEBI has strengthened regulations and enforcement to curb insider trading activities. Key regulations include the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, which were updated to enhance transparency and compliance.
BANK FRAUDS: According to the National Crime Records Bureau (NCRB) 2022 report, there were 3,117 cases of bank fraud reported. This reflects an ongoing challenge for the banking sector in India, emphasizing the need for stringent measures to prevent and address fraud.
This major fraud involved fraudulent transactions worth over ₹11,000 crore, orchestrated by Nirav Modi and Mehul Choksi, highlighting vulnerabilities in the banking system.
FAKE CURRENCY: The widespread circulation of counterfeit money can severely damage a nation’s economy and public safety. In India, this problem is longstanding, but advancements in technology have led to high-quality fake currency being seized from terrorists crossing the border. Counterfeit currency, often printed abroad, is typically smuggled into India through Nepal and Dubai. Alongside this, domestic criminal groups are using sophisticated computers and high-tech printers to produce fake notes. Given the national and international implications of this issue, it requires effective intervention from the Reserve Bank of India (RBI), Central Bureau of Investigation (CBI), and state police forces.
INSURANCE FRAUDS: Insurance companies have fallen victim to fraud perpetrated by dishonest claimants, sometimes with the involvement of insurance agents. Common instances include deliberately setting fire to insured goods, warehouses, or factories, submitting multiple claims for the same incident, and inflating claims with the support of corrupt assessors.
BRIBERY: The Central Vigilance Commission (CVC) and other anti-corruption bodies regularly report on the number of cases investigated and prosecuted. For example, in 2022, the CVC reported over 1,000 cases involving bribery and corruption.
WHY IS THERE A RAMPANT GROWTH OF CRIME?
Lack of Strict Punishment: Offenders often evade justice due to the lack of stringent penalties and sometimes flee the country before legal actions can be taken, which has allowed many to escape accountability.
Market Competition: The competitive nature of the market, as described by Darwin’s “survival of the fittest,” drives some individuals to resort to illegal methods to surpass their peers and gain an advantage.
Lack of Awareness: Victims of white-collar crimes often lack awareness about the nature of these crimes and the process for filing complaints. Offenders, who may hold influential positions, can intimidate victims into silence, preventing them from seeking justice.
Implementation of Anti-Graft Laws: India is ranked 93rd out of 180 countries on Transparency International’s Corruption Perceptions Index for 2023. The report highlights that one reason for the persistence of corruption is the inadequate enforcement of anti-graft laws, which allows white-collar criminals to operate with impunity.
Greed: White-collar crimes are often committed by affluent professionals who, despite their financial stability, seek to increase their wealth through illegal activities driven by greed.
EFFECTS OF WHITE-COLLAR CRIMES
IMPACT ON CRIMINAL JUSTICE SYSTEM:
Complex Investigations
White-collar crimes often involve sophisticated schemes and complex financial transactions, making investigations challenging and resource-intensive. Law enforcement agencies may struggle with the intricacies of these crimes and require specialized skills and technology.
Prosecutorial Challenges
Proving white-collar crimes in court can be difficult due to the need for detailed evidence and expert testimony. Offenders may also leverage their resources to delay or obstruct legal proceedings.
Inequality in Justice
There can be disparities in how white-collar crimes are prosecuted compared to traditional street crimes. Wealthy offenders may use their financial resources to navigate or influence the legal system, potentially leading to perceptions of leniency or inequality in justice.
Regulatory and Policy Response
The criminal justice system may need to adapt by developing new regulations, enhancing forensic capabilities, and increasing collaboration between public and private sectors to address the evolving nature of white-collar crime effectively.
IMPACT ON SOCIETY:
Economic Inequality
White-collar crimes often exacerbate economic inequality by redistributing wealth from ordinary people to wealthy offenders. This can undermine social trust and contribute to broader societal inequities.
Loss of Public Trust
When high-profile white-collar crimes are exposed, it can erode public confidence in institutions, including businesses, government agencies, and financial systems. This loss of trust can have wide-ranging social and economic repercussions.
IMPACT ON BUSINESS:
Financial Losses
White-collar crimes, such as fraud and embezzlement, can lead to significant financial losses for businesses. For instance, corporate fraud can deplete resources, affect profitability, and lead to substantial financial liabilities.
Reputation Damage
Businesses involved in or affected by white-collar crimes often suffer reputational harm. This damage can result in loss of customer trust, decreased investor confidence, and a tarnished brand image.
Operational Disruption
Investigations and legal proceedings can disrupt normal business operations, diverting resources and attention away from core activities. This can also lead to reduced productivity and increased operational costs.
Legal Consequences
Companies may face legal penalties, including fines and sanctions, which can further strain financial resources and affect overall business stability.
LEADING CASE LAWS IN RECENT TIMES:
- RANA AYYUB v. ENFORCEMENT DIRECTORATE (2023)
The Supreme Court analyzed the Prevention of Money Laundering Act (PMLA) to address key questions about the jurisdiction and trial of money laundering cases. It defined the offence under Section 3 of the PMLA, which includes any involvement in processes related to criminal proceeds, such as concealment or acquisition. The Court noted that the term “proceeds of crime” refers to property obtained from criminal activities. It explained that Special Courts, established under Section 43, handle money laundering cases and may also try related offences. If the money laundering and the scheduled offence are handled by different courts, the case must be transferred to the Special Court. The Court emphasized that money laundering must be tried in the Special Court located in the area where the offence occurred, considering where the proceeds were acquired or held.
- ENFORCEMENT DIRECTORATE v. ADITYA TRIPATI (2023)
In the case concerning bail applications under the Prevention of Money Laundering Act (PMLA), the Supreme Court reviewed the High Court of Telangana’s decisions to grant bail to accused individuals involved in a significant e-tender fraud case. The Economic Offences Wing (EOW) of Bhopal had found evidence of bid manipulation involving INR 1769 crores, leading to a money-laundering investigation by the Enforcement Directorate (ED). Despite the High Court’s bail orders, the Supreme Court found that the court had not adequately considered Section 45 of the PMLA or the ongoing nature of the ED’s investigation. The Supreme Court ruled that bail should not have been granted given the serious nature of the allegations and the incomplete investigation, thus directing the accused to surrender and remitting the cases back to the High Court for re-evaluation.
- JAYA THAKUR v. UNION OF INDIA (2023)
The Supreme Court ruled that legislative amendments cannot override its judgments if they undermine constitutional principles or violate fundamental rights. In the case of Mr. Sanjay Kumar Mishra, the Court had previously mandated that his tenure as Director of the Enforcement Directorate (ED) should not be extended further. However, new ordinances and laws extended his tenure, which the Court found unlawful. The amendments were deemed to contravene the Court’s mandamus and did not respect judicial authority. The Court declared the extensions invalid and instructed the government to appoint a new director by July 31, 2023, while allowing Mr. Mishra to continue until then.
SUGGESTIONS
Establishment of Specialized Forensic Institutions
As white-collar crimes increase, formal training in forensic skills is becoming essential. Creating specialized courses at the undergraduate and master’s levels tailored to the needs of contemporary forensic professionals would be beneficial. Additionally, establishing a leading forensic training institute could provide advanced training for enforcement personnel and focus on research and best practices in forensic investigation. This approach would help address the growing challenges posed by white-collar crime.
Promoting Transparency
Promoting transparency is crucial for establishing a robust ethical framework. According to Transparency International’s latest Corruption Perceptions Index, India is ranked 76 out of 168 countries, an improvement from 85 in the previous ranking. This positive shift reflects increased transparency in the country, influenced by enhanced regulations, more rigorous enforcement, better public awareness, and government efforts to position India as an attractive investment destination.
Establishing Forensic Technology Centres of Excellence
To advance the Digital India initiative, the government could elevate its efforts by establishing forensic technology centres of excellence. These specialized centres would focus on advancing forensic technology and expertise, further enhancing the digital infrastructure and capabilities essential for modern investigations.
Public-Private Collaboration
Forensics is becoming a highly specialized field, with numerous private organizations working to expand the pool of skilled professionals. The government could benefit from this by recruiting these experts into its regulatory and enforcement frameworks. Engaging with private sector talent would leverage their specialized skills and provide valuable insights into key
Enhancing Awareness and Providing Incentives
Public service announcements have long been effective in raising awareness, and with the rise of social media, they now reach broader audiences through video content. Utilizing these platforms can effectively inform the public about good governance practices, anti-corruption laws, and how to access ombudsmen. Additionally, introducing a whistleblower reward system, similar to those in countries like the US, could motivate more individuals to report irregularities.
CONCLUSION
In conclusion, the landscape of white-collar crimes in India reveals a troubling evolution from vague and under-recognized offenses to well-documented and impactful crimes affecting various sectors. Despite improvements in public awareness and regulatory frameworks, these crimes, committed by individuals in positions of power, continue to undermine economic stability and public trust. Key issues include inadequate enforcement, lack of stringent punishments, and insufficient transparency. Addressing these challenges requires a multifaceted approach, including specialized forensic training, enhanced transparency, the establishment of advanced forensic technology centres, and fostering public-private partnerships. Effective measures and continued vigilance are essential to combat the pervasive nature of white-collar crime in India.
-BY ADITI SRIVASTAVA
– DELHI METROPOLITAN EDUCATION COLLEGE, GGSIPU