Abstract
This paper looks at important studies on white-collar crimes and how they are enforced. So, what exactly is white-collar crime? Well, it alludes to wrongdoings committed by taught individuals from higher social classes in their employments. In this discussion, we’ll cover the many challenges we face when trying to prosecute these crimes, like fraud, embezzlement, and insider trading. You can also think of these as crimes done by educated and professional elites.
White-collar crime can be described as stealing money from a business. Generally, those who commit such crimes are in powerful positions—like CEOs or managers. The impact of these crimes can be huge, costing regular citizens a lot of money. Unlike violent crimes, white-collar crimes are often nonviolent and rely on tricks or deceit to either gain money or keep it safe—including personal or business benefits. Common examples are securities fraud, embezzlement, corporate fraud, & money laundering.
Organizations such as the Securities and Trade Commission (SEC), the Budgetary Industry Administrative Specialist, the Government Bureau of Examination (FBI), & state specialists explore white-collar wrongdoing. The term “white-collar wrongdoing” was to begin with presented by humanist Edwin Sutherland back in 1939. He described it as a crime carried out by respectable individuals with high social status during their work activities. Historically, white-collar workers held office jobs without manual labor while blue-collar workers would typically wear blue shirts and work in factories or other similar places.
White-collar crimes involve illegal acts that aren’t usually seen as traditional criminal behaviour. These acts are mostly about illegally making money and hiding financial losses through various dishonest means like deception or scams. In India, this issue has been rapidly growing over the past few decades. This article aims to provide a detailed look at white-collar crimes within Indian laws. We will also explore some cases and laws that not only analyze these offences but also push for stronger rules to fight against them since they can harm the economic growth of the country.
These crimes aren’t just limited to particular areas; they happen everywhere and across all job types in society. Additionally, we’ll dive into the legal framework and how the courts interpret these issues.
In India, with its variety of businesses and economic systems, there’s a big reliance on comprehensive laws regarding white-collar crime to keep both individuals & companies safe and secure while doing business. This article will give you a general overview of India’s laws about white-collar crime, enforcement methods & regulations while discussing efforts made to tackle financial wrongdoings and improve corporate transparency.
Over recent years, India has made strides in tackling financial crimes through new laws like the Prevention of Money Laundering Act (PMLA) from 2002, the Companies Act (CA) of 2013, & the Prevention of Corruption Act (POCA) from 1988. These changes aim to strengthen enforcement and hold people and companies responsible for their actions. On top of legislative changes, India actively collaborates internationally & adopts best practices for addressing cross-border financial misconduct.
Keywords
White-collar crime, theft, defrauding, elite fraud, swindling
Introduction
There’s a saying from Dr. S. Radhakrishnan that sticks with me. He said, “The experts of beastly, hoarders, the profiteers, the dull marketers, and scholars are the most exceedingly terrible enemies of our society. They have to be dealt sternly. No matter how important or influential they might be, if we just ignore wrongdoing, people will lose faith in us.”
Now, let’s talk about white-collar crimes. These crimes happen when high-level professionals misuse their jobs for personal gain or corporate greed. It covers a broad range of things like fraud and illegal financial deals. White-collar crime is what some of the most elite people do while doing their day-to-day work. A few clear examples include fraud, counterfeiting, embezzlement, and yeah—tax evasion.
Edwin Hardin Sutherland, a well-known sociologist from the 20th century, was the first to define this term in 1939. He said that white-collar crime is a “crime committed by people who enjoy high social standing and great respect in their profession.” Five key points make up this definition:
1. It’s a crime.
2. An important person does it.
3. They commit it while working in their job.
4. It usually involves breaking trust.
5. It’s often non-violent.
In many third-world countries, these crimes happen a lot! For example, India saw a big jump—37 positions—in ease of doing business between 2018 and 2020. That allows more investments but also puts consumers at risk, leading to an over 80% rise in cases just in 2019! Edwin Sutherland mentioned that white-collar crime can hurt society even more than regular crimes because it leads to huge financial losses for the public.
You know what? These kinds of crimes date back to the 15th century in the UK! They appeared later in the US during the Civil War and resulted in the creation of Anti-trust laws meant to protect consumers and keep competition fair.
With technology moving so fast nowadays and businesses growing quickly, places like India sometimes struggle to keep up. This has led to rises in white-collar crimes like cybercrimes that cross country borders easily! Since it’s so easy to commit these crimes now, fraudsters are getting bolder and even younger; they can access tech easily! This growth means we’re seeing more incidents of these crimes which isn’t good news for our country’s future.
In short: within the corporate world, white-collar crimes are non-violent offences usually committed by people in powerful jobs. In simple terms? They’re crimes done by folks who hold significant positions at companies!
White collar crimes in India
White-collar wrongdoings happen when individuals in tall positions commit illicit acts. These people frequently have imperative occupations & a great notoriety in society. While they’re non-violent, they can seriously harm a country’s economy. In many developing countries, like India, these crimes are more common. This is often because some powerful individuals misuse their authority, making it hard to control these bad actions.
Both past & present economists say that white-collar crimes can hurt society more than other types of crime. Why? Because they mess with people’s hard-earned money! As a developing nation, India wants to be on the same level as major countries like the US & China. To do this, it encourages global investment in its businesses. But this also means consumers are more exposed to these crimes. There was an alarming 80% increase in white-collar crimes in India back in 2019.
Common types of white-collar crime include corruption, fraud, & bribery—these aren’t just problems in India; they’re all over the world. A report from Business Standards on November 22, 2016, mentioned the changing nature of these crimes in India. Over ten years, the Central Bureau of Investigation (CBI) found 6,533 corruption cases. However, only 517 of those were registered in the past two years!
Worryingly, insights uncovered that around 4,000 crores worth of exchanging was done with fake or copy pan cards. Maharashtra saw a quick rise in online fraud cases, with 999 reported incidents. The report also said that about 3.2 million people lost money due to their card details being stolen from YES Bank ATMs managed by Hitachi Payment Services.
As technology grows and commerce expands, cybercrime is booming too! This type of white-collar crime is on the rise because there’s not much risk of criminals getting caught. However, there’s some good news: India’s score on Transparency International’s corruption perception index has been improving! From being ranked 85th in 2014, it climbed to 76th place in 2015 thanks to steps taken against white-collar crimes.
In 2018, The Economic Times reported that India was at the 78th spot—three places up from 2017—out of 180 countries evaluated.
But let’s not forget: even though India is developing well, white-collar crimes are a big reason behind its ongoing issues with poverty and health care. These crimes threaten India’s economic progress and need quick action from the government! It’s crucial not just to create strong laws but also to make sure those laws are enforced properly.
So yes, it’s a journey for India as it navigates through these challenges!
Research Methodology
This Paper is Descriptive and the research is based on secondary sources for the deep analysis of White-Collar Crime and Regulatory Enforcement. Secondary sources of information like newspapers, websites, and journals, are used for the research.
Review of Literature
White-collar wrongdoing alludes to monetarily persuaded, non-violent wrongdoing committed by people, businesses, and government authorities. The term, coined by humanist Edwin Sutherland, emphasizes violations committed by individuals of tall social status and respectability in the course of their occupation. Understanding the inspirations, components, and authorization of white-collar wrongdoing is vital, particularly in locales with shifting legitimate and administrative frameworks.
Theoretical Framework
Niccolò Machiavelli’s statement that men are normally eager and can more effectively ignore the passing of their father than the misfortune of their legacy gives a philosophical background to white-collar wrongdoing. This point of view proposes that ravenousness and the want for money related pick up are noteworthy sparks behind such violations. Machiavelli’s see adjusts with the inspirations behind white-collar wrongdoings, where people of tall social status and money related security still lock in in false exercises driven by greed.
Regulatory System in India
In India, the administrative system for combating white-collar wrongdoing includes a few statutory arrangements and rules pointed at guaranteeing straightforwardness, responsibility, and exacting detailing necessities. Key administrative measures include:
Companies Act, 2013 (CA):
Section 143: Commands inner evaluators to report extortion to the central government inside a endorsed time period if the extortion includes at slightest 10 million rupees. This arrangement underscores the significance of opportune detailing and the part of inspectors in recognizing and detailing fraud.
Section 134(5): Requires chiefs to unveil measures taken to combat extortion through a director’s obligation explanation. Chiefs must guarantee the upkeep of exact bookkeeping records to distinguish false behavior and other discrepancies.
Companies (Auditor’s Report) Arrange, 2020 (CARO):
Introduced stricter budgetary announcing prerequisites successful from 1 April 2021, upgrading due perseverance and revelation necessities for auditors.
CARO orders reviewers to consider whistle-blower complaints and report any extortion watched amid the year beneath survey, not restricted to extortion by officers or workers of the company.
Guidance Note on Announcing on Extortion beneath Area 143(12) of the Companies Act, 2013:
Issued by the Established of Chartered Bookkeepers of India in 2016, this direction note stipulates that revelation commitments are required as it were if the statutory inspector is the to begin with to find the extortion in address amid their obligations. Reviewers must utilize proficient judgment to evaluate extortion and audit the steps taken by the company’s administration to report or relieve the fraud.
Securities and Trade Board of India (Posting Commitments and Divulgence Necessities) Regulations:
Mandates recorded companies to uncover to stock trades any occasions of extortion by promoters or key administrative work force inside a 24-hour window. This control points to guarantee provoke and straightforward communication of false exercises to secure financial specialists and keep up showcase integrity.
Enforcement Mechanisms
The authorization of white-collar wrongdoing laws includes different substances and mechanisms:
Auditors and Inside Commentators: Inspectors play a basic part in identifying and announcing extortion. CARO’s upgraded prerequisites guarantee that inspectors consider whistle-blower complaints and report extortion comprehensively.
Director Responsibility: Chiefs are required to take satisfactory measures to avoid extortion and uncover such measures, guaranteeing that beat administration is responsible for keeping up monetary integrity.
Regulatory Bodies: Administrative bodies like the Service of Corporate Issues and the Securities and Trade Board of India direct the compliance and requirement of directions, guaranteeing that companies follow to detailing and revelation standards.
White collar wrongdoing cases in India
White-collar Violations have been on the rise for consistency and the legal has taken note of the same. The taking after are a few of the point-of-interest cases of white-collar wrongdoings and what choice was upheld-
The Harshad Mehta Trick:
In the year 1991, India opened its entryways to the rest of the world by introducing an unused financial arrangement which is frequently alluded to as Liberalization, Privatization, and Globalization (LPG). Where this unused administration opened openings for India’s economy to prosper, in the scenery India was almost to reveal the most brassy trick done by a stock broker named Harshad Mehta in the year 1992. Taking advantage of the escape clauses that existed at that time in the Indian managing an account framework, Harshad Mehta falsely washed over 24000 crores (balanced for swelling nowadays) in the stock showcase over 3 a long time. Regularly alluded to as the ‘Big Bull’, Mehta bought stocks on the Bombay stock trade by siphoning around Rs. 1000 crores from Indian Banks. This is driven by a mixture of colossal sums of cash in the stock showcase. Between 1991 and 1992, the Sensex raged. It returned 274 per cent, moving from 1,194 focuses to 4,467. This was the most noteworthy annual return for the file. This trap was revealed when the SBI (State Bank of India) found a deficiency in government securities.. Afterwards, the examination uncovered that Mehta had fiddled with around Rs 3,500 crore in the framework. After the presentation of the trick in the year 1992, the markets smashed by 72 per cent bringing the greatest drop in the stock showcase with by a hopeless stage that kept going for 2years.
Ketan Parekh Scam:
Frequently alluded to as the Pied Flute player of Dalal Road, Ketan Parekh’s activities were taken after by marketmen since all that he touched turned into gold. From the year 1999 to 2001, Parekh was included in circular exchange and stock control in numerous companies. Parekh got colossal stakes in known small promote capitalization companies and jacked up their costs through circular trading with other merchants, and ruse with these companies and broad organization theorists. This brought about in soak climbs in share prices”. “This set of ten stocks was colloquially implied to as K-10 stocks and Parekh was enthusiastically insinuated to as Penta four” (Indian These days, 2009).On Walk 1, 2001, after the government had displayed the Union Budget, the Bombay Stock Trade Sensex fell 176 focuses, which was driven by the setting up of a request by the government to check the controls done by Ketan Parekh. Examinations uncovered that the promoters of different companies along with numerous industrialists frequently gave reserves to Parekh to misleadingly expand their share costs. “Thus, in fair a few months, scrips of for all intents and purposes obscure companies like Visual Delicate rose from Rs 625 to Rs 8,448 per share and Sonata Program rose from Rs 90 to Rs 2,150” (Lok Sabha Report, 2002). As a result of this trick, the escape clauses that existed in the showcase were fixed. Since that point, the exchange cycle has been diminished. The trick drove to the boycott of Badla. Forward exchanging was formally presented to control the prospects showcase and the stockbroker’s control over stock trades was annihilated.
Satyam Embarrassment:
In the year 2009, a corporate embarrassment shook the India-based company ‘Satyam Computer Administrations, scandalizing the worldwide corporate community at huge. The chairman Ramalinga Raju confessed to distortion of company accounts, controlling the accounts worth Rs 14,162 crore in a few shapes. “This trap revealed different escape clauses in the Indian corporate organization structure that included precarious conduct, off-base bookkeeping, insider exchanging, oversight by evaluators, lacking of Board, disappointment of free officials and non-disclosure of texture realities to the stakeholders” (Pushkar and Naushad, 2018). Since that point, various measures have been taken to reinforce corporate administration in India. In the year 2009, the Service of Corporate Issues issued Intentional Rules for Corporate Administration. In 2014 Securities Trade Board of India corrected the Posting Assention to incorporate arrangements concerning the foundation of a vigil component, the part of the Review Committee in case of extortion and inconsistency along the part of the Chief Official Officer and the Chief Monetary Officer relating to money related announcing and divulgence to the Review Committee. “SEBI surrounded the “Listing Commitments and Divulgence Necessities Regulations” in the year 2015, which expands to all recorded companies and given for exacting rules relating to reporting/disclosure of fabric occasions and genuine and suspected fraud” (Pushkar and Naushad, 2018). Advance, the Companies Act 1956, was cancelled with a modern Companies Act, 2013 that presented a few measures for the advantage of partner community.
Punjab National Bank Fraud:
In the year 2018, Punjab National Bank (PNB) uncovered a Rs. 11,000 crore extortion implied by one of India’s wealthiest men, diamantaire Nirav Modi (ET Bureau, 2018). Between the long time 2011 and 2017, the charged PNB representative outfitted numerous fake PNB letters of undertaking (LOU) without any collateral to Nirav Modi. The bank claimed that these individuals bypassed the inner information for banks to maintain a strategic distance from any kind of discovery. At that point, the information was set through the Quick Worldwide instalment framework requesting abroad branches of the Indian banks to pay out the credits in cash (ET Bureau, 2018).
Kingfisher Aircrafts Trick
The Kingfisher Carriers trick included the defaulting of credits worth over ₹9,000 crores by the now-defunct aircraft. The case highlighted the issue of wilful default on advance reimbursement by commerce substances. The Preeminent Court of India requested the connection of resources worth ₹1,400 crores having a place to the promoter of the carrier, Vijay Mallya, who afterwards fled the nation.
2G Range Trick
The 2G Range Trick, moreover known as the “Commonwealth Scam,” was a major debasement case including the assignment of 2G range licenses by the Office of Broadcast Communications in 2008. The case was driven to the cancellation of 122 2G licenses and came about in the conviction of a few high-profile lawmakers and businessmen, counting previous telecom serve A. Raja.
Broadly seen white-collar wrongdoings in India
Monetary Explanation Control
The amendment or distortion of a company’s financial explanations to delude banks, financial specialists, or other partners around the company’s budgetary execution, well-being, or position is alluded to as monetary explanation control, also known as monetary explanation extortion or financial articulation extortion. This hone is against bookkeeping and budgetary announcing benchmarks and is unscrupulous and unlawful, with possibly desperate repercussions. In the Satyam Outrage of 2009, the president of Satyam Computer Administrations controlled monetary explanations, blowing up benefits and assets.
Insider trading
Insider trading is the purchase or bargain of security (such as stocks, bonds, choices, or other money-related insubordinate) while in possession of vital, riddle information roughly the security and in encroachment of a gatekeeper commitment or other relationship of acceptance and certainty. Put more basically, it alludes to exchanging based on private data that has not however been unveiled to the common open. In the 2012 case of Rajat Gupta, an Indian-born previous chief of Goldman Sachs was found blameworthy of insider exchanging around the Indian company Infosys in the Joined together States.
Bribery and Corruption
Bribery and debasement are corrupt and illegal exercises that involve trading cash, items, administrations, or control to get an out-of-line advantage or control circumstances. These activities may have far-reaching organization and individual-level budgetary, social, and political repercussions. One of India’s greatest debasement embarrassments, the 2G Range Trick (2012) included companies getting 2G range licenses at less than advertised esteem, an act of dishonesty.
Cash Washing
The criminal act of making the continuous illegal movement appear even though they are coming from genuine sources is known as cash washing. It’s an advanced and furtive strategy utilized by criminal bunches, people, and indeed informal governments to stow away the source of reserves gotten through unscrupulous implies. The dynamic cash-washing cases such as the extortion cases at Punjab National Bank (PNB) and INX Media highlighted occasions of illegal cash moving through perplexing networks.
Securities Fraud
An assortment of unlawful activities and unscrupulous trade strategies including securities, stocks, bonds, choices, and other monetary instruments—are collectively alluded to as securities extortion. The objectives of these unscrupulous hones are to hoodwink financial specialists, control budgetary markets, or pick up unlawful advantage from the buy or deal of securities. The Sahara Gather raised cash through alternatively completely convertible debentures (OFCDs) without getting administrative endorsements, which put them in the centre of a securities extortion case.
Charge Evasion
Underreporting salary, expanding findings, or partaking in other false exercises to lower one’s assess obligation and pay lower demands than one is lawfully required to be known as obligation avoidance. Assess evasion is the utilisation of legitimate implies to diminish one’s charge risk; charge avoidance is a genuine financial wrongdoing. The Vodafone charge debate was a well-known case that included claims that the telecom mammoth Vodafone had dodged paying charges when it procured Hutchison Essar.
Phishing and Cyber Fraud
Cyber extortion and phishing are pernicious online exercises that as a rule target individuals or companies in an endeavour to get private information, reserves, or computer framework. Cybercriminals lock in in these exercises, which can have genuine monetary, particular, and security repercussions. In India, there have been various reports of cyber extortion cases that have come about in budgetary misfortunes and information breaches. These cases incorporate phishing assaults that target people and organizations.
Suggestions
White-collar wrongdoings are wrongdoings that cause hurt to the economy of the nation as an entire. It undermines the country’s economy through bank extortion, financial robberies, avoidance of assets, etc. It not as it were influence the monetary status of a nation or an individual but has moreover a negative effect on society. Different wrongdoings such as bribery, debasement, and cash washing have adversely influenced society.
# There is no appropriate definition of White-collar wrongdoing in Indian laws. These socio-economic wrongdoings ought to not be taken indulgently by the government.
# Discipline concerning White collar wrongdoing ought to be stricter as an unforgiving discipline can avoid these wrongdoings to an extraordinary extent.
# If the wrongdoing is exceptionally intolerable the discipline might too be amplified to life imprisonment.
# Individuals are not mindful of most of these wrongdoings so open mindfulness through any communication medium is moreover necessary.
# The government ought to force strict controls concerning financial robberies in the country.
Conclusion
In India, white-collar wrongdoing is an enormous issue that needs consideration. White-collar wrongdoings are committed by individuals in positions of belief, like commerce pioneers or government authorities, and they as a rule include cash or control. These violations can have a huge effect on society since they can hurt the economy and influence numerous people’s lives.
One issue with managing with white-collar wrongdoing in India is that the legitimate framework is moderate and overburdened. Trials can take a long time, and in some cases, equity is postponed or denied. Another issue is that the individuals denounced of these violations frequently have a part of cash, so they can bear to contract the best attorneys to guard them. This can make it harder for prosecutors to demonstrate their case.
While there have been a few laws passed to address white-collar wrongdoing, there are still crevices in the legitimate system. More needs to be done to prevent individuals from committing these wrongdoings and to hold them responsible when they do. This might include stricter punishments for wrongdoers or superior authorization of existing laws.
Overall, handling white-collar wrongdoing in India requires a facilitated exertion from the government, law authorization, and a lawful framework. It is critical to guarantee that everybody is held responsible for their activities, in any case of their riches or status. By reinforcing the lawful system and moving forward with authorization, we can work towards a society where white-collar wrongdoing is less common and equity is served decently for all. In general, white-collar wrongdoing proceeds to be a genuine and complicated issue that calls for continuous consideration and activity by law authorization organizations, controllers, organizations, and society at expansive. We can guarantee that our money-related and financial frameworks are fair, open, and void of illegal conduct by participating in addressing this issue.
Reference
Article
- Sutherland, Edwin Hardin (1950). White Collar Crime. New York: Dryden Press, p. 9.
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Name – Sagnik Podder
College – St Xavier’s University.