Published Paper
Article Details
WHITE -COLLAR CRIMES
AUTHORED BY - S. BHUVANESHWARI BALAJI
Abstract:
White-collar crime is invisible. Offences
are connected within occupational and organisational routines and are difficult to detect by victims, observers
or law enforcers, and few offenders are tried and sentenced in open court. It
is also absent from public and academic discussions of crime and criminal justice policy. Finally,
we will briefly outline the discussions of how this vast group of offences can
be controlled.
Keywords:
Crime, erode, public's trust, high
social status, Blackmail, Bribery, Cheating, Corruption, SEBI, CVC, RBI,
“The practitioners of evil, hoarders,
the profiteers, the black marketers, and speculators are the worst enemy of our
society. They have to be dealt with sternly. However well placed important and
influential they maybe, if we acquiesce in wrongdoing, people will lose faith
in us.”
Introduction:
White-Collar crimes are not violent,
but they are not victimless. White-collar crimes can destroy a company, wipe
out a person's life savings, cost investors billions of dollars, and erode the
public's trust in institutions.[2]
History behind the definition:
The most influential criminologist of
the 20th century and also a sociologist, Edwin Hardin Sutherland, for the first
time in 1939, defined white collar crimes as “crimes committed by people who
enjoy the high social status, great repute, and respectability in their
occupation”. The five attributes of the given definition are:
•
It is a crime.
•
That is committed by an important person of the
company.
•
Who enjoys a high social status in the company.
•
And has committed it in the course of his profession
or occupation.
•
There may be a violation of trust.[3]
Mens rea
To constitute a crime
element of mens rea and actus reus is must.
Where mens rea, In white collar crimes is not necessary
White Collar Crime In Foreign
White collar crime also encompasses
those businesses that are international, which is covered under the Foreign
Corrupt Practices Act (FCPA). The FCPA prohibits American businesses from
making payments to government officials for the purpose of obtaining or
retaining business and contracts in foreign countries; it also prohibits
third-party payments, including joint-venture partnerships, in which payment is
made to a third party with the knowledge that some or all of that payment will
be passed on to a foreign government official as a bribe.
Therefore, the FCPA applies not only
to bribery but also to money laundering. It also applies to foreign businesses
listed on the U.S. Stock Exchange and those conducting business from within the
United States.[4]
White collar crime in India
Corruption, fraud, and bribery are
some of the most common white collar crimes in India as well as all over the
world. The Business Standard on 22.11.2016 published a report titled ‘The
changing dynamics of white collar crime in India’ stating that in the last 10
years, the Central Bureau of Investigation (CBI) has found a total of 6,533
cases of corruption out of which 517 cases were registered in the past two
years.
India is a developing country and
white collar crimes are becoming a major cause for its under development along
with poverty, health, etc. The trend of white collar crimes in India poses a
threat to the economic development of the country. These crimes require
immediate intervention by the government by not only making strict laws but
also ensuring its proper implementation.
Blackmail
Section 503 of
the Indian Penal Code, 1860 defines blackmailing or criminal intimidation as,
making a demand for money or any other consideration by imposition of threat to
cause physical injury, or to cause damage to ones property, or to accuse one of
a crime, or to expose somebody’ secret. The threat can be induced in the
following ways:
By revealing a secret of the person
which the offenders knows if revealed will cause great embarrassment to the
victim. For example, if A, the Managing Director of the company XYZ, knows that
B, a female employee of the same company, was bearing the child of somebody
other than her husband. A asked B to commit forgery on the account papers so
that he could embezzle 20 lakhs rupees from the company without anybody knowing
about it, or else he would reveal her secret which would cause great
embarrassment not only to her but her family as well.
Bribery
Bribery is a white collar crime where
a person asks for money, or a favor, or something of value in order to get the
other person’s work done. For example, if an electoral officer asks a person to
offer him wine and only then will he be allowed to give vote, it would amount
to bribery.
The punishment for bribery has been
provided under Section 171E of the Indian Penal Code, 1860 which says that any
person who commits such an offence would be imprisoned for a term which may
extend to 1 year or with fine or both. Also, Section 13 of the Prevention of
Corruption Act, 1988 has penalised acts constituting an offence under this
head, being engaged in by public officials.
Some of section under Indian Penal Code of 1860
166.public servant disobeying law,
with intent to cause injury to any person.
166a.Public servant disobeying
direction under law.
169. Public servant unlawfully buying
or bidding for property.
171b.Bribery
182. False information, with intent
to cause public servant to use his lawful power to the injury of another
person.
420.Cheating
503. Blackmail
…etc
Reasons for the growth of white collar crimes in India
Greed, competition and lack of proper
laws to prevent such crimes are the major reasons behind the growth of white
collar crimes in India.[5]
Laws against white collar crimes in
India
1. Companies
act, 1960
2. Income tax
act, 1961
3. Indian
penal code, 1860
4. Commodities
act, 1955
5. Prevention of
corruption act, 1988
6. Negotiable
instrument act, 1881
7. Prevention
of money laundering act, 2002
8. It act,
2005.
9. Imports and
exports (control) act, 1950.
Few Land mark Cases in India:
1.
Harshad
Mehta Securities Fraud (1988-1995)
Stockbroker Harshad Mehta founded
Grow More Research & Asset Management Limited, a security company, in 1990.
Investors blindly followed Mehta’s lead because he was a well-known name in the
stock market and was known as the “Sultan of Dalal Street.”
He created a fictitious market by
borrowing sizable sums from the bank and buying the scrips at exorbitant
prices. He took advantage of his position to manipulate certain scrips’ stock
prices for his own benefit. This led to an unnatural infusion of cash into the
stock markets, which abnormally increased the price of these shares. Despite
being immoral, Harshad Mehta’s action was legal.
2.
Satyam
Scandal: biggest-ever corporate accounting fraud
A confession letter written by B.
Ramalingam Raju, founder and chairman of Satyam Computers Services Limited, and
published in Times of India on January 7, 2009, revealed this scam. In the
letter, he admitted to tampering with his books of accounts by inflating assets
and understating liabilities.
The company’s financial situation is
reflected in the books of accounts. Before making an investment, investors can
rely on them as a crucial tool. Accounts books were falsified in order to
defraud shareholders and investors.
The total cost of the fraud was
around 14,000 crore, and it is thought to have played a significant role in the
2009 recession.
In response to this scandal, SEBI
responded forcefully, finding Ramalinga Raju and nine significant associates
guilty of insider trading as well as engaging in dishonest and unfair business
practices. In addition to prohibiting the accused from entering the security
markets in any way for a period of 14 years, SEBI ordered the accused to pay
approximately 3000 crores within 45 days. In order to ensure that a similar
scam never occurred again, SEBI was able to respond strongly.[6]
Necessity
People also commit white collar
crimes to meet their own needs and the needs of their family. But the most
important thing that the people of high social status want to feed their ego.
The reasons behind white collar
criminals going unpunished are:
•
Legislators and the people implementing the laws
belong to the same class to which these occupational criminals belong.
•
The police put in less effort in the investigation as
they find the process exhausting and hard, and often these baffling searches
fail to promise favorable results.
•
Laws are such that it only favours occupational
criminals.
•
The judiciary has always been criticised for its
delayed judgment. Sometimes it so happens that by the time court delivers the
judgments, the accused has already expired. This makes criminals loose in
committing crimes. While white collar crimes are increasing at a faster rate,
the judiciary must increase its pace of delivering judgments.
Functionaries in India to regulate White collar crimes
•
Securities and Exchange Board (SEBI)-
•
The Central Vigilance Commission (CVC)
•
Lokpal
•
Reserve Bank of India (RBI)
Conclusion:
White collar crimes have two surprising features, first,
that they are non-violent crimes, though the criminals have the tendency to
gain control or have a sense of entitlement, and, second, that they are
committed by people in the higher profession.
However, these crimes are also committed by poorly paid
underlings, although the mastermind behind the commission of such crime could
be a rich person enjoying a higher social status in his occupation. white
collar crimes are often committed because of peer pressure or are dependent on
the culture of the company.
As our society is growing towards modernity and the world
is experiencing new technological advancement, the rate of crime is also
increasing at a faster rate. Particularly the growth in white collar crimes has
been enormous. From the medical profession to educational institutions, these
crimes are being committed everywhere.
The cases of online fraud are also increasing at an
alarming rate. India, as a developing nation, has faced difficulties in leading
its economy towards growth because of these crimes in general and corruption in
particular.
The investigating officials are in need of training where
they could acquire the skill to trace these criminals, otherwise tracking of
whom is difficult, complicated and tiresome job. The investigating
officials’s work should be scrutinized to ensure transparency in the work as
the white collar crimes are committed by people enjoying higher social status
in their occupation.
The government must make laws that are strict enough to
reduce the commission of such crimes. And the system should be such that not
only there exist laws giving strict punishment to the accused but also dispose
off maximum cases in a short while. If not done so then people will soon lose
complete faith in the system, as these crimes are committed by people who
should act as a role model for the society.
The media has a key role to play in reducing the rate of
increasing white collar crimes. It has been noted that most of the white collar
crimes go unreported. So, if the media becomes more active towards publishing
frauds and scams at higher levels and revealing how do the people at higher
position in a company use their powers arbitrarily, and also make efforts in
making people aware about the white collar crimes, and avoid corrupt practices,
then this would definitely help in reducing the rate at which the white collar
crimes are being committed.
[1] The Certificate
in Introduction to White Collar Crimes in India is brought to you
by one of the eminent law firms in India, Scriboard Advocates and
Legal Consultants, in association with Enhelion.
[2]
https://www.fbi.gov/investigate/white-collar-crime
[3] Edwin H. Sutherland. "White
Collar Crime," Page 9. Dryden Press, 1949.
[4] https://www.law.georgetown.edu/your-life-career/career-exploration-professional-development/for-jd-students/explore-legal-careers/practice-areas/white-collar-crime/
[5]
https://blog.ipleaders.in/white-collar-crimes/
[6]
https://vakilsearch.com/blog/top-white-collar-crime-cases-in-india/#:~:text=Harshad%20Mehta%20Securities%20Fraud%20(1988%2D1995)&text=Investors%20blindly%20followed%20Mehta's%20lead,the%20scrips%20at%20exorbitant%20prices.
Article Information
WHITE -COLLAR CRIMES
Authors: S. BHUVANESHWARI BALAJI
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/03/07
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
All research articles published in International Journal for Legal Research and Analysis are open access and available to read, download and share, subject to proper citation of the original work.
Disclaimer: The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of International Journal for Legal Research and Analysis.