committed by someone who holds an important position or high social status in a company;
the crime committed by the accused in the course of his profession or occupation;
there is a violation of trust.
White-collar crimes usually include high-profile financial crimes within the company done in the hindsight of functioning corporate governance in the company. According to E.A. Ross, the concept of white-collar crimes could be understood with emphasis on businessmen who are able to indulge in such harmful acts under the veil of respectability and sophistication. It is always observed that white-collar crimes end up creating a huge impact on the economy than any other form of crime due to their effect on the decision-making of the people. The same could be observed after the Harshad Mehta scam or the recent PMC Bank Fraud case.
White-collar crimes are usually perpetrated by seizing the opportunity that resulted from the shortcomings in practically all areas of monetary transactions, making it possible to change the course of small portions from a large sum of money without notice. The plunder usually proceeds till the officials have to plug provisos in the influenced framework. Be that as it may, the financial offenders, as they possess the aptitude of obtaining advantage of deficiencies in any framework either navigate another domain or undermine the framework which is their typical field.
The first known case of white-collar crime in the world goes as far back as the 15th Century, committed in England. But it was during the widely known case of the Star Chamber and Exchequer Chamber of the English Court of Law that led to the emergence and adoption of the ‘breaking bulk’ doctrine. Now, white-collar crimes are widespread all over the world, committed by greedy high profile businessmen and government officials. In India, too white-collar crimes have been very frequent, even though India has one of the strictest corporate governance regulations in the world. The only possible explanation for this could be the presence of corrupt officials and certain regulatory loopholes which still have not been dealt with.
Differentiating White Collar Crimes from other Crimes
The similarity between white-collar crimes, corporate crimes, occupational crimes, and blue-collar crimes is that all three could be committed for wrongful financial gains. But, white-collar crimes and blue-collar crimes are executed by persons in their individualistic capacities to accomplish personal or financial gain. Corporate crimes are perpetrated by individuals either for or on behalf of the company or institution they work for, to financially benefit the company and its shareholders. If we only compare White-collar crimes and blue-collar crimes. They are also distinct from each other. Both, groups are divided by social class.
While white-collar crime is the term that is usually associated with the crimes being committed by men of higher social class, on other hand, blue-collar crime is usually considered to be committed by men belonging to the blue-collar class. As far as occupational offenses are concerned, they are usually understood to be synonymous with white-collar crimes. Often they are commonly perceived as a misuse of the structural system in a workplace leading to white-collar crime. The ones committing white-collar crimes are usually better educated and more likely to have high-paying jobs.
White Collar Crimes in India
With the advancements in the field of science, technology, and commerce, the concern regarding white-collar criminality has become a global phenomenon. The enormous modifications in the structure of Indian society have led to a slight shift in people’s core integrity and ideologies. The culture of change brought by globalization has revolutionized the nature of crimes in India. Now White-collar crimes have become widespread in India, feeding on the still-growing but poorly structured economy.
The Santhanam Committee was the first body to recognize the intensity of the crimes committed by people of high social standards, which was acknowledged by the 29th report of the Law Commission released in 1972. Santhanam Committee in its report on the Prevention of Corruption has talked about the reasons behind the prevalence of white-collar crimes in India. The Law Commission of India in its 47th report on ‘The Trial and Punishment of Social and Economic Offences’ defines white-collar crimes as “a crime committed in the course of one’s occupation by a member of the upper class of the society.”
In the case of the State of Gujarat v. Mohanlal Jitamalji Porwal and Anr, the Supreme Court pointed out the differences between general crimes and white-collar crimes. It was of the view that “the offense is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community.” The court later in the case of Ram Narain Poply v. CBI, continued to define white-collar crime. According to this they are the cases of private profits at the expense of the public which eventually leads to economic catastrophes.
Common Types of White Collar Crimes
As per NCFC, there are approximately 25 types of listed white-collar crimes. Among them, the most common white-collar crimes in India are:
Fraud is one of the most common types of white-collar crime. Section 17 of the Indian Contract Act defines Fraud. As per the Act, we can deduce that fraud means and comprises acts committed by an individual, or with his connivance, or by his agent to deceive another. Bank Fraud is the act of illegally procuring money or assets held by any financial institutions or banks. The perpetrator uses unlawful means to withdraw financial assets. One of the prominent manners through which people commit bank fraud is identity theft. The person committing the fraud usually falsely represents himself to be someone he is not to a bank or financial institution in order to extract money or assets.
Another common form of Bank fraud is cheque fraud, where cheques are fraudulently signed and money is withdrawn from the bank. Later the money gets deposited in a fake account. Bank fraud is not defined anywhere but the series of acts done by the perpetrator while committing the fraud can be identified as offenses as per the Indian Penal Code. Section 403 (dishonest misappropriation of property), Section 415 (Cheating), Section 463 (Forgery) and Section 489A (Counterfeiting of currency) are the provisions that deal with such acts.
Bribery is also one of the most common white-collar crimes committed in India by both private and public officials. It is the transaction between two people, where one aims to influence the action of another. The act of Bribery is punishable under Section 171E of the Indian Penal Code, according to which any person who commits the act of bribery would be punished with imprisonment of a term which may extend up to 2 years or with fine or both.
Under Section 13(1)(a) of the Prevention of Corruption Act, a public servant is punishable for the act of bribery. According to the provision “the public servant is said to commit the offence of criminal misconduct if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or any other person any gratification other than legal remuneration as a motive or reward such as is mentioned in section 7.” Bribery as a crime is not only limited to public officials. Bribing a witness, a foreign official, a sports official, any bank officials, etc are also an offence.
Money laundering is also a common white-collar crime. It is the process through which a person converts a large sum of money acquired through illegal means into legitimate income. Money laundering can be considered a high profiled white-collar crime. According to Section 3 of the Money-laundering Act, “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of the offence of money-laundering.”
Tax Evasion, the act of avoiding paying tax liability is also widely common around the world. Tax evasion is also generally called Tax fraud. Someone is said to commit tax fraud when he does not report his or her income or wrongfully tries to conceal his earnings by falsifying documents. Paying taxes is a duty of a citizen and nobody pays more tax than their fair share. The tax evasion offence is punishable by Chapter XXII of the Income Tax Act, 1961. In recent years India has witnessed various white collar crimes. The lack of strict guidelines and corruption that has sunk its roots deep into the system, has made it extremely difficult to prevent the crimes from happening.
Effects of White Collar Crime
The very first effect of a white-collar crime can be seen on the company or the institution, which was the bait for the crime. The effects on a company are massive. Casualties incurred by the corporation because of the actions of one or some of employees in connivance with or without an outsider can have immediate and exponential consequences on the whole profitability of the company. Once the information regarding the scandal concerning crime leaks into the public domain, it ends up tarnishing the reputation of the company. The effects of the scandal often stay in the long term which eventually may force the directors to wind up the company.
Similarly, the crimes also affect the clients or customers of the company. They are the ones who bestowed their trust and money to the company with the hope to have a smooth and profitable experience. Everyone prefers to be a part of a company that has a friendly trading environment. Any trouble with the legal officials will have an effect on the number of customers and clients. A section of customers may become hesitant in dealing with the company for the fear of getting into unnecessary trouble and forcing them to look for alternative options available in the market. If we look at the broader picture, white-collar crimes end up having a high financial impact on society.
It is extremely difficult to eradicate such crimes. But collective efforts of the government and the public could help in reducing such crimes. The government has to put strict regulations and should ensure constant inspection, especially for those corporations which handle huge sums of public money. Also, there must be frequent changing of seats of the officials so that no one can hold one seat for long. White-collar crimes have detrimental effects on the economic progress of the country. It is high time to take adequate actions to deal with such crimes. The government along with the media should play a key role to raise awareness regarding such crimes, initiating the public to do safe investments.