INTRODUCTION
White-collar crimes, often referred to as corporate or financial crimes, are non-violent and victimless crimes committed for financial gain. Sutherland defined a white-collar crime as a violation of criminal law by a person of the upper socio-economic class in the course of his occupational activities. These crimes are often deceptive, complex and involves manipulation of financial records.
Satyam Computer Services Scandal of 2009, India’s largest corporate fraud, is an example of such an offence which revealed falsified accounts and share price manipulation by former company’s founder and owner Ramalinga Raju. This resulted in stealing large sums of property which was then invested in the company.
This article delves into the criminological perception of white-collar crimes and briefly deals with the provisions available in India for combating these crimes.
CHARACTERSTICS
These crimes are job-oriented, committed with the motive of illicit financial gain. Earlier, only a person of high-status committing these crimes was considered a white-collar criminal but, now any person who commits crime by misusing his occupation falls into this category. These crimes are victimless but harms society at large.
The people committing these crimes generally hold respectable positions in the society which they misuse for profits. These perpetrators are educated and often rationalize their illicit actions. Non-violent methods are used to deceit and manipulate transactions. These crimes are often difficult to detect as offenders use sophisticated schemes to cover-up frauds. Occupational crimes are often justified as necessary by offenders to escape punishment.
THEORIES
Various theories have contributed in the study of white-collar crimes which have made a profound impact. One of them is Differential Association theory of Sutherland which explains how individuals learn criminal behavior through interactions with peers or mentors. Another theory developed by Merton, focusses on how societal pressure can lead to deviant behavior causing one to misuse his position.
Conflict theory, rooted in Marxist theory views white-collar crimes as a result of class conflict, power dynamics and economic interests. The theory of Rational choice views crimes as result of rational decisions made by individuals weighing costs and benefits whereas the Self-Control theory developed by Travis and Michael explains these crimes as a result of low self-control.
Opportunity theory, developed by Clark and Cohen, explains how white-collar crimes occur when individuals or organizations have the opportunity to commit these crimes due to their position, access or circumstances.
TYPES
White-collar crimes are diverse in nature. They can be committed within a country or can be transnational as well. Some financial crimes include insider trading, ponzi scheme, money laundering, tax evasion, securities fraud and bank fraud.
Hacking, identity theft, data breach, online fraud and digital piracy are some technology-related white-collar crimes. Crimes involving professional misconduct includes insurance fraud, real estate fraud, medical malpractice and nursing home abuse.
Transnational white-collar crimes include international money laundering, intellectual property theft (counterfeiting and piracy) and cybercrimes.
REASONS
There can be a wide range of reasons explaining the increasing crime rate of white-collar crimes. Financial gain, power, revenge, personal enrichment and prestige may lure people to commit these crimes.
Various organizational factors such as competition, pressure to meet profit targets, lack of whistleblower protection, weak internal controls and inadequate management motivate offenders to get engaged in illicit activities.
Psychological factors such as stress may also cause a person to commit an offence. The proliferation of personal computers and smartphones have further aggravated this problem as the use of these not just results in the generation of many more ideas, but also gives open opportunities to the people residing in any corner of the world to commit these crimes.
Offenders give themselves a false assurance and a soothing justification as these crimes are victimless. This convinces them to do more crimes in future.
LEGAL PROVISIONS IN INDIA
Various legislations have been passed in India to punish offenders committing white-collar crimes. Some of them are Bhartiya Nyaya Sanhita,2024; Prevention of Corruption Act,1988; Prevention of Money Laundering Act,2002; Companies Act,2013 (sections 447 to 449); Securities and Exchange Board Act,1992; the Fugitive Economic offenders Act,2018 and the Income tax Act,1961.
SEBI Act was passed after the Harshad Mehta Scam of 1992 which was the biggest stock market scheme in India whereas Fugitive offenders Act was passed in response to high profile economic fugitives notably Vijay Mallya.
Central Bureau of Investigation (CBI), Enforcement Directorate (ED), Securities and exchange board of India (SEBI), Serious fraud investigation (SFO), Income Tax Department (ITC) and Directorate of Revenue intelligence (DRI) are enforcement agencies in India who investigate white-collar crimes.
CONSEQUENCES
White-collar crimes are considered as less harmful due to its non-violent nature. However, victims of these crimes suffer emotional and financial distress. These crimes can erode trust of people in financial institutions and government’s ability to regulate them. These crimes not only cause financial losses but also damages the reputation of the legitimate companies. Nirav Modi Scam of 2018 resulted in a fraud of $2 Billions which eroded public trust in the banking sector whereas Harshad Mehta scam (1992) resulted in a loss of over Rs. 4,000 crores for investors.
Chit fund scams cause distrust and particularly affect middle class. The famous saradha scam of 2013 defrauded thousands of rural investors with estimated losses in the thousands of crores. These schemes often promised high returns but revealed to be ponzi in nature. Overall, white-collar crimes trigger economic downturns, leading to financial losses, public distrust, reduced investments and job losses. These crimes distort market competition and leads to misallocation of resources which results in destabilization of the economy.
SOCIETAL REACTION
The reaction to white-collar crimes reflects a complex interplay of moral outrage, calls for justice and a desire for systemic change within India. These crimes exacerbate economic inequalities which causes rage in the society. Public opinion is more supportive of punitive attitudes towards these criminals. Victims of these crimes suffer not only financial losses but also psychological pressures. These types of crimes are hard to detect which causes the victims to lose all hopes of relief. Media often sensationalize white-collar crimes, focusing on high-profile corporate scandals. There can also be cases where victims are blamed for their own loses on the grounds of being greedy or naive for trusting the offender. In conclusion, there is often a stronger societal push for accountability and justice on side, whereas on the other side, victim blaming may also be used as a shield by these offenders. Over time, society and government institutions have recognized the severity of these crimes and have even laid emphasis on its prevention and deterrence.
WAY FORWARD
“White-collar crimes know no borders, affecting economies and societies worldwide. To combat these crimes, international cooperation and coordination are essential. We must share knowledge, best practices, and resources to prevent and prosecute white-collar crimes globally. Only through collective action can we protect our global financial systems and ensure accountability for those who seek to exploit them.” To detect these crimes, advanced technologies (AI, blockchain) should be used. Digital forensics for investigation and evidence collection must be promoted. There is need to strengthen corporate governance and compliance.
Speedy trials can ensure an efficient remedy to the victims of the scam. Further, global cooperation is required to ensure that fugitives are punished for their crimes and this will set an example for future. It is necessary to promote ethical business practices and culture for the growth of economy. People must be aware and educated to prevent and report these crimes because only with collective efforts increasing crime rates may fall.
SOURCES REFERRED
- Federal Bureau of Investigation, U.S. White collar crimes. (https://www.fbi.gov/investigate/white-collar-crime).
- Snodgrass, Jon (1985). “A Biographical Sketch and Review of the Work of Edwin H. Sutherland”.
- H Vardhan. A Critical Study of White-collar crimes. Indian Journal of Integrated Research in Law. (Retrieved from https://ijirl.com).
- White-collar crime: a neglected area in forensic psychiatry? National Institutes of Health (NIH). (Retrieved from: www.ncbi.nlm.nih.gov).
- White Collar Crime Survey. Indian National Bar Association.
(Retrieved from: https://www.indianbarassociation.org).
- Ram Ahuja. Criminology. Rawat Publications
