Edwin Hardin Sutherland, for the very first time, in the year 1939, defined “White collar crimes” as those crimes which are committed by people who enjoy a high social status, great reputation and are respected in their occupation. In relevance to the corporate sector, white-collar crimes can be defined as non-violent crimes that are generally committed by businessmen as well as government professionals.
Causes of White collar crimes:
1. The people with high social status and standing in society are financially stable, but still commit crimes because of their greed to earn more.
2. According to Darwin’s theory of evolution, the competition will always be there due to the “survival of the fittest”, and this leads to crimes.
3. There is an absence of enough laws to deal with such crimes, and hence the offenders easily get away from the clutches of the law. It has mostly been seen that due to political connections, most offenders get away without any kind of punishment. Also, in many cases, the crimes are committed to privacy and hence there are no witnesses to support the case.
4. Due to the rapidly growing technology, business, as well as political pressure, has introduced criminals to newer ways of committing such crimes. Technology has made it easier to inflict harm to the other person, with a relatively lesser risk of being caught.
5. Another reason is lack of awareness because unlike other conventional crimes, most people in our country are still unaware of these crimes and hence have very high chances of becoming the worst hit by these.
Background:
The Carrier’s case was the first-ever case of white-collar crime, in the year 1473 in England. In this case, the agent was entrusted with the task of transporting wool from one place to another by his principal. However, the agent was found guilty of stealing some wool. Thereafter, the English Courts adopted the doctrine of “breaking the bulk” as it constituted the offense of larceny. However, with the growth of industrial capitalism in the 18th century, a new phase of crime and criminality ushered in.
Dimensions of white-collar crimes:
White-collar crimes have plagued society and there is no profession that is still untouched by these. To cite a few professions that has been afflicted by these crimes:
• The medical profession- Issuance of false certificates, carrying out illegal abortions, selling adulterated drugs and medicines to patients, some of which are even samples.
• Education sector- Private institutions are only concerned about making profits at the cost of children’s futures. Many teachers and staff of educational institutions are often found involved in unscrupulous practices.
• Corporate sector- Formation of illegal contracts, conspiracies of trade restraints, unfair labour practices, selling of adulterated drugs and food, bribing of public officials, etc.
• Engineering- There have often been found instances of underhand dealing with contractors, suppliers, passing of sub-standard works, maintenance of bogus reports of labour, etc.
• Legal profession- Fabrication of false evidence, engagement of professional witnesses, sorting out illegal methods of tax evasion, etc.
• The society as a whole- A very common white-collar crime that is prevalent amongst all professions and all strata of society is that of evasion of taxes. The complexity of taxation laws has provided individuals with a number of loopholes that are well exploited by them for their own personal benefits.
Types of White collar crimes in India:
Some of the white-collar crimes that are on an upward trend in India are:
1. Credit card frauds- These are committed when one individual uses the credit card of another individual in an unauthorized manner to obtain goods of value. For instance, in the year 2003, Amit Tiwari, based in Mumbai, who was a 21-year-old engineering student was arrested for having many names, many bank accounts and many clients, which were all false, and he managed to defraud a Mumbai based credit card company, CC Avenue, of an amount of Rs.9 lakhs.
2. Currency schemes-These refers to the practice of determining the currency value in the near future, but not on the basis of any firm evidence. Some common types of currency schemes in India are:
a. Schemes involving advance payment of fees
b. Scams in the boiler room
c. Exempt securities scam
d. Scams in the foreign exchange market
e. Offshore investing scams
f. Scams against pensions of retired people
g. Double dip scams
h. Scams by building a relationship
i. Ponzi scams
j. Spams by sending spam emails
3. Embezzlement- When a person entrusted with money or property uses it for his own use or benefit in an illegal manner. This may be characterized as a criminal breach of trust as defined in Section 405 of the Indian Penal Code, 1860.
4. Frauds with insurance companies- Many times, people make use of false documents in order to obtain insurance from insurance companies. Frauds can also be committed by insurance companies or their agents who may defraud the other person for illegitimate financial gains. Under the Indian Penal Code, 1860, the relevant provisions that deal with such types of frauds are Section 205, 420 and 464.
5. The kick-back fraud- In these, one person bribes another person with something of value to convince the other person to take a favorable decision.
6. Racketeering- This involves a criminal act of an individual wherein he indulges in illegal business in order to make profits.
7. Telemarketing frauds- These are frauds made over phone calls.
8. Insider trading- This involves an individual using confidential information to trade in the shares of publicly held corporations.
9. Bribery- It is an act of giving money or gift that alters the behaviour of the recipient. The Apex Court has observed that it is not charity, but is shrewd business.
Cyber crimes:
The latest trending white-collar crime in India is cybercrime. It is on the rise due to the increased usage of computers and the internet. The only legislation that deals with this is the Information Technology Act, 2000. The word “cybercrime” has not been defined anywhere.
The major types of cybercrimes that are prevalent in India are:
1. Child pornography: It involves publishing and distribution of obscene material of children in an electronic form. This has been categorized as a heinous crime. It has, in turn; led to various other crimes viz. sex tourism, sexual abuse of children, and so on. There have been many positive amendments in the POCSO Act via the POCSO (Amendment) Act, 2019, which deals with this crime.
2. Cyber-stalking- The harassment faced by women online is on an increase. Nowadays, the harassment faced by men online is also showing an upward trend.
3. Cyber terrorism-The ambit of cyber terrorism is very broad and hence it is not possible to define it in exact words. Former President of India, Dr. Abdul Kalam, had expressed his concern over the free availability of sensitive spatial pictures of different countries on the internet.
Impact of White Collar crimes:
1. On companies- White Collar crimes have the potential of causing huge losses to companies. The companies, to recover these losses, raise the cost of their products, which in turn leads to an increase in its price, thus affecting the end-user. The salaries of the employees are also reduced, and at times it could also lead to cutting jobs. The investors, as well as employees of these companies, find it hard to repay their loans, which in turn has an adverse effect on the economy.
2. On employees- White Collar crimes have a negative effect on the employees, as they become apprehensive of their working conditions and find it tough to trust their employers.
3. On end-users or consumers-Customers start having trust issues with respect to the pricing as well as the quality of the products being sold, which leads to an adverse impact on the demand of the products.
4. Loss of confidence- Stock frauds, currency scams, trading scandals, etc. have the effect of people losing faith in the stock market and leading to negative sentiments, which in turn drive the stock markets to new lows.
5. On offenders-Many white-collar crimes go unreported, due to obvious reasons. These crimes have no eyewitnesses as they are committed to personal spaces. This makes it very difficult to track offenders. Also, there is an absence of stringent punishments. All these loopholes have added to the confidence of potential and present offenders to keep committing these crimes frequently.
6. On victims-It has often been seen that elderly people are easy targets for such kinds of crimes. The victims of such crimes undergo depression and may also have suicidal tendencies because, in most instances, the losses are unbearable.
Legislations for White Collar crimes in India:
The Government has brought in the following legislations in order to punish the white-collar criminals:
1. Indian Penal Code, 1860
2. The Income Tax Act, 1961
3. The Companies Act, 1960
4. The Prevention of Corruption Act, 1988
5. The Commodities Act, 1955
6. The Negotiable Instruments Act, 1881
7. The Information Technology Act, 2005
8. The Prevention of Money Laundering Act, 2002
9. The Imports and Exports (Control) Act, 1950
10. The Special Court (Trial of offenses relating to the transaction in securities) Act, 1992
11. The Central Vigilance Commission Act, 2003
Latest judgments regarding White Collar crimes in India:
1. Narinderjit Singh Sahni and Anr. v. Union of India and Ors. (2001 SC)
“It would be a misplaced sympathy of the Court on such white-collared accused persons, whose acts of commission and omission have ruined a vast majority of poor citizens of this country.”
2. Rahul RadheshyamBhomavat v. The State of Maharashtra (2020 Bom HC)
“In cases of such nature, the grant of anticipatory bail would cause prejudice to the Investigating agency. Unless the Investigating agency is given a free, fair and full scope, it would be very difficult to nab the culprits involved in such white collared scams”.
3. The state of Gujarat v. Mohanlal Jitamalji Porwal (1987 SC)
“A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even-handed manner without the fear of criticism from the quarters which view white-collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest”.
4. Mukesh Jain v. CBI (2010 Del HC)
“Unfortunately, in the last few years, the country has seen an alarming rise in white-collar crimes which has affected the fibre of the country’s economic structure. These cases are nothing but private gain at the cost of the public and lead to economic disaster”.
Steps to be taken to curb White collar crimes:
1. It is imperative that more stringent laws are introduced along with better implementation and execution.
2. Fast track courts and tribunals should be established across the country for strict and efficient implementation of the laws.
3. People should be educated and made aware of the types of white-collar crimes and their ill-effects so that they do not fall as easy prey in the hands of the offenders. For this purpose, electronic and print media can be utilized.
4. An independent body could be established to focus on such crimes and also to provide for punishments in this regard.
5. The officials who deal with such offenders must be trained adequately and from time to time, to update them of the latest developments in these crimes and the measures that could be adopted to curb them.
6. Strong regulating policies must be adopted by the investigating agencies in India. There should be transparency in the system and a common agenda on their checklist.
“The views of the authors are personal“
Frequently Asked Questions
What are White Collar Crimes?
Edwin Hardin Sutherland, for the very first time, in the year 1939, defined “White collar crimes” as those crimes which are committed by people who enjoy a high social status, great reputation and are respected in their occupation. In relevance to the corporate sector, white-collar crimes can be defined as non-violent crimes that are generally committed by businessmen as well as government professionals.
What are the main causes of these types of crimes?
The main causes are:
1. The people with high social status and standing in society are financially stable, but still commit crimes because of their greed to earn more.
2. According to Darwin’s theory of evolution, the competition will always be there due to the “survival of the fittest”, and this leads to crimes.
3. There is an absence of enough laws to deal with such crimes, and hence the offenders easily get away from the clutches of the law. It has mostly been seen that due to political connections, most offenders get away without any kind of punishment. Also, in many cases, the crimes are committed to privacy and hence there are no witnesses to support the case.
4. Due to the rapidly growing technology, business, as well as political pressure, has introduced criminals to newer ways of committing such crimes. Technology has made it easier to inflict harm to the other person, with a relatively lesser risk of being caught.
5. Another reason is lack of awareness because unlike other conventional crimes, most people in our country are still unaware of these crimes and hence have very high chances of becoming the worst hit by these.
Can cybercrime be categorized as a White Collar crime?
The latest trending white-collar crime in India is cybercrime. It is on the rise due to the increased usage of computers and the internet. The only legislation that deals with this is the Information Technology Act, 2000. The word “cybercrime” has not been defined anywhere.
The major types of cybercrimes that are prevalent in India are:
1. Child pornography: It involves publishing and distribution of obscene material of children in an electronic form. This has been categorized as a heinous crime. It has, in turn, led to various other crimes viz. sex tourism, sexual abuse of children, and so on. There have been many positive amendments in the POCSO Act via the POCSO (Amendment) Act, 2019, which deals with this crime.
2. Cyber-stalking- The harassment faced by women online is on an increase. Nowadays, the harassment faced by men online is also showing an upward trend.
3. Cyber terrorism- The ambit of cyber terrorism is very broad and hence it is not possible to define it in exact words. Former President of India, Dr. Abdul Kalam, had expressed his concern over the free availability of sensitive spatial pictures of different countries on the internet.
What is the impact of such crimes?
Such crimes have a negative impact on the following:
1. On companies- White Collar crimes have the potential of causing huge losses to companies. The companies, to recover these losses, raise the cost of their products, which in turn leads to an increase in its price, thus affecting the end-user. The salaries of the employees are also reduced, and at times it could also lead to cutting jobs. The investors, as well as employees of these companies, find it hard to repay their loans, which in turn has an adverse effect on the economy.
2. On employees- White Collar crimes have a negative effect on the employees, as they become apprehensive of their working conditions and find it tough to trust their employers.
3. On end-users or consumers- Customers start having trust issues with respect to the pricing as well as the quality of the products being sold, which leads to an adverse impact on the demand of the products.
4. Loss of confidence- Stock frauds, currency scams, trading scandals, etc. have the effect of people losing faith in the stock market and leading to negative sentiments, which in turn drive the stock markets to new lows.
5. On offenders- Many white-collar crimes go unreported, due to obvious reasons. These crimes have no eyewitnesses as they are committed to personal spaces. This makes it very difficult to track offenders. Also, there is an absence of stringent punishments. All these loopholes have added to the confidence of potential and present offenders to keep committing these crimes frequently.
6. On victims- It has often been seen that elderly people are easy targets for such kinds of crimes. The victims of such crimes undergo depression and may also have suicidal tendencies because, in most instances, the losses are unbearable.
Is there any legislation in place in India to curb white-collar crimes?
The Government has brought in the following legislations in order to punish the white-collar criminals:
1. Indian Penal Code, 1860
2. The Income Tax Act, 1961
3. The Companies Act, 1960
4. The Prevention of Corruption Act, 1988
5. The Commodities Act, 1955
6. The Negotiable Instruments Act, 1881
7. The Information Technology Act, 2005
8. The Prevention of Money Laundering Act, 2002
9. The Imports and Exports (Control) Act, 1950
10. The Special Court (Trial of offenses relating to the transaction in securities) Act, 1992
11. The Central Vigilance Commission Act, 2003
What are the steps that can be taken to keep a check on these crimes?
Some of the steps that could be taken are as follows:
1. It is imperative that more stringent laws are introduced along with better implementation and execution.
2. Fast track courts and tribunals should be established across the country for strict and efficient implementation of the laws.
3. People should be educated and made aware of the types of white-collar crimes and their ill-effects so that they do not fall as easy prey in the hands of the offenders. For this purpose, electronic and print media can be utilized.
4. An independent body could be established to focus on such crimes and also to provide for punishments in this regard.
5. The officials who deal with such offenders must be trained adequately and from time to time, to update them of the latest developments in these crimes and the measures that could be adopted to curb them.
6. Strong regulating policies must be adopted by the investigating agencies in India. There should be transparency in the system and a common agenda on their checklist.
