White-collarcrime is a comprehensive term which includes a wide range of illicit acts whichare committed by apparently respectable people in business set ups as a part oftheir occupational roles.
There are different types of white-collar crimes,ranging from antitrust offenses to cyber-crimes to health care frauds andbeyond. These types of crime are vital to be looked upon because they imposeenormous financial and social detriment on individuals and society at large.Whitecollar crimes have to be differentiated from the traditional street crimes asin the latter case only a handful of people are affected while in the formerone the number of person harmed is countless. Distinguishing between the whitecollar crimes and the traditional crimes is not meant to suggest that one formof crime is worse than the other one.
Instead, the intent is to note thatdifferent types of crimes exist and a full understanding of crime, explanationsof crime and responses to crime will not occur unless the differences betweenthese forms of crime are understood.1Comingto the scenario in India, White Collar Crimes are rapidly growingin our country with the advent of commerce and technology. The advancement inthe technology have given new dimensions to offences relating to computer andthe development of new websites have further added fuel to the fire. The areasaffected by these crimes are banking and financial institutions, industry, businessetc. someone has rightly said that the capacity of human mind is unfathomableand these crimes are nothing but just folly mind games. HISTORY:Theorigin of White collar crime can be traced thousands of years back, althoughthe term itself was coined in 1939 by sociologist Edwin Sutherland as “a crimecommitted by a person of respectability and high social status in the course ofhis occupation”.
White collar means offences committed bybusiness-men and government officials in their capacity as professionals.Thefirst and the foremost case of ‘white collar crimes’ shows up in 15th-centuryEngland, may be because England was the first country to industrialize, and itdeveloped earlier than in any other society. In the Carrier’s case2of 1473, a Flemish traderhired a carrier to carry bales of wool to Southampton.
However, the carrier tookthe bales of wool for himself. He was arrested for larceny (kind of theft), buthe could not be convicted of theft because the bales were rightfully in hispossession, because they had been given to him by the merchant. However, thejudge found that even though the existing law didn’t recognize the defendant’sactions as theft, it was still against the laws of nature. Thus, this case madewhat became known as embezzlement, a crime.INDIANPERSPECTIVEWhitecollar criminology has become a universal phenomenon with the advent of commerceand technology.
Alike other countries, India is equally grasped by white collarcriminality. After the independence the rate has shown up more as compared tothe pre-independence period and at that time the white collar crimes werelimited in nature, therefore the criminals were called as grass-eaters but nowthey are referred as meat-eaters because the extent and level has increasedwith time and technology.Thereason behind the tremendous increase in white collar crimes in the past fewdecades is to be found in the fast and rapid developing economy and the industrialgrowth of this developing nation. The Santhanam Committee Report in itsfindings showed a vivid picture of white collar crimes committed by persons ofhigh respectability such as businessmen, industrialists, government officials,contractors and suppliers. The Report of the Vivin Bose Commission of Inquiryinto the affairs of Dalmia Jain group of companies in 1963 highlights how theseindustrialists indulge in white collar crimes like various kinds of frauds,falsification of accounts, tampering with the records and evidences for personalgains, tax evasion etc. Similar observations were made by Mr. Justice M.C.
Chagla about the big business magnate Mundhra who wanted to “build up anindustrial empire of dubious means.” There were about 124 prosecutionsagainst this business tycoon and companies owned or controlled by him between1958 to 1960 and as many as 113 of these prosecutions resulted into conviction.3 LAWSRELATING TO WHITE COLLAR CRIMES IN INDIA:Hoardings,profiteering and black marketing are among the white-collar crimes which arecommon to Indian trade and business world. Foreign exchange regulations (i e.
FERA) and import and export laws are very often violated in order to earn hugeprofits. Yet another whistle-collar crime in India is the adulteration of foodstuffs,edibles and drugs which causes irreparable damage to the health of public.Because of the involvement of sophisticated system and many people it becomesdifficult to prosecute White Collar Criminals. Various regulatory legislationshas been introduced by the government of India which when breached results inwhite-collar criminality. Some of these legislations include EssentialCommodities Act 1955, the Industrial (Development and Regulation) Act, 1951, TheImport and Exports (Control) Act, 1947, Companies Act, 2013, Prevention ofMoney Laundering Act, 2002.Thereare various provisions contained in Indian Penal Code to check such crimes likeBank Fraud, Insurance fraud, credit card fraud etc.
Directions have been issuedby The Reserve Bank of India which needs to be strictly followed by the banksunder KYC (Know Your Customer) guidelines. There is requirement on part ofbanks and financial institutions to maintain the records of transactions for aperiod of ten years. Information Technology Act, 2000 has been formulated so asto provide legal recognition to the authentication of information exchanged inrespect of commercial transactions. This helps to tackle computer relatedcrimes. Section 43 and 44 of Information Technology Act provides for the penalty forthe following offences:•Unauthorized copying of an extract from the data.•Unauthorized access and downloading of files.•Introduction of viruses or malicious programmers.
•Damage to computer system and computer network.•Denial of access to an authorized person of a computer system.•Providing assistance to any person to facilitate unauthorized access to acomputer. Thoughthe focus of Information Technology Act is mainly on cyber-crimes, but this Actalso has certain provisions that deal with the white collar crimes. Chapter XIdeals with the offences of cyber-crimes and chapter IX deals with penalties andadjudication of these crimes.
Apart of this, many issues are unresolved becauseof-•Qualification for appointment of adjudicating officer is not prescribed.•Definition of hacking.•No steps for curbing internet piracy.•Lack of international co-operation.•Power of police to enter and search is limited to public places only.•Absence of strict guidelines for investigation of cyber-crimes. TYPESOF WHITE COLLAR CRIMES:Whitecollar crimes are not compact in nature, it has many types.
Though there is nolimit to its classification but there are some of its form which are allpervasive and they are as follows:-Fraudas white collar crimesAnnualGlobal Fraud Survey report of Kroll by Economist Intelligence Unit gives thedata about the fraud percentages globally. Fraud continues to be a majorproblem universally and also in India. Of the corporations surveyed globally, 75%reported experiencing frauds in the year 2010-2011. In India, the situation is evenworst, with 84% organizations claiming that they suffered from fraud during theyear. It is a wake-up call for India, as it ranked second worldwide afterAfrica and shares the position with China i.e. second position.
The reportshowcased the top six fraud categories at global level with India. In majority ofthe cases, India is doing much worse than its other counterparts. The crucialpain points in Indian business are corruption and bribery, information theft,internal financial fraud, financial mismanagement and vendor procurement.4Corruption and bribery in IndiaBriberyand corruption continue to be a significant challenge in India. The 2012Transparency International Corruption Perceptions and Bribe Payers Indices rankedIndia 94th (out of 176) and 19th(out of 28), respectively, depicting the severity of the issue.
The most knownand grave corruption and fraud cases in India are – 2G telecom scam, AdarshSociety scam, CWG fraud, Satyam Scam, Bofors Scam, Saradha Chit fund Scam,Indian Coal Allocation Scams and various other land scams etc. – which havenegatively impacted on India’s reputation internationally. The situation becamemore worsened with liberalization as the flow of foreign investments increased.The sudden change in economy also resulted in higher greed and corruptionmushroomed up.
The cases exhibit how senior politicians and business chiefs whowere much revered and respected played on their ethics. In my view,approximately 90- 95% of the companies are exposed to corruption. Themultinational subsidiaries in India are also magnificently affected bycorruption. Though the FCPA and/or UKBA are applicable to them, the acts do nothave much effect in Indian scenario.
In my view, the US/ UK authorities will beable to follow only in the bigger cases, and the smaller ones will be ignored.Hence, the effectiveness of these acts becomes limited. Secondly, the developedcountries have a one sided view of corruption. They prohibit the country’s owncompanies from paying bribes. However, allowing them to accept the bribe moneydeposits from Indian (and other countries) politicians and business persons andultimately to the country’s banks. This encourages money laundering in spite ofpreventing corruption.
Although, India has a Prevention of Corruption Act, 1988,but it hasn’t reduced corruption. According to the act, government officialscannot accept any form of bribes or grease payments. However, receiving 2-10%bribe of total contract value assigned is quite prevalent. The Indian movementagainst corruption led by Anna Hazare has forced government to issue a strongLokpal Bill. The implementation of the bill may curb the demand side of corruptionto some extent.
In October 2011, the Prime Minister announced, ?that hisgovernment was working on proposals to criminalize private sector bribery andto also make illegal gratification of foreign public officials as an offence. Thisis in line with United Nations Convention on Corruption, to which India is asignatory. In November 2016, the BJP Government dubbed demonetization as a waragainst black money and corruption.
That time the hon’ble Prime Minister said,”we need to move ahead with those supporting us in our fight againstcorruption.”Thereare various other laws apart of the act of 1988 aiming at the eradication ofcorruption like provisions of Indian Penal Code, 1860, Benami Transactions (prohibitionact),1988, prevention of money laundering act,2002, right to information act,2005. Ina study on Bribery and Corruption in India conducted in 2013 by globalprofessional services firm Ernst & Young (EY), a majority of thesurvey respondents from PE firms said that a company operating in a sectorwhich is perceived as highly corrupt may lose ground when it comes to fairvaluation of its business, as investors bargain hard and factor in the cost ofcorruption at the time of transaction. Corruption also results in economiclosses and low growth.Anti-trustviolations’Becausemost white collar crimes violate trust they breed distrust.’5 Antitrustviolation can be categorized into two broad heads: restrictive trade agreementsand monopolies or monopolistic practices. Restrictivetrade agreements means an illegal agreement between the competitors in anyindustry to restrict the working of the industry. Two major examples ofrestrictive trade practices are price fixing and market sharing or division.
Price fixing refers to the agreements between the competitors to set prices ata certain level. For example, if pharmaceutical industries get together andagree among themselves to charge hospitals a set price for the medicines usedin the labs or in the hospitals, this is called price fixing. Market sharingoccurs when competitors get together and divide up an area, so that only one ofthem operates in any one of those areas at a point of time. For example, thereare only two contractors in a town and they might divide up a town so that onetakes the north side and the other the south side of town.
These types ofagreements are illegal because they impose a restrain on trade. In these cases,the prices for these goods and services (medicines and paving) are not beingset for open competition in the market, as they should be actually in a freemarket economy. Rather, prices are being set by collusion between thecompetitors themselves.
Monopoliesand monopolistic practices includes unfair attempts to corner a market or todrive out competitors from a market and to become a single seller. A monopolyis said to exist if one company or enterprise controls the entire market, but acompany is said to have a monopolistic control when apart of having competitorsit controls a large share of the market. Microsoft’s Windows operating system,for example, was declared a monopoly even though there were other operatingsystems also available because of its large share in the IT industry and othersystems have such a small market share.EnvironmentalcrimesThereis no clear definition of the term environmental crime. Implicitly, it isdefined as any violation of local, state, or central “environmental laws.
“Environmental laws seek to protect the environment by protecting the quality ofair, water, and soil by regulating both harmful additions to the environment(water and air pollution, soil erosion) and harmful subtractions from theenvironment (destruction of habitats and depletion of ozone).Environmentalcrime comes in a variety of forms and categories. Offenders may be homeownerswho dump leftovers into a city sewerage system that are in violation of local bylaws,or they may be multinational corporations or big industrial houses thatmanufacture, ship, and dispose of hazardous materials to the rivers and underconditions which are criminally wrong and morally not acceptable.Becausethere are different types of environmental crimes which are associated withdifferent types of industries and businesses, the nature of these environmentalcrimes in a community tends to reflect its local economic activity. Certaintypes of environmental crimes are however widespread.
A study of local lawenforcement responses to environmental crime concluded that illegal waste tiredisposal, improper disposal of furniture stripping and electroplating waste,used motor oil disposal, and hazardous wastes dumped into streams and rivers,are found in nearly all communities.6Ina strict legitimate sense, what is considered as environmental crime variesupon different jurisdictions. Statutory inconsistencies and the lack of uniformcodification of state environmental laws creates difficulties for theauthorities and investigators. At the same time, they tend to advance opportunitiesfor the environmental offenders, who can evade prosecution by moving theiroperations to jurisdictions that are legally more “user-friendly” so as toescape from the prosecution process and thereby avoiding the legal sanction. CYBERCRIMES”The modern thief can steal more with acomputer than with a gun. Tomorrow’s terrorist may be able to do more damagewith a keyboard than with a bomb.”Theelevation of technology has made man hanger-on Internet for all his needs andwants.
Internet technology has given man an easy access to everything whilesitting at one place. Social networking, online-shopping, storing data, gaming,online studying, online jobs, kindles, web-surfing etc. every possible thingthat a man can think of to do through the channel of internet. With the build-outof internet and its related benefits, also developed the concept of cyber-crimes.Cyber-crimes are committed in different forms such as hacking, pornography, webhijacking, cyber stalking, software piracy, cyber defamation, forgery etc.Ina report published in 2016 by the National Crime Records Bureau report, the incidenceof cyber-crimes has increased by 7.
55% more than in the previous year i.e. 2015and highest no.
of cases were reported in the state of Uttar-Pradesh.7 PROFESSIONALWHITE-COLLAR CRIMINALITY:· Medical profession-There are some white collar crimes which are committed by persons of medicalprofession namely making false medical certificates, illegal abortions, sellingsample drugs and medicines to the patients and chemists.· Engineering-In this field also there are various sorts of crimes which comes in thiscategory like underhand dealing with the contractors and industries, usinginferior quality goods for construction purposes etc.
· Legal profession-fabricationof false evidence, violating ethical standards of the profession and makingillegal agreements with ministerial staff and some other illegal practices bythese professionals. · Educational institutions-Educational Institutions are also subject to these crimes whether it becharging huge donations or selling of professional seats or manipulating themerit lists. These bodies also manage to secure huge amounts by way of grantsby the government by showing fictitious and fabricated details about theinstitutions. REASONSFOR GROWTH OF WHITE COLLAR CRIMES IN INDIA:Ina developing country like India, the presence of white collar crimes is notunusual. Controlling and preventing these crimes is a vital problem. The mainreasons which are observed to be behind the increase of such crimes are asfollows-· These crimes are committed because ofthe greed of the people to have more.
These are generally committed by peopleof high standing and having secured financial status.· The emergence of new cutting edgetechnologies and developments, political pressures and increasing competitionshas led to the white collar criminals to prosper.· Because of the expanding internetfacilities it becomes very hard to trace and locate the criminals.· There is no special legislation on whitecollar crimes in our country due to which it has trended up.
· Most of these criminals go unpunishedbecause of the high standing of these people and their cordial relations withthe politicians and ministers. CONCLUSION:Itis easy to conclude that due to advancement of science and technology newerform of criminality known as white-collar crimes has arisen. The provisions ofIndian Penal Code and other laws dealing with white-collar crimes should beamended to enhance the punishment and to make these offences of substantivenature. With white-collar crimes on the rise, what we need is the strengtheningof our enforcement agencies and Speedy trial should be arranged and SpecialTribunals should be constituted. Convictions should result in heavy fines andpenalties rather than arrest and detention of white-collar criminals.
Public vigilanceto be improved by creating public awareness about these crimes through the mediumof press, and other audio-visual aids and legal literacy programs should beorganized. In India there is a need for strengthening of morals particularly inthe higher strata and among the public services departments. Unless the peoplestrongly execrate such crimes, it would be a hard to do task for controllingthis growing menace.