The hon’ble Supreme Court in Ram Narayan Popli v. CBI observed that- “white collar crimes are planned, calculated, well- designed and executed and this has led to an alarming rise which is nothing, but personal profit of an individual based on public money”, these sentences clearly highlight the exceptional rise in number of white-collar crimes.
Edwin Sutherland, a criminologist, came up with the term ‘White-collar crime’ in the title of the speech ‘the white-collar criminal’, delivered in 1939. In his opinion, white collar crime is nothing but “crimes committed by people who enjoy the high social status, great repute, and respectability in their occupation”. FBI defines- White collar crimes as crimes which include public corruption, fraud related to health care, money laundering etc. and are generally non-violent in nature as against the criminal acts like rape, murder etc. Morris emphasized of punishing and bringing the high class within the ambit of crime and develops a branch of crime as white-collar crimes. Definition given by Herbert Edelhertz is as follows- “an illegal act or series of illegal acts committed by non-physical means and by concealment or guile to obtain money or property, to avoid the payment or loss of money or property, or to obtain business or personal advantage”
The commission of white-collar crime is done by individuals or groups who have earnings above the average earnings and are not involved in the manual or labor category of work but rather the supervision and specialized positions. They are high class and respected in society and due to such flattery by the blue-collar workers, they become greedy and overambitious. They are held to be non-laboring office positions. They are powerful in terms of economic, social, and technological aspects. Non- violent wrongful acts committed by the labor class or people who are involved in manual or groundwork, example given – plants and mill etc.
White-collar crimes are non-violent financial crimes committed for personal or organizational gain. Examples include:
- Fraud: Deceiving others for financial gain (e.g., identity theft, corporate fraud).
- Embezzlement: Misusing entrusted funds.
- Insider Trading: Using confidential information for stock trading.
- Tax Evasion: Illegally avoiding taxes.
- Money Laundering: Hiding the origins of illegal money.
- Bribery: Offering or accepting favors to influence decisions.
- Ponzi Schemes: Fraudulent investments relying on new investors’ money.
- Cybercrimes: Hacking or phishing for financial theft.
Important cases highlighting the seriousness of white-collar crimes-
Case laws provide for what the law cannot explain. At this point, it is equally important to study different case laws to derive valuable and logical conclusions. It will also help in understanding the judicial perspective and stand taken by judiciary in matters concerning white collar crimes.
Rohit Tandon v. The Enforcement Directorate – Justice A.M. Khanwilkar observed- that “white collar crimes must be given the title of grave offence and companied with well-planned and deep-rooted conspiracies; at the same time they take a huge toll on public money”. These words by the honorable judge of the Supreme Court clearly highlight the importance of control over white collar crimes.
ABG Shipyard Liquidator v. Central Board of Direct Taxes – One of the most recent cases of fraud which highlights the prevalence and extent of White-collar crime. In this case, former ABG chairman Rishi Agarwal was charged with allegation of Rupees 22,842 crore fraud against the State Bank of India and 27 other banks.
Reasons for increasing number of white-collar crime-
There can never be one size fits all kind of an answer as far the reason behind commission of crimes is considered, however it is important for one to understand the primary reasons behind commission of white-collar crimes as at the end of the day this understanding will help us in reducing such crimes. There are numerous and plenty reasons for increasing number of White-collar crimes, major ones are discussed below-
- Detection is difficult- Proving White collar crimes is difficult due lack of evidence, which is indeed due to dominance of white-collar workers and power concentration in the hands of such offenders.
- Technological advancement – As technology is taking leaps, the misuse of it is also prevalent. From fraud and forgery, the world has moved to cybercrimes. Crypto currency, metaverse, credit card fraud, production of shell companies and investment in such companies, health frauds by procurement of fake medical reports, etc. are some offences which are either directly technology related, or use of technology makes their commission easier. Development in the technological field is not itself discouraged but instead development accompanied with safety mechanisms is recommended.
- Financial Security – The offenders of this category are usually high- paid and thus are financially secure, this is a primary reason why they don’t be afraid of being caught. Due to power concentration in the hands of the offenders in terms of connection power, financial power and expert power, a huge advantage is taken from the position which they hold. The misuse of power and money is a big factor which contributes to the ever-growing list of White-collar crimes.
- Lack of international cooperation- Another reason why fugitive offenders and other offenders which commit white collar crime are not punished is because of lack of international cooperation. Fugitive offenders like Vijay Mallya , Nirav Modi etc. are not caught and punished as they escape the country in which they have to face criminal prosecution and reside in some other country where it takes decades to extradite them. International cooperation needs to be attained for speedy trial with the aim to deter other future offenders of the same kind.
- This branch of crime is considered less important and often neglected – they lead to adverse impact on society- Recognition of White-collar crime is relatively new in comparison to other branches of law and hence this is a cause for lack of awareness and implementation of legal provisions. The amount of effect of white-collar crime on society is much more intense than the effect of individual blue-collar offenders or criminals for that matter. Still the importance of realization of this branch of law is not discussed or highlighted. This carefree nature about these types of crimes is the reason why these crimes are not caught in the primary stages only.
- Delay in justice- Delay in speedy trial is present due to lack of cooperation and evidence. However, it is recommended that some mechanism needs to be developed for a speedy trial to prevent such crimes. Also to instill deterrence in the minds of people against such crime needs to be done with the help of speedy justice.
- COVID -19- This situation actually enlarged the arena of white-collar crimes by digitizing even the minute segments of life and giving several reasons, opportunities to the offenders to commit fraud and cybercrimes. Malicious use of technology to lure people is part of the manifesto. Covid-19 also acted as a barrier to inspection and investigation.
- Competition and personal needs triggers extreme steps – The sheer competition prevailing in the world also forces the offender to take such extreme steps in order to survive in the cutthroat competition considering the rise in prices, the rat race and family needs.
- Lack of work ethics among professionals- On assuming power, it is obvious that the professionals often forget the work ethics and indulge in malpractice which is triggered by greed and desire for more power. Hence, professionals must be trained to avoid such evil practices from the grassroots level.
- Lack of literacy and awareness among masses-Illiteracy is one the prominent cause of such crimes. Crimes like credit card fraud, cybercrimes, fake insurance policy etc. can be avoided and reported if the victim is literate. Not only literacy rate (Current literacy rate is 74.04%) plays a role in white collar crimes but also other crimes.
- Weak controlling system- Extensive supervision, surprise inspection and cross-checking of data on record in computers must be done to prevent such crimes in the initial stages. If each level of the system or corporation is supervised, well linked and properly functional then situations of white-collar crimes can be effectively prevented.
- Over ambition and greed- Conditions of life like greed, overambitious, needs of family, personal needs, desire of acquiring power, competition, poverty in early stages, easier commission of such crimes, fear of losing wealth etc. are the psychological conditions which trigger the commission of such offences.
- Desire of acquiring power- The unending desire to acquire power makes the person overambitious and against humanity, forcing him/her to commit such crime. Power is the ultimate reason for commission of crimes and even politics revolve around power.
- Corporate criminals are not considered criminals in the lateral sense in the eyes of the society – media coverage is not vast and not in entirety. These crimes are the least discussed. They are not given the importance at par with the intensity of damage they cause.
- Disparity between different sections of society – Often ill feeling with regards to some section of society is also a reason why people indulge in such practices.
- Lack of enforcement and awareness of legal provisions- There are various legal provisions in the constitution of India which are actually capable of covering most of the white-collar crimes but what backfires is the fact that people are not aware about the provisions and also enforcement, administration of these legal provisions is not place.
Future recommendation and conclusion-
Some stringent actions must be done by the public and government in order to stop the rise in number of white-collar crimes. This rise must not go unnoticed and unattended, focusing on the gravity of the situation, the following recommendation can be made-
- Stringent action to prevent fugitive must be taken.
- Proper implementation of legal framework.
- Strengthening the compliance system.
- Improvement in technology to prevent cybercrimes.
- International cooperation to catch the fugitive.
- Formation of specialized institutions and improvement in the working of the already existing.
- Installing transparency will ensure reduction in corrupt practices.
- Motivating whistle blowers to provide information for quick detection of white-collar crimes.
To wrap, it is extremely important not only for the government and judiciary but also for the public alike to understand the gravity of White-collar crime and enormous amounts of awareness must be spread among masses to reduce the alarming rise in the number of white-collar crimes. Recognition and punitive punishment of white-collar crime is the need of the hour.
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