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White-Collar Crime[1]

Table of Contents

QUESTION BANK

Q.1 What is white-collar crime? What are the causes of white-collar crime?

Q.2 Explain, in brief, various kinds of white-collar crime in India.

Q.3. Define white-collar crimes. What are the main characteristics of white-collar crime?

Q.4. What do you mean by white-collar crime? How is it different from conventional crime?

SHORT NOTES

Q.1 Measure to prevent white-collar crimes,

SYNOPSIS

I] Introduction

I] Definition

1) According to Prof. Sutherland defines white-collar crime as

2) According to Sir Walter Reckless

3) Lord Action has defined white-collar crime as

4) According to Gilbert Geis

III] Characteristics of white-collar crime

1) Committed by persons of high social status

2) More Harmful

3) Committed to greed and not to need

4) Less gravity

5) Public apathy

6) No effective programme

7) Self-invited crimes

IV] Classification or types of white-collar crimes

A) Hoarding and Black marketing and adulteration
B) Tax Evasion
C) White-collar crime in a certain profession

1) Medical profession

2) Engineering

3) Legal Profession

4) Educational institutions

D) White-collar crime in business deals
E) Corruption

Laws to control corruption

V] Difference between white-collar crime and conventional crimes

1) Who does?

2) Detection

3) Impact on society

4) Mens rea

5) Effective law enforcement authority

6) Public vigilance

VII] Anti-white-collar crime legislation in India

VIII] Role of the judiciary

I] INTRODUCTION:-

The Founding father of the concept of White-collar Crime is Edwin H. Sutherland. He focused the attention of criminologists on this area of white-collar crime. Sutherland himself named these crimes as white ‘collar crimes’ in 1941. Even before Sutherland, Albert Morris, in his paper ‘Criminal Capitalists’, asserted that anti-social activities of persons of high status, committed in the course of their profession, must be brought within the category of crime and should be made punishable.

According to Sutherland, besides traditional crimes like robbery, theft, murder, rape etc., (which he calls ‘blue collar crimes), there are some anti-social activities also. The persons of upper strata commit those crimes during their occupation or business (which he named white-collar crime).

According to him, these activities of persons from upper strata for a long time were accepted as a part of the usual business tactics necessary for shrewd professional men to succeed in their profession or business. According to Prof. Sutherland, the basic needs and necessities are the triggering factors in traditional crimes, whereas, in white-collar crimes, it is the basic desire or aspirations. Therefore, some say that people of status commit white-collar crimes not for need but for greed. White-collar crimes are more detrimental to society than conventional crimes. Consequently, we may say that robbers may rob some thousands or lacs from a bank, but the manager may loot the whole bank. One may pickpocket and earn some hundred someday, but corrupt persons earn thousands or lacs daily.

II] DEFINITION:-

We will discuss some definitions of white-collar crimes given by different criminologists.

According to Prof. Sutherland defines white-collar crime as-

“Crime committed by persons of respectability and high social status in the course of their occupation”[2].

According to Sir Walter Reckless–

White-collar crime represents the offences of businessmen who are in a position to determine the policies and activities of the business[3].

Lord Action has defined white-collar crime as-

“Power tends to corrupt, and absolute power tends to corrupt absolutely”.

According to Gilbert Geis–

White-collar crime is an organised crime and can be done only through the cooperation and participation of several persons; hence, this crime can be called ‘corporate crime’ or ‘occupational crime’.

III] Characteristics of White-collar Crime:-

From the following definitions, we may lay down the following characteristics of white-collar crime, viz.

1) Committed by persons of high social status:-

A white-collar crime relates to the upper socio-economic class who violates the criminal law while conducting his profession. Thus, misrepresentation through fraudulent advertisements, infringement of patents, copyrights and trademarks etc., publication of fabricated balance sheets, profit and loss accounts of the business, concealment of defects in goods, money laundering by credit societies, corruption, etc., are some of the instances of white-collar crime committed by businessman, industrialists, directors etc.,

2) More Harmful:-

According to Sutherland, white-collar crimes are more harmful than conventional or blue-collar crimes. It is because the fundamental loss to society from white-collar crimes is far greater than financial losses from burglaries, robberies, etc.,

3) Committed to greed and not to need[4]:-

White-collar crimes are committed for greed rather than need. Conventional crimes are committed for need, but white-collar crimes are commended for greed (since their basic needs are already satisfied).

4) Less gravity[5]:-

The gravity of white-collar crimes is very negligible. Bank robberies cause public attention, but more money laundering by management does not attract that much gravity.

5) Public apathy[6]:-

The general public is less serious about such offences and apathetic towards such offenders. White-collar crimes thrive only due to public apathy.

6) No effective programme:-

There is no effective programme for enforcing criminal law against such white-collar criminals. Moreover, such criminals, being influential, can resist the enforcement of a law against themselves.

7) Self-invited crimes[7]:-

The members of the society themselves contribute to the commission of various white-collar crimes willingly or unwillingly, e.g. people offering illegal gratification to the public servants to get the work done quickly, tax evasion, contributing to black marketing, deposits in credit societies who are offering incredible high-interest rates etc.,

IV] Classification or Types of White-collar Crimes:-

White-collar criminality is a global phenomenon. With the advances in commerce and technology, it increases. Since it is a global phenomenon, its types are also the same. However, we will discuss it with the Indian scenario.

In India, in its report presented in 1964, the Santhanam Committee gave a vivid picture of white-collar crimes committed by persons of respectability, such as businessmen, industrialists, contractors and suppliers, and corrupt public officers.

The Vivian Bose committee was appointed in 1963 to inquire into the affairs of the Dalmia Jain group of companies. The Committee, in its report, highlighted how these big industries indulge in white-collar crimes such as fraud, falsification of accounts, tampering with records for personal gains and tax evasion. Similar observations were noted by Justice M.C. Chagla in big business tycoon Mundra’s case.

From all the above discussions, reports and general practices, white-collar crimes are divided into the following types-

1) Hoarding, Black marketing and adulteration[8]:-

Hoarding, profiteering and black marketing are among the common types of white-collar crimes in India.

The foreign exchange and import-export laws are frequently violated to earn huge profits in import and export trade.

Moreover, the adulteration of foodstuffs, edibles, and drugs is the most dangerous for public health.

The Law Commission has suggested drastic legislation against the above types of offences.

2) Tax Evasion[9]:-

Tax evasion is another type of white-collar crime. The complexity of tax laws in India has provided sufficient scope for taxpayers to evade taxes. The evasion is more in influential categories of persons such as traders, businessmen, lawyers, doctors, engineers, contractors etc.,

3) White-collar crimes in a certain profession:-

White-collar crime is rampant in the following professions-

a) Medical profession:-

Issuance of false medical certificates, helping illegal abortions, unnecessarily prolonging treatment to extract money, etc., are some of the common white-collar crimes adopted by medical practitioners.

b) Engineering:-

Underhand dealings with contractors and suppliers, passing sub-standard work and providing substandard materials, maintenance of bogus records of labourers, etc., are common white-collar crimes adopted in the engineering profession.

c) Legal Profession:-

Some of the common white-collar crimes committed in the legal profession are fabricating false evidence, engaging professional witnesses, violating ethical standards, resorting to frequent strikes to enforce their demands, and adopting dilatory tactics.

d) Educational institutions:-

White-collar crimes are rampant in privately run educational institutions. It has become a business nowadays. Therefore, all sorts of white-collar crimes committed in other businesses are also committed in educational institutions.

Submitting false details to grab more government grants, paying meagre salaries to staff on the signature of more salary slips, fake and bogus student enrolment, recovering huge donations, etc., are some common practices of white-collar crime adopted in educational institutions.

e) White-collar crime in business deals:-

Misrepresentation in advertising, infringements against copyrights and trademarks, unfair labour practices, bribing public officers, and other forms of business dealings are some common examples of illegal business deals.

f) Corruption:-

Corruption is a global phenomenon in government and politics. It results from greed, which is the main reason for it. It is an epidemic found in almost all offices. However, its magnitude differs from office to office. Political corruption includes graft, abuse of public offices, violations of election codes, etc. Many scams, such as the coal mine allotment scams, telephone scams, etc., took place in the UPA government regime.

Corruption includes all forms of dishonest gains in cash, kind or position by persons in government and those associated with public and political affairs. Thus, it includes bribery, corruption and political fraud.

Corruption nowadays has become rampant. India’s citizens have become increasingly aware of the menace of corruption. Therefore, parties like AAP have come into power in Delhi on the agenda of eradicating corruption. Congress, even a national party, is being defeated everywhere due to its previous scam allegations. Corruption, bribery, political fraud, etc., are severe white-collar crimes which need to be eradicated by systematic planning and increasing the moral power of persons. It sometimes involves a syndicate of politicians, officers and criminals.

Laws to control Corruption:-

Prevention of Corruption Act. 1988 exists to prevent crimes, but it has proved inadequate to combat the epidemic of corruption. There are very few cases and very few convictions. However, its success, by and large, depends upon execution machinery.

The mass movement under the leadership of corruption crusader Shri Anna Hazare took place in August 2011 in Delhi to force legislatures to make effective laws against corruption. Due to continuous persuasion, the Lokpal Act of 2014 came into existence. Unlike the Corruption Act 1988, the Lokpal Act 2014 brought the Prime Minister and all other Ministers and senior officers into its purview. It has made provision for the appointment of Lokpal and Lokayukta (Ombudsmen). The jurisdiction of Lokpal and Lokayukta includes all categories of public servants and NGOs (receiving aid from the government or donations from foreign sources). Thus, the Act will prove very important in curbing corruption.

V] Difference between White-collar Crime and Conventional Crimes:-

Following are some of the distinctions between white-collar crimes and conventional, i.e. blue collar crimes or traditional crimes-

1) Who does it?

The privileged class of society does white-collar crimes, whereas the unprivileged class does conventional crimes.

2) Detection:-

By and large, white-collar crimes remain undetected, whereas conventional crimes are detected.

3) Impact on society:-

White-collar crimes cause a greater adverse impact on society than conventional crimes.

4) Mens rea:-

In white-collar crimes, mens rea is not considered a component of a crime, whereas in traditional crimes, mens rea is an important component of criminal liability.

5) Effective law enforcement authority:-

Effective law enforcement agencies and separate courts for white-collar crimes must be established.

6) Public vigilance:-

Public vigilance is a cornerstone of the anti-white-collar crime strategy. Nothing major can be achieved without strong public opinion against white-collar crimes. Public vigilance is very important in the control of white-collar crimes.

VII] Anti-white-collar crime Legislations in India:-

There are several laws in India to curb the menace of white-collar crime. They are as follows-

Sr. No.	Crimes	Acts
1	To curb corruption in public offices	Lokpal Act 2014
2	Illegal Trafficking in contraband goods and smuggling	Customs Act 1962 COFEPOSA 1974
3	Evasion of Excise Duty	Central Excise and Salt Act 1944
4	Cultural object Theft	Antiquity and Art Treasure Act 1972
5.	Money laundering	Foreign Exchange Regulation Act 1973

Thus, several other Acts, including provisions in the I.P.C, Import and Export (Control) Act, 1947, Passport Act, 1920, Copyright Act, 1957, Right to Information Act, 2005, etc., help in eradicating the menace of corruption.

VIII] Role of Judiciary:-

Through its number of judgments, the judiciary has played a vital role in curbing the menace of white-collar crimes in India.

In State of Maharashtra V/s Mohd. Yakub[10]

Supreme Court observed that penal provisions calculated to suppress smuggling activities must be construed liberally, as a narrow construction would defeat the purpose of protecting the nation’s wealth.

Similarly, in the State of Maharashtra, V/s Gorge[11]

Supreme Court denied taking into consideration mens rea while committing white-collar crime.

Supreme Court observed- that the very object and purpose of the Foreign Exchange Regulation Act 1947 and its effectiveness as an instrument for the prevention of smuggling would be defeated if liberal interpretation is given to the Act.

In Tejani V/s Dange[12],

In a case under the Prevention of Food Adulteration Act, the Supreme Court observed that “in food offences, strict liability is the rule regardless of mens rea. If the offender sells any article of food out of the country, contrary to the Act’s provisions, he is guilty. It requires no more argument.”

PIL has also played a significant role in unearthing different scams such as fodder scams, Hawala Scam, Urea Scam, Illegal allotment of Government houses, petrol pumps, Coal scams etc.,

Jayalalitha, the then-Chief Minister of Tamil Nadu, was convicted for a disproportionate assets case in Karnataka; however, the High Court of Karnataka has recently acquitted her of the offences. Om Prakash Chautala, the former Chief Minister of Haryana, has also been convicted for a recruitment scam, and his punishment has been confirmed in the High Court.

Similarly, in Maharashtra, the then Chief Minister Ashok Chavan was one of the accused in the Adarsh Housing allotment scam.

Thus, the judiciary plays a very active role in corruption cases to curb the menace.

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[1] पांढरपेषी गुन्हे

[2] समाजातील उच्चपदस्थ व्यक्तींनी त्यांचे व्यवसाया संबंधी केलेले गुन्हे म्हणजे पांढरपेषी गुन्हे होय.

[3] व्यवसाईकानी केलेले गुन्हे की जे व्यवसाईक त्यांच्या व्यवसायाची ध्येयधोरणे व कार्यक्षमता ठरवित असतात.

[4] लालसेपोटी केलेले गुन्हे

[5] गांभिर्याचा अभाव

[6] समाजाचे औदासीन्य

[7] स्वतः च अमंत्रित केलेले गुन्हे

[8] साठेखोरी काळाबाजार व भेसळ

[9] कर चुकवेगीरी

[10] (1980) 3 SCC 57

[11] AIR 1965 SC 722

[12] AIR 1947 I SCC 167