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WHITE-COLLAR CRIME IN INDIA


Author: Tanisha Gautam,Institute of Law, Nirma University



“White-collar crime is not new to India. The scale is.” [1]



INTRODUCTION

White-collar crime is usually committed by the rich, powerful and affluent members of the society during the course of their occupation. It is a crime of educated and professional elites resulting in the exploitation of the general mass public. People involved in white-collar crime are spread in all fields of business today. This paper emphasis on how the White-collar has rather become a socio-economic crime.

In 1939, White-collar crime was for the first time coined by Criminologist and Sociologist Edwin H. Sutherland. He defined white-collar crime as one committed by a person of respectability and high social status in the course of his occupation. He also included crimes committed by corporations and other legal entities within his definition.

Today, due to more and advanced access to resources and digital media the rate of white-collar crime is pacing at a fast rate. Moreover, developments in commerce and technology have broadened the scope of white-collar crime to include cybercrime (computer crime), health-care fraud, and intellectual property crimes, in addition to more-traditional crimes involving embezzlement, bribery, conspiracy, obstruction of justice, perjury, money laundering, antitrust violations, tax crimes etc.

The criminals of white-collar crimes are relatively more intelligent, smart and successful as compared with the other ordinary criminals. A large percentage of white-collar crimes go undetected and unnoticed mostly because the illegal money is shared among those high-post officials. White-collar crimes are a huge threat to society as they can cause to incur huge financial losses in the economy.

The Santhanam Committee report for the first time emphasized great importance to the emergence of offences and mal-practices of white-collar crime. This was also acknowledged by the 29th Law Commission report in 1972.[1] The Santhanam Committee in its report put forth that advancement in technology and development in scientific temperament are the major reasons behind the expedite growth of white-collar crimes in India.[2]

WHITE-COLLAR CRIME & BLUE-COLLAR CRIME: DIFFERENTIATION

As opposed to blue-collar crimes, white-collar crimes hold a different meaning. White-collar crimes are not personal crimes. They aren’t targeted towards a particular individual or a group. On the other hand, blue-collar crimes are also known as ordinary crimes are very direct and personal. They are targeted towards a particular individual or a group. These crimes also include violent methods such as using force and coercion to commit a crime.

White-collar crimes are not afraid of the law agencies because of the wonderful ability of them to get undetected most of the times. The identity of the offenders is hidden in such a mind-blowing manner that it becomes a tedious process, trying to oust them. White-collar crimes even if they get detected, are bailable and cognizable. On the other hand, ordinary crimes are usually afraid of the law and law agencies because they tend to get noticed and detected. These crimes can range from being bailable to non-bailable, cognizable to non-cognizable and compoundable to non-compoundable.

The economic loss suffered by the entire country is generally higher in white-collar crimes. The economic loss can cost millions of losses in a matter of seconds! White-collar crimes are committed out of greed and are very well executed. Blue-collar crimes, on the other hand, are committed out of rage, revenge, hatred, jealousy and other heightened emotions.

Most white-collar offenders have huge and massive political connections and sometimes the politicians are themselves involved in the said crimes making it difficult to take any action against such offenders. However, that is not the case with ordinary crimes and offenders.

Another important difference between the two is that in the case of Blue-collar crimes, the elements of Actus Reus & Mens Rea are vital. On the other hand, in White-collar crimes the presence of these elements is unnecessary.


CAUSES OF WHITE-COLLAR CRIMES IN INDIA

In a world where people can stoop to a level as low as pulling out a genocide on a particular caste, they can do anything to satisfy their lust for money, power and fame. There has been a generous amount of surge in the rates of white-collar crimes mainly because of:


GREED – The tremendous amount of gap between the rich and the poor is a result of the fact that the rich want to get richer. People have become power-hungry to the level where they can succumb to any derogatory level to acquire it. Financially stable, secure and affluent individuals are at the right hand of committing white-collar crimes.


LACK OF STRINGENT LAWS – The penal provisions/punishments for white-collar crimes are spread out not in a particular Law but numerous laws. The laws are not strict and stringent so the avaricious individuals get away from the eyes of law smoothly without any fear of sanctions and punishments being charged on them. Most of the white-collar crimes are digitally operated, henceforth, making it a difficult task of getting tracked.


LACK OF AWARENESS – White-collar crimes are executed in a way that the victim/sufferer might fail to understand that he/she has been cheated or has been a victim of fraud. The nature and the character of the white-collar crimes are entirely different from that of the crimes of blue-collar, green-collar, black-collar, etc.


COMPETITION – Another reason for the surge in the rates of white-collar crimes is the level of competition in society today. People want money, respect, esteem and power to make themselves feel self-actualized. There is a competition between the individuals to be the best and survive luxuriously by resorting to illegal, unlawful and unjust modes rather than taking up the moral way.

TYPES OF WHITE-COLLAR CRIMES IN INDIA

The prospect of white-collar crimes in India or all across the world is expanded on a vast platform and is varied. Few types of white-collar crimes are:

BLACKMAILING blackmailing or criminal intimidation as defined by Section 503 of the Indian Penal Code, 1860, is threatening or intimidating someone to cause damage to their body, mind or estate for gaining a monetary advantage or other considerations. Blackmailing can be done in several ways ranging from revealing a secret or sensitive matter to the third person, falsely accusing someone or jeopardizing with their social group. Blackmailing becomes a white-collar crime when, it is done by high official members, affluent business people or someone enjoying higher social-economic status in an occupation or organization.

CYBERCRIME – Cybercrime, the crime of computer network, is another type of white-collar crime that is racing in a land at a really fast pace today. In simpler terms, cybercrime involves the use of computer along with the use of the internet to mock and harass the society. With the rapid advancement in the technology sector cybercrime is adapting to new roles such as property, hacking, child pornography, terrorism, stalking, voyeurism, intellectual property right infringements etc.


BRIBERY – bribery is also a very common type of white-collar crime in India. Bribery means giving a monetary edge or some goods/services to a person at a higher position to get a favor done. Bribery takes place when any public official, foreign officials, bank officials, higher post administrators demands or exchanges something in return for performing his duty which he is bound to perform within the power of his office and when a witness is bribed to make a false statement in the court of law or a false witness is arranged to witness in the court.


TAX EVASION – tax evasion occurs when a person, organization or a corporation intently and deliberately perjures and conceals his/her actual taxable income. This crime is committed to reducing tax liability. Tax evasion crimes include failure to file income tax returns, not providing official and original documents to the government authorities, not providing a PAN card or giving a fake one, giving wrong accounts of income to escape tax liability etc. he offence of tax evasion is punishable under Chapter XXII of the Income-tax Act, 1961,[3] which can impose the heavy amount of fine or even send you to jail.


MONEY LAUNDERING & COUNTERFEITING OF THE CURRENCY - When a launderer, converts his illegal money into legitimate money, and thus succeeds at hiding his illegally earned money, is said to have committed the crime of money laundering. The money launderers do their job in such a manner that not even the investigating agencies can trace the real source of the money. This is how people who invest their black money in the capital market succeed at converting the black money into legitimate wealth. Counterfeiting is a criminal act defined under section 28 of the Indian Penal Code, 1860,[4] where the imitation of something authentic takes place to steal, destroy or replace somebody’s original work. This facilitates gaining profits from illegal transactions and deceiving the public. The crime of using counterfeiting is generally related to coins and currencies and is punishable under section 489B of the Indian Penal Code, 1860.[5]

Other types of white-collar crimes include embezzlement (when a person who has been entrusted with money or property appropriates it for his/her use and benefit), extortion (when one person illegally obtains property from another by actual or threatened force, fear or violence, or under the cover of an official), bank frauds, extortion, forgery, insider trading, fraud, weights and measures, and computer and cellular phone fraud.[6]


HAWALA TRADING – It is an illegal mode of exchanging foreign currency where the currency is traded in the black market. The currency is dealt i.e., purchased and sold by unauthorized dealers. It is an extremely confidential and advanced system which many times lead to big scams. It is essential to note that there is no person who validates the transaction between the two parties. Whoever claims and quotes the unique number to the Hawala Agent shall receive the money. There is no real transfer of monetary assets. The anonymity of this trading makes it easier to execute terrorist activities, money laundering, international mercenary scams, etc.


PONZI/PYRAMID SCHEME - It is a fraudulent investing scheme that promises immensely high rate of returns with minimal risk. These schemes focus mainly on attracting new clients for more investments. The money collected from the new investors is used to pay returns to the old investors. This is an extremely unreliable area of investment as, the new investors if not found will lead to the dissolution of the scheme as there won’t be any funds available for the it to run. The origin of the Ponzi scheme dates way back to the year 1919. The Ponzi scheme is named after Charles Ponzi. He was known for his deception to convince people to invest their money. Charles Ponzi is recorded to have run the first-ever Ponzi scheme.[7]


WHITE-COLLAR CRIMES IN DIFFERENT PROFESSIONS

White-collar crimes are to be considered as a global phenomenon, present in every country and every field of the profession at some scale. The dynamic of white-collar crime isn’t limited to business particularly but it is present in other professions as well at a massive scale. Different professions in which white-collar crime is present are:


LEGAL PROFESSION - the urge of minting more and more money make legal practitioners resort to unethical, illegal and immoral services. Legal practitioners present false evidence, forge documents, fake witnesses in the court of law. Legal practitioners with fairly strong ministerial and government support indulge in these wrongdoings. Many times, just because of this conduct, the innocent is sent behind the bars whereas the real accused is left free on the streets. A large number of evolved advocates are forgetting the pious oath of serving society and creating a protective shield around the violators of the law.


MEDICAL PROFESSION - the medical practitioners are often found involved in the issuance of false certificates, carrying out illegal abortions, selling out sample drugs and medicine, even in some cases adulterated drugs and medicines to the patients to extract a huge amount of money. Crime in the medical profession also includes illegal sex determination of the fetus, delayed and deliberate prolonged treatment by the doctors to increase the fees.


EDUCATION – The education sector is getting degraded and downgraded each passing day. When the private sector is concerned on looking for different ways of getting money out of the pockets of student’s families and not so concerned on the quality of education, says a lot about where the scene is headed to. Collecting the huge amount of money in the name of donations, giving admissions on a donation basis, leaking question papers, and procuring students to appear in the examinations based on manipulated eligibility certificates are some examples of white-collar crime in the education sector. In the government intuitions, teachers, administrators and guides are not concerned about the student’s future but themselves. There have been proven instances in the case of both private and government institutions engaging in malfeasance and misfeasance exercises.


CORPORATE - The major role in committing white-collar crimes are played by the business tycoons and politicians. One will notice that any major scam or fraud is backed up by the help of a politician or any political party. They are termed as the corporate criminals who more often than not, are involved in illegal contracts, combination and conspiracies of trade restraints, unfair labour practices, selling of adulterated foods and drugs, bribing of public officials so on and so forth.


IT & ENGINEERING – in IT sector, cybercrime is prevalent on a massive space leading to digital frauds. Engineers, are often found to be involved in malpractices like providing substandard works and materials are being used for the construction of buildings, bridges, dams and roads, and also not maintaining the records or maintaining bogus records. They financially earn more for their low-grade works from the contractors, than they can earn for the genuine work, leading to playing dangerously with the lives of people at large.


CASES OF WHITE-COLLAR CRIME IN INDIA


HARSHAD MEHTA SCAM CASE – The Harshad Mehta scam shocked the entire nation and economy. He took the advantage of the loopholes of the banking system. He started from obtaining fake Bank Receipts from small banks; these receipts were further handed over on to the other banks as security to obtain cash. This resulted in a surge in the prices of stocks in the stock market, impacting the economy’s progress. Approximate amount of Rs. 5000 Crores was involved. This is one of the major scams of manipulation of accounts and providing false information.


SARADHA CHIT FUND CASE – The Saradha Group financial scandal was a major financial scam and alleged political scandal caused by the collapse of Ponzi scheme run by Saradha Group, a consortium of 200 private companies that were believed to be running collective investment schemes popularly and wrongly referred to as Chit Fund. The group collected around ₹200 to ₹300 billion from over 1.7 million depositors,[8] promising a multiplied hefty sum in return in the form of cash or real estate and other assets. SEBI barred Saradha Realty India and its managing director Sudipta Sen from the securities market. Many prominent personalities were arrested for their involvement in the scam including two Members of Parliament- Kunal Ghosh, Srinjoy Bose, former West Bengal director general of police- Rajat Majumdar, a top football club official Debabrata Sarkar, Sports and Transport minister in the Trinamool Congress government Madan Mitra.[9]

HDFC BANK CASE - An employment fraud by a consulting firm on HDFC Bank was recently unveiled under an internal investigation conducted by the Bank. The consultancy agency had pulled off the fraud by puffing up resumes of candidates through forged documents, along with falsified salary slips, forged certificates and documents, as well as non-existent references.

ABDUL KARIM TELGI CASE – He was a convicted Indian counterfeiter. He earned money by printing counterfeit stamp paper in India. To protect himself from the eyes of the law, he got fake medical certificates made by two doctors, K.H. Jnanendrappa and K.M. Channakeshava (Karnataka), to help him get bail on the ground of health issues. Therefore, under the Prevention of Corruption Act, 1988 they both were held liable with 7 years’ imprisonment and with a fine of 14 lakh rupees each.[10] This is clear evidence of a white-collar crime in the medical sector.


CST BRIDGE COLLAPSE CASE – In this case, a total of 6 engineers and the chief engineers of Bombay Municipal Corporation were held liable for their reckless and negligent act that led to the death of 7 people and injured 35 others. The first to be arrested in the case was structural auditor Neeraj Desai who certified that the bridge was in "good condition", followed by SF Kakulte, who was arrested and produced in court. Kakulte was remanded to police custody on grounds that the police wanted to recover some important documents about the bridge's audit and also to verify if Kakulte had made some financial gains during this period. The police investigation has proved that BMC officers showed negligence in performing their duties and had no records of any inspection or supervision. The probe has found that BMC officials were not even present on site when the bridge was being audited or repaired.[11]


ABHAY SINGH CHAUTALA VS. CBI[12]- When the Central Bureau of Investigation (CBI) initiated its investigation, it was found that the father of the appellant had acquired huge properties and the same as the case with the appellants. The High Court held that the appellant had provided a different office(s) of the accused than they were holding at that time. Thus, the sanction under Section 19 of the Prevention of Corruption Act, 1988 was held to be without any merit.


LAWS AND LEGISLATION RELATED TO WHITE-COLLAR CRIMES IN INDIA

In India, although, there are various laws present to deal with white-collar crimes, there isn’t a particular law and legislation that solely deals with them. However, these regulations are still flawed facilitating the offender to escape from punishment for his crimes. Strict legal actions and frameworks with suitable penalties and provisions should be made and those laws that are flawed by means should be amended. Various laws and legislations dealing with curbing white-collar crimes in India are:

· Companies Act, 1960.

· Income Tax Act, 1961.

· Indian Penal Code, 1860.

· Prevention of Corruption Act, 1988.

· IT Act, 2005.

· Prevention of Money Laundering Act, 2002.

· The Negotiable Instrument Act, 1881.

· Imports and Exports (control) Act, 1950.

· Commodities Act, 1955.


Along with strengthening the laws, other measures such as adequate training of the officials should be provided, the youth instead of a bunch of elderly people, patriarchs and geriatrics should be hired on a large extent. The judiciary should arrange for more tribunals and fast-track courts. Moreover, spreading more and more awareness, using digital technology for a credible role instead of frauds and scams should be on the front line. Criminal liability should be made absolute.

CONCLUSION

White-collar crimes are not only prevalent in India, they are present globally. These crimes impact the base of a society in a highly negative way. They affect the country on a social, economic and political level. These crimes degrade the faith, hope and trust of the members in the society. Money-laundering, scams, tax evasions, counterfeiting of the currency will impair the GDP of the country, failing to boost up the economy. Crimes in the legal sector build a sentiment of distrust and mistrust in the minds of people. Crimes in the legal sector clear the way for the offender to sail through and shatters the life of the victim. When the law protectors for their greed and reputation follow the wrong path of evil conduct, the conscience of the society is bound to leap.

It has been noted that most of the white-collar crimes go unreported. So, if the media becomes more active towards publishing frauds and scams at higher levels and revealing how do the people at a higher position in a company use their powers and also make efforts in making people aware about the white-collar crimes, and avoid corrupt practices, then this would help in reducing the rate at which the white-collar crimes are being committed. Though the phenomena of white-collar crimes existed in society for decades, it is not easy to curb and eliminate it once and for all. Getting the society out of the clutches of these crimes is going to require years of practice. It is unity against mal-practices and corruption that will bring the change.



REFERENCES

http://indianresearchjournals.com/pdf/IJSSIR/2012/September/16.pdf

https://blog.ipleaders.in/white-collar-crimes/#Recent_white_collar_crime_cases_in_India

https://www.business-standard.com/article/economy-policy/white-collar-crime-losses-from-frauds-rise-80-from-last-year-says-survey-119120401652_1.html

https://shodhganga.inflibnet.ac.in/bitstream/10603/129394/19/19_summary.pdf

https://legodesk.com/legopedia/white-collar-crime-cases/

[1] https://lawcommissionofindia.nic.in/1-50/Report29.pdf [2] Report by Santhanam Committee [3] Income Tax Act, 1961 [4] https://indiankanoon.org/doc/1133131/ [5] https://indiankanoon.org/doc/1926477/ [6] https://blog.ipleaders.in/white-collar-crimes/ [7] https://cleartax.in/g/terms/ponzi-scheme [8] 1 Ayushi Pandit, Top White Collar Crime Cases, Lego Desk (Jan. 18, 2020) https://legodesk.com/legopedia/whitecollar-crime-cases/#_ftn8 [9] https://www.business-standard.com/about/what-is-saradha-scam [10] https://thewire.in/government/abdul-karim-telgi-stam-paper-scam [11] CST bridge collapse case https://www.bloombergquint.com/politics/cst-foot-over-bridge-collapse-mumbai [12] Abhay Singh Chautala vs. CBI https://indiankanoon.org/doc/1342360/https://blog.ipleaders.in/white-collar-crimes/#Recent_white_collar_crime_cases_in_India

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