We have often heard about White Collar Crime, but most of us do not know what it is.
So today in this article we are going to talk about a study on white-collar crime in India.
Understanding white-collar crime in India is really important. As the name says itself, white-collar crime refers to crimes committed by well-educated people belonging to a higher class during their occupation. As a criminologist of great influence in the 20th century and a sociologist as well, Edwin Hardin Sutherland defined White collar crimes for the first time in 1939 as “Crimes committed by people who have a high social status, a great reputation, and a respectable career.”
A white-collar crime differs from a blue-collar crime or ordinary crime, and I have tried to explain this in this article. Crimes committed by educated or professional elites are also known as elite crimes. From the last few years, white-collar crimes have developed into many different types in India, as detailed in this article and how this has grown into socio-economic crime.
Apart from these, there are crimes committed in different professions, such as medicine, education, and law. As discussed in the research article, Indian laws have various legislations that describe how crimes of this type are punished. In conclusion, I will make some recommendations also.
Criminal activities that involve higher class members of society or those who are members of the most reputable groups in society are known as white-collar crimes. Criminal activity committed by these people occurs within the scope of their job. The people who commit this crime usually possess more knowledge about technology, their respective fields, disciplines and so forth.
Crimes related to white collars have evolved rapidly in recent years. Additionally, they may be committed to large organizations that have many functions and activities. Therefore, these crimes are inherently connected to business, commerce, education, and health services. White-collar crimes have partly replaced traditional crimes in the country due to the changes in crime profile over the past few years.
White-collar crime is distinguished from blue crime because the ordinary criminals of blue crime are from the underprivileged section, while the upper class is involved in white-collar crime and it is conducted in a highly organized manner. As long as the crime has not been discovered, they maintain their reputation in society.
Historical Background of White Collar Crime:
- The American sociologist Edwin Sutherland made the first definition of white-collar crime in the global setting. During his employment, he described that people would commit this crime with higher social status as opposed to ordinary criminals.
- Albert Morris stressed the need to shift the emphasis on crime in 1934. As far as he was concerned, anti-Social activities committed by persons of high status in the course of their professions ought to be categorized as crimes and punished.
- As a result of his pioneering work, E. H. Sutherland argued that the ‘ upper-class crime Is committed by people of social standing in their occupations and is now termed White Collar Crime; as opposed to traditional crime which he termed a blue-collar crime.
- The concept of White Collar Crimes was introduced to criminology for the first time in 1941.
India’s white-collar crime
There are several types of white-collar crimes committed in India and to a large extent around the world, such as corruption, fraud, and bribery. In an article of the Business Standard named as ‘The changing dynamics of white-collar crime in India’ reported that the Central Bureau of Investigation (CBI) has identified 6,533 cases of corruption over the last 10 years, of which 517 have been registered over the past two years.
Statistics showed that fake or duplicate PAN cards were used to transact for 4,000 crores in value. There were 999 cases registered in Maharashtra with a rapid increase in the number of online cases. Approximately 3.2 million people suffered losses as a result of YES Bank ATMs managed by Hitachi Payment Systems being hacked and stealing their card details.
A type of white-collar crime known as cybercrime has seen unprecedented growth due to the advancement of commerce and technology. It is easier to commit cybercrimes because there are fewer chances of getting caught or apprehended. Since Transparency International launched its corruption perception index (CPI) in 2005, India’s ranking has improved.
The country was ranked 85th in 2014 but improved to 76th in 2015 due to several measures taken to combat white-collar crimes. In 2018, according to a report in The Economic Times, India has moved up three spots from 2017, placing it at 78th out of 180!
India is a developing country, and white-collar crimes, along with poverty, health, etc., have been major contributors to its underdevelopment. There is a growing trend of white-collar crimes in India that threatens the country’s economic development. To prevent these crimes from becoming a reality, the government needs to adopt strict laws and make sure they are properly applied as well.
Factors contributing to the growth of white-collar crime in India
It is the combination of greed, competition, and the lack of appropriate laws that has led to the rise of white-collar crimes in India.
Greed
Machiavelli was the father of modern political philosophy, and he was a firm believer that men are greedy by nature. According to him, men can forget their fathers’ deaths more easily than losing their inheritances. A similar situation occurs when white-collar crimes are committed. A man who is coming from a high social class and social background, who is financially secure, would commit such crimes, if not out of greed?
Effects that are easy, swift, and long-lasting
New technologies, businesses, and political pressures have introduced new ways for criminals to commit white-collar crimes. As a result of technology, causing harm and loss to someone is also simpler and quicker than it used to be. Additionally, the victim would take time to recover from such crimes because they are much more expensive than murder, robbery or burglary. Competitiveness would be cut down as a result.
Competitiveness
Darwin’s ‘On the Origin of Species’ inspired Herbert Spencer, who coined the term ‘survival of the fittest’ that Darwin used. Therefore, there will always be competition between species, and whoever adapts themselves to the conditions and circumstances will survive.
Laws are not stringent enough
The fact that most of these crimes are facilitated via the internet and digital transfer methods appears to be one of the reasons that laws are hesitant to pursue such cases because investigating and tracking them is difficult. It is difficult to track thefts because they are committed in their homes or offices, making eyewitnesses impossible to find.
Awareness is lacking
White-collar crimes differ from conventional crimes in their nature. The majority of people are unaware of it and do not understand that they are the worst victims of crime.
Necessity
It is also common for people to commit white-collar crimes to satisfy their own and their family’s needs. People of high social status want to get pampered and feed their egos most of all.
The reasons for which the white-collar criminals going unpunished are as follows:
- The people responsible for passing laws and implementing them belong to the same class as those who commit crimes as their profession.
- Often, the police are less willing to invest effort in the investigation, finding it exhausting and difficult, and these baffling searches often fail to yield good results.
- Laws are in such a way that they favour mainly occupational criminals.
- The judiciary has always been criticized for delivering judgments slowly. There is sometimes a situation where the accused has already expired by the time the court delivers the ruling. As a result, criminals have more freedom to commit crimes. As white-collar crimes increase at an accelerated rate, the judiciary must deliver judgements at a faster pace.
How is White Collar Crime is different from Blue Collar or Ordinary Crime
It is generally accepted that white-collar criminals are more intelligent, smart and successful than common criminals, who are lower class in general.
Detecting these crimes is difficult and they are not in any way personal. Ordinary crimes, on the other hand, are sometimes directly personal and very direct. In addition to violent methods, they use force to commit crimes.
Criminals are usually afraid to come into contact with law enforcement after they commit an offence, however, white-collar criminals are not afraid because if they are detected by law enforcement they will be fined, transferred, or for the maximum, they will face a short prison sentence.
Blue-collar crime and white-collar crime differ in that the economic loss of white-collar crime is thousands of times greater than that of ordinary crimes. Financial losses incurred by society are higher when white collars commit crimes compared to those committed by those with low social status.
The reason why White-collar crimes are committed are actually based on greed and are carefully planned and executed on the other hand blue crimes are usually committed from rage, revenge, and other emotions. While in white-collar crime, the victim is injured financially or physically, the victim is hurt physically in blue-collar crime.
Criminals are not the only ones affected by white-collar crimes:
In addition to affecting the criminals, white-collar crime has a significant impact on society as a whole. Because of its direct impact on society, it is also known as a socio-economic crime. An enterprise loses a lot of money when a white-collar crime is committed, which impacts consumers and the general public directly.
From the past few years, a variety of frauds and scams have been exposed in our country. Examples include 2G scams, havala scams, banking scams, fodder scams, among many others. The economy of our country is in a mess as a result of these frauds and scams. Then, to compensate for the losses of fraud or scams, they increase the costs. Taxes, government revenue, and insurance costs will go up, as a result, increasing prices for consumers.
A great deal of damage is done to society by white-collar crime. The securities and insurance markets are not immune from losses, from the costs of commodities to the costs of commodities. There is no such thing as a small financial fraud that cannot affect businessmen, investors, and governments alike. The only thing you need is one bad employee who out of greed for money will commit financial fraud and cause serious damage to the company’s reputation, loss of profits, and financial loss.
White-collar crime in India takes the following forms:
1.Bank Fraud: The term “financial crime” refers to any crime committed with the intention of deceiving and gaining an unfair advantage and the Bank Fraud is a fraud committed mostly on the banks. Fraudulent companies commit it by making false representations.
In addition, it is related to manipulating instruments such as cheques, securities, bank deposits etc. Bank fraud affects the public at large because there is a relationship of trust between banks and the public. White-collar crime is the most prevalent type, along with corporate crime. Both the public and the government of the country are affected.
2.Bribery: is yet another form of white-collar crime that is prevalent. Our definition of bribery involves giving money or goods in return for favours to a person in a position of power. To put it simply, bribery is when one person provides money to another who is in authority.
It is done to force him to do something or of preventing him from doing something. It is the most common source of income for most of the public officials in our country. It is most common in schools and colleges for admission or it is common in between the politicians so that the work gets done.
3.Cybercrime: In terms of these types of crimes in India, cybercrime is the largest contributor. Currently, it is the most prevalent problem in cyberspace. “Cybercrime” is the criminal activity that involves ‘computer networks’. There has been a rapid increase in technology-related crimes due to the rapid advancements in technology.
The perpetrators of cybercrime are those who specialize in computer technology. It is committed directly or indirectly against the victim through the use of the internet, networks, and other technological means to cause harm to his reputation or to harm his physical or mental well-being.
A cybercrime threatens both the security and financial status of the nation as well as the individual. Cybercrime can cause huge financial losses to the country and this can lead to a financial loss as well as a threat to a person’s privacy. Privacy issues can arise if confidential information is revealed.
Even the cybercrime against women is also increasing day by day. Crimes against women are also increasing due to the use of telecommunications networks and mobile phones to conduct cyberstalking or send obscene messages and images. Some examples of cybercrime are as follows:
- Hacking
- Child pornography
- Copyright infringement
- Cyber terrorism
- Cyberstalking
4.Money Laundering: Money laundering is a very popular committed crime in which these white-collar criminals disguise the identity of the money. The criminal tries to conceal the ownership of the money obtained by using illegal means as well as the place from where it came. To make that money appear to have come from legitimate sources, it is necessary to wash it.
In simple terms, money laundering involves showing illegitimate funds as legitimate funds. People who obtain money through black marketing or trafficking illegal goods will be considered dirty goods, and they cannot deposit the money into the banks because it may appear suspicious if they deposit directly into financial institutions since he has to produce statements and records to demonstrate where the money originated. Three steps are involved in money laundering:
- Firstly, the owner of the money must obtain the money through some illegal means and deposit it into a bank in some way.
- The transfer of money is then done through multiple transactions.
- And lastly, they re-inject the money into banks to legitimize it.
5.Tax Evasion: Tax evasion is the concealment of one’s actual taxable income and one’s actual position from the authorities. The purpose of concealing income is to reduce tax liability in the eyes of the government. It is the act of hiding the money obtained from illegal means to reduce one’s tax liability and present a low income to the tax authorities.
Tax evasion harms social values as it demoralizes honest taxpayers, who might wish to do tax evasion themselves. Additionally, it gives economic power to a few undeserving people.
6.Identity Theft: A crime of this kind today is extremely easy to commit. Having access to the personal information of anyone has become very easy due to advances in technology. A criminal commits identity theft when they access unauthorized information such as a name, address, phone number, etc. and use it to gain money. The term identity theft is used to refer to the act of using the identity of another person for fraud or gaining money by illegal means.
Different white-collar crimes committed in India by different professions:
1) In the medical and health field:
- False medical certificates are created by doctors.
- In an attempt to increase the bills, fake and not intended treatments are prolonged.
- A child’s sexual discrimination is based on compulsion by the patient to receive money from the patient party.
- Doctors delay treatment to raise the amount of money they charge.
- Sale of sample medicines that are not allowed by pharmacies.
2) In the field of law:
- Forging documents is a major problem.
- Threatening witnesses from the opposition.
- Violation of ethical standards of the legal profession to make money.
3) In Education:
- Student donations are used to collect large sums of money for admission by collecting this money.
- The admissions process is replaced by donations rather than merit.
- Collect huge amounts of money under the guise of government grants.
Here are a few examples of crimes committed by white-collar people in India:
1.A scandal has arisen concerning Satyam Computer Service Ltd.’s founder and chairmen, who confessed to manipulating his accounts books to defraud investors and shareholders with understated liabilities and overstated assets. The scandal first came to light on January 7, 2009. The total amount was Rs. 14,000 crore.’
The SEBI found him and nine others guilty of fraudulent trade, unfair trade practices, and insider trading. In addition, they were ordered to pay 3000 crores in 45 days and barred from dealing in securities for 14 years. The scam was also considered a major cause of the recession in 2009.
2.Case of Saradha Chit Fund: this was a major scam caused by the failure of a Ponzi Scheme by the Saradha group, which included 20 private companies which were believed to be running an investment scheme by the name of Chit Fund.
They collected 200 billion rupees from the depositors and made sure they received a multiplied sum of money in return in cash or real estate. In addition to international money laundering and political ties, this case was referred to the CBI by the Supreme Court.
3.Nirav Modi, an elite jewellery designer, and his companies colluded with Punjab National Bank officials to acquire guarantees or letters of undertaking for funding buyers’ credit from other overseas banks under the Punjab National Bank scam. The investigation revealed that two bank officers fraudulently issued letters of undertaking to the firms without following the proper procedures.
According to the report, the funds raised from the sale and purchase of diamonds were not used for actual purposes. A total of $1.8 billion was lost to fraud at PNB. India’s banking sector has been subjected to the biggest fraud ever.
4.Harshad Mehta, a stockbroker with a well-known name in the stock market, established his firm in 1990. Previously, investors followed his footsteps blindly. He obtained a large amount of bank credit and acquired scrips at a very high price, thus creating a false market. To make his selfish profit, he misused his name, reputation, and status to manipulate the stock market, resulting in the unnatural pumping of money into the market, causing share prices to rise.
The bank’s money was misappropriated for stock market investments. It falls under the category of money laundering. The amount he earned was Rs 5000 crores. It was a huge scam that resulted in a loss of Rs 1 million per day on the market.
In India, laws prohibiting white-collar crime include:
The government has made various laws to identify white-collar crime. These laws contain punishment for these crimes.
- Companies Act, 1960.
- Income Tax Act, 1961.
- Indian Penal Code, 1860.
- Commodities Act, 1955.
- Prevention of Corruption Act, 1988.
- Negotiable Instrument Act,
- Prevention of money laundering Act, 2002.
- IT Act, 2005.
- Imports and Exports (Control) Act, 1950.
Conclusions and recommendations:
The term white-collar crime refers to crimes that harm the economy of the country as a whole. Among the risks that it poses to the country’s economy are bank fraud, economic theft, and tax evasion. It is not just detrimental to a person or a country’s financial standing, but it is also detrimental to society as a whole.
The various crimes such as bribery, corruption, and money laundering have negatively affected society. There are two surprising characteristics of white-collar crimes: they are not violent, but the criminals have a tendency to gain control or to have a sense of entitlement, and they are committed by people in higher positions.
These crimes, however, are also committed by poorly paid underlings, even if the mastermind behind them could be a rich person enjoying higher social status in their profession. White-collar crimes are usually committed under pressure from colleagues or because of company cultures.
The rate of crime is increasing at a faster pace as our society moves towards modernity and the world experiences new technological advances. There has been a tremendous increase in white-collar crimes, in particular. Throughout the medical profession and educational institutions, these crimes are committed.
Fraudulent activities online are also increasing at an alarming rate. Due to these crimes in general and corruption in particular, India has faced difficulty leading its economy towards growth as a developing nation.
Indian law does not have a proper definition of white-collar crime. Governments should not be lenient toward these socio-economic crimes.
The punishment for White-collar crime should be stricter, as harsh punishment can prevent these crimes to a large extent. The punishment may be extended to life imprisonment if the crime was particularly heinous.
There is a crucial role for the media to play in reducing the rate of white-collar crimes. There has been a finding that many white-collar crimes go unreported. The media could considerably reduce the rate at which white-collar crimes are being committed if it became more active in publishing frauds and scams at higher levels, exposing how people at higher positions in companies abuse their power arbitrarily, making people aware of white-collar crimes and avoiding corrupt practices.
Most of these crimes go unreported because people are unaware of them, so we should also make the public aware of any communication medium available.
The Indian Government should enforce strict regulations against economic thefts in the country.
