CRIMINOLOGY

Date: 28/11/2016

WHITE COLLAR CRIMES

Submitted to: Mr. Hakim Yasir Abbas

Submitted by: Mohammad Sabir
LLM, 1st Year 1st Sem
Table of Contents

 ACKNOWLEDGMENT
 LITTERATURE REVIEW
 HYPOTHESIS
1. INTRODUCTION
 DEFINITION OF THE TERM ‘’CRIMINOLOGY’’
 Understanding The Nature And Scope of “ CRIMINOLOGY “
 The Modern Criminology
 Overview of CRIMINOLGY
 BIRTH OF WHITE COLLAR CRIMES
 WHITE COLLAR CRIMES Definitions.
 Understanding the definitions of WHITE COLLAR CRIMES.
 Difference between Traditional Crimes and White- Collar Crimes
 Limitation the term of “ White-Collar Crime”
 White Collar Crime Worldwide (Statistical Data)

2. TYPES OF WHITE COLLAR CRIMES

 Elaborated Details on common types of White Collar Crimes
 Reasons for the growth of white collar crimes

3. WHITE COLLAR CRIMES IN INDIA

 Hoarding, Black Marketing and Adulteration
 Tax-Evasion
 Main reasons for White Collar crimes in India
 Corruption in Politics
 Corruption in Government
 White Collar Crimes and Indian Laws (Legal Framework)

4. JUDICIAL TRENDS (Role of the Judiciary)

 Cases showing examples of White Collar Crimes
 Recent Cases and Case Laws

5. ANTI-WHITE COLLAR CRIME LEGISLATION: Problem Of Enforcement

 Why many white collar criminals go unpunished?
 REMEDIAL MEASURES
 Forty Seventh Law Commission
 Suggestions

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 6. CONCLUSION

Table of Cases
I. M.H.HOSKOT v. STATE OF MAHARASHTRA
II. Murlidhar Meghraj loya vs State of Maharashtra
III. State of Maharashtra V. Mohd Yakub
IV. State of Maharashtra V Mayer Hans George
V. Pyarali K.Tejani V Mahadeo Ramchandra Dange
VI. J. Jayalalitha V. Union of India
VII. Govt. of A.P V. P.V Reddy
VIII. R.K Garg V. Union of India
IX. Lily Thomas V. Union of India
X. Sebi vs. Burman Plantation & Others on 1 August, 2013
XI. Abhay Singh Chautala V. CBI
XII. Binod Kumar Vs. State of Jharkhand

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 ACKNOWLEDGMENT

Working on this project of “White Collar Crimes” was a source of immense

knowledge to me. I would to express my sincere gratitude to Mr. Hakim Yasir
Abbas for his guidance and valuable support throughout the course of this
project work. I acknowledge with a deep sense of gratitude, the encouragement
and inspiration from our faculty members and classmates.

MOHAMMAD SABIR

3
Literature review of white collar crime

In light of the previous stated definitions of “White collar crime” we can deduce that
these are a special kind of crime committed by high status people. We can see that white
collar crime are not potential danger to the property and body of a person in terms of
violence but rather white collar crime are differently disadvantageous.

In my view, “white collar crime” do not necessarily include a guilty mind or means rea and
presumption of innocence. This kind of crime can be considered as a social disadvantage for
people since it involves only money gain to people committing it. White collar crimes are on
high rise because of the level increase of corruption in our present society. Since India has rate
of corruption, the level of white collar crime is elevated here. However, we cannot neglect
neglects that any country of the world is not spared to “white-collar” crimes regulation or public
welfare offences rather than true crimes.

These crimes are committed by productive, social and economic conduct, not because of its
wrong nature but ultimately because of the fidelity of the long-discrete class based view of the
society.

As we can see, in India “white-collar” crimes are mostly committed in the field of professionals
like engineering, law field, medical field etc.…

The spread of “white-collar” crimes are increasing day by day like a fire in every sphere and
aspect of our society, they are present in all socio-economic field and not much are being done to
eradicate them.

The study of white collar crimes was prompted by the view that criminology had incorrectly
focus on the social and economic determinants of crime of such family background and level
wealth.

White-collar are developing in the commercial nexus as well as in our legal system. Nowadays
lawyers, judges and magistrates in terms of interpreting the laws attracts a protective shield for
goons. It is a shame when White Collar Crimes are committed by the state responsible who
claim to ensure justice and equality in our nation.

Taking India in consideration

However, India should at all cost put a bar on the rise of “white-collar” crimes to bring a more
stabilized and effective rise to its economic growth. We can see that a decrease of FDI give a
clear indication for fraud outflow of funds from the country which is largely disadvantageous.

Even if the Indian society, people do not highlights the importance of white collar crimes as such
since those crimes are not visible to the people directly. White collar crimes have more adverse
effect on the society but since its commission and effect have a long time span in between, those
crimes go almost undetected. White collar crimes having no particular target makes them
difficult for the normal people to see it. But the long adverse effect on these crimes puts a decline
in the country’s economic and financial resources.

However, there have been a lot of cases of white collar crimes in India, whereby people using the
power of their position to commit these offences.

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It could be said that both the Indian government, private sectors and stakeholders should
together help in eradicating this kind of crime.

And as well as, the public should not focus on the impact of what it causes but rather to the
grassroots level that has given rise to the existence of a white-collar crime.

“Prevention is better than cure” and hence not just the state responsible but each and every
individual should give a helping hand to normalize the situation.

HYPOTHESIS

1. Define white collar crimes. Are there any limitations to the usage of the
term?
2. Is white collar crime in any way related to traditional crime? If so, how?
3. Is white collar crime in any way related to blue collar crime? If so, how?
4. What should be done to eliminate or reduce the rate of White Collar
Crimes?
5. Are there any remedial measure to lessen white collar crimes?
6. Is the Government only responsible for the high increase in white collar
crimes?

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 CHAPTER 1
Introduction

DEFINITION OF THE TERM ‘’CRIMINOLOGY’’

Criminology is a branch of criminal science which deals with crime causation, analysis
and prevention of crime. Criminology as a branch of knowledge is concerned
with those particular conducts of human behavior which are prohibited
by society. It is, hence, a socio-legal study which seeks to discover the causes of
criminality and suggests the remedies to reduce the rate of crimes in the society.
Therefore, it can be said that criminology and criminal policy are interdependent and
they mutually support to each other. Therefore, criminology seeks to study the
phenomenon of criminality in its whole.

Understanding The Nature And Scope of “ CRIMINOLOGY “

Criminology is an inter-disciplinary field of study, involving scholars and
practitioners representing a wide range of behavioral and social sciences
as well as numerous natural sciences. Sociologists played a significant role in the
definition and development of the field of study and criminology to emerge as an
academic discipline housed in sociology programs. But, with the establishment of
schools of criminology and the proliferation of academic departments and programs
concentrating specifically on crime and justice in the last half of the 20 th century, the
criminology emerged as a separate professional field with a broad, interdisciplinary
focus and a shared commitment to proliferating knowledge through systematic research.

The Modern Criminology

In recent years, there seems to have been an alteration of criminological views regarding
somewhat skeptical question of criminal accountability. Modern critics attack the
traditional criminological view on the basis that their search for characteristic
differences between the class of criminals and the class of non-criminals rests upon
erroneous assumption.

As Michael Phillipson deeply observes that to take crime out of its social context and
to try to explain it as a product of physical characteristics or mental deficiencies is a
myth. 1He briefed his criticism of traditional criminology by suggesting that it consists
four false assumptions, namely,

1. That there are universal causes of crime;

1
Michael Phillipson Observation

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 2. That the human population can be divided into two groups, criminals and non-
criminals;

3. That crime can be located by the study of individual criminals; and

4. That the official statics are indication of trends in crime.

Modern criminology attributes societal reasons for general criminality and suggests a
pragmatic approach to the resolution of the problem.
The advocates of modern criminology firmly believe and affirms that distinction
between criminals and non-criminals is the direct outcome of a mistaken notion of
labelling certain individual offenders as criminal types. Modern criminologists
prefer to identify the criminal with a particular social type who has been a
victim of well-known inequalities between social classes, private wealth,
private property, social power, and life chances. Hence it can be said that there
is nothing like as suggested by traditional criminologists. The modern criminologists
have succeeded in substituting the traditional belief regarding crime causation by social
deviance as a cause of criminal behavior.

Overview of CRIMINOLGY
“Criminology is a socio-legal study which seeks to discover the causes of
criminality and suggests the remedies to reduce crimes.”

The principles of criminology serve as effective guidelines for formulation of penal

policy. Criminology is an inter-disciplinary field of study, involving scholars and
practitioners representing a wide range of behavioral and social sciences as well as
numerous natural sciences.

A school of criminology means ―the system of thought which consists of an

integrated theory of causation of crime and of policies of control implied in the theory of
causation. Pre-classical, classical, neo-classical, positive, clinical and sociological schools
of criminology can be traced down through the development of criminology. The pre-
classical school was dominated by the spiritual mysticism.

The pioneer of Classical school, Beccaria, expounded his naturalistic theory of

criminality by rejecting the omnipotence of evil spirit. He laid greater emphasis on
mental phenomenon of the individual and attributed crime to free will and consent of
the individual. The classical writers accepted punishment as a principal method of
infliction of pain, humiliation and disgrace to create the element of ‘’fear” in man to
control his behavior. This school, however, considered prevention of crime more
significant than the punishment for it. Still, this classical school had some shortcomings.

The neo-classists affirmed that some categories of offenders such as minors, idiots,
insane or incompetent had to be treated leniently in matters of punishment irrespective
of the similarity of their criminal act because these persons were incapable of

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appreciating the difference between right and wrong. This tendency and theory of neo-
classists to differentiate criminals according to their mental depravity was undoubtedly
a progressive step as well it highlighted the need for changing the classical view. Hence,
the contribution of neo-classical thought to the science of criminology has its own
merits.

Positive School tried to find criminality in the physical characteristics of criminals.

Lombroso adopted an objective and empirical approach to the study of criminals
through his anthropological experiments. The greatest contribution of positive school to
the development of criminal science lies in the fact that the attention of criminologists
was drawn for the first time towards the individual, that is, the personality of criminal
rather than his act (crime) or punishment.
The theory of modern clinical school on the side of criminologists presupposes
offender as a product of his biological inheritance conditioned in his development by
experiences of life to which he has been exposed from infancy up to the time of the
commission of crime.
The recent sociological school of criminology seeks to assess the real causation of
crime in social environment. Sociologists, however, carried their researches and
attempted to co-relate variations in crime rate to changes in social organization. They
successfully established that other factors such as mobility, culture, religion, economy,
political ideologies, density of population, employment situations, etc., have a direct
bearing on the incidence of crime in a given society.

Finally, however, the modern criminologists prefer to identify the

criminal with a particular social type who has been a victim of well-
known inequalities between social classes, private wealth, private
property, social power, and life chances.
 BIRTH OF WHITE COLLAR CRIMES
Due to the advancement of science and technology newer form of criminality known
as white collar crime has arisen.
The concept of white collar crime was introduced in the field of
‘Criminology’ by Edwin H. Sutherland in 1939 . The Indian Penal Code was
enacted in 1860.
The word white collar crime is not mentioned anywhere in the Code. However, the
dimensions of white collar crimes are so wide that after analyzing the provisions of
Indian Penal Code 1860 we may conclude that certain offences under Indian Penal
Code are closely linked with white collar crimes such as corruption, bribery,
counterfeiting of coins and government stamps, offences relating to weights and
measures, adulteration of food stuffs and drugs, misappropriation of property,
criminal breach of trust, cheating and dishonesty inducing delivery of property,
forgery, etc.

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After analyzing relevant provisions we may conclude that even though Indian Penal
Code was enacted in 1860 and though it has been amended here and there but its main
structure has continued intact during the last 154 years. It is an admirable compilation
of substantive criminal law and most of its provisions are as suitable today as they were
when they were formulated.
But the social and economic structure of India has changed to such a large extent that in
many respects the Code does not really fulfills the needs of the present day. It
is dominated by the nation that almost all major crimes consist of offences against
person, property or State.

However, the Penal Code does not deal in any satisfactory manner with acts which
may be described as white collar crimes having regard to the special circumstances
under which they are committed and which have now become dominant feature of
certain powerful sections of modern society. The punishment prescribed for white
collar crimes under Indian Penal Code, 1860 are proving inadequate.

CONSTRUCTION OF THE HARMONIOUS BRIDGE

The specific Acts dealing with white collar crimes and the provisions of Indian Penal Code
should be harmoniously interpreted to control the problem of white collar crimes. The
provisions of Indian Penal Code dealing with white collar crimes should be amended in such a
way to enhance punishment particularly fine in tune with changed socio-economic conditions.

Defining the term WHITE COLLAR CRIMES.

White collar crime is a term that was first used by a sociologist in 1939 to describe criminal
activity by members of the upper classes in connection with their professions.
His point was that this type of crime was barely acknowledged by the criminal justice system
and rarely prosecuted.
Today, the most common definition of white collar crime now no longer focuses on the
social status of the offender but rather on the type of conduct/behavior which is involved:

 Illegal acts using deceit and concealment to obtain money, property, or services, or to
secure a business or professional advantage.

Within the field of criminology, white-collar crime has been defined by Edwin
Sutherland as "a crime committed by a person of respectability and high social
status in the course of his occupation"2
 SUTHERLAND was a proponent of Symbolic Interactionism, and believed that
criminal behavior was learned from interpersonal interaction with others. White-
collar crime thus overlaps with corporate crime because the opportunity for fraud,
bribery, insider trading, embezzlement, computer crime, and forgery is more
available to white-collar employees.

2
Sutherland Definitions (1949).

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Generally, however, white collar crime is defined as”violation of the law committed by
a person or group of persons in the course of an otherwise respected and
legitimate occupation or business enterprise.”3

Sutherland’s Concept of White Collar Crimes. (in figure 1.1)

Crimes by Crimes for

high status Organizations
people

White-collar
Crimes

Crimes against
Organizations

The figure 1.1 illustrates the overlap of (at least) three different types of misbehavior
(crimes). The first refer to any crime committed by a person of high status (whether or not
in the course of their occupation); second to crime committed on the behalf of
organizations (by people of any status); and third to crimes committed against
organizations (whether or not these are carried out by people working in the same
organization, another organization, or no organization at all).
Sutherland focuses on that area of overlap in which people of high status use
organizations to commit crimes for their organization against workers, consumers or
other organizations including competitors and the government. But whatever, there may
be in common among the offences highlighted by this focus, it is probable that, for each of
the 3 types misbehavior on which his definition draws, there will be even more in common
between the behavior which fits into his central category and other examples of behavior
of the same types which fall outside his definition. This creates a continual tension in crime
to develop typologies of white collar crime.4

Understanding the definitions of WHITE COLLAR CRIMES

The term “white collar crime” means different things to different disciplines, as well as
to different camps within those disciplines. Unfortunately, professionals within an

3
James W. Coleman, 1989
4
Oxford Handbook of Criminology Maguire(M) & ETC

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environment where there is general consensus about the term’s meaning do not always
clearly specify what they mean by the label/term of “white collar crime.”
However, this can lead to confusion and (sometimes vigorous) disagreement when they
interact with larger audiences that might contain a number of different understandings
of the term. It is therefore very significant, when understanding and discussing white
collar crime, to more closely examine and view what different people mean by it.
Generally, these definitions tend to concentrate on:
-the characteristics of the offender (such as high social status) and/or the
characteristics of the crime (such as crimes occurring within the scope of one’s
employment).
In the late nineteenth and early twentieth centuries, the theoretical constructs used by
sociologists to understand crime focused on it as a problem of poverty and of personal
characteristics believed to be associated with poverty (such as broken homes, mental
illness, association with criminal subcultures, and living in slum housing).

‘’One of the most influential of those theories, Anomie Theory, is still in general use (in
various forms) today, and was put forth a year before the introduction of the concept of white
collar crime. 5It holds that in a society where members are taught to value attaining certain
goals (such as wealth), but the means to achieve those goals are unevenly distributed, those
without access to the societally prescribed means are put under considerable pressure to find
other ways (including crime) to achieve those goals. In short, the theory holds that crime is a
symptom of some members of society not having the tools to achieve what their society defines
as success.’’

The sociologist Edwin Sutherland coined the term “white collar crime” in
a speech given to the American Sociological Society in 1939.
While he gave no formal definition of the term in the speech, he would
eventually define white collar crimes as “crimes committed by a person of
respectability and high social status in the course of his occupation.” 6

This offender-based (and crime-based) definition was well-suited to the tasks to which it
was put, serving to give sociologists a way to label and talk about offenses committed by
successful, healthy people who had ample access to societal resources and who were
members of respectable society

 A concept that was out of synch with the prominent sociological theories of the day.
Sutherland’s contribution expanded the discussion to include illegal deviance
perpetrated by those who had the tools to achieve the goals that their society taught
them to desire, and had, in fact, already used them to that effect .

One notable aspect of Sutherland’s conception of white collar crime is that he explicitly
rejected the notion that a criminal conviction was required in order to qualify.
Sutherland saw four main factors:
5
Robert K. Merton, Social Structure and Anomie, 3 AM. SOCIOLOGICAL REV. 672 (1938), available at
http://www.jstor.org/discover/10.2307/2084686?uid=3739968&uid=2133&uid=2&uid=70&
uid=4&uid=3739256&sid=21102625935857.
6
EDWIN H. SUTHERLAND, WHITE COLLAR CRIME: THE UNCUT VERSION (1983) (the censored first edition came out
in 1949).

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 civil agencies often handle corporate malfeasance that could have been charged as
fraud in a criminal court,
 private citizens are often more interested in receiving civil damages than seeing
criminal punishments imposed,
 white collar criminals are disproportionately able to escape prosecution “because of
the class bias of the courts and the power of their class to influence the
implementation and administration of the law,” and
 White collar prosecutions typically stop at one guilty party and ignore the many
accessories to the crime (such as when a judge is convicted of accepting bribes and
the parties paying the bribes are not prosecuted).

A related concept that again focuses on the offender is “organizational crime”—the idea
that white collar crime can consist of “illegal acts of omission or commission of an
individual or a group of individuals in a legitimate formal organization in accordance
with the operative goals of the organization, which have a serious physical or economic
impact on employees, consumers or the general public.” 7

While these definitions were vital for expanding the realm of sociology and criminology,
they were not as well-suited to the needs of other criminal justice stakeholders who dealt
with these issues in a more practical sense (including policymakers, law enforcement,
and the legal community).

NOTE : These definitions are geared for asking why white collar crime
occurs or who commits it, but they are not as well-suited to asking
questions about how much white collar crime is occurring, or whether
prevention methods are working.

A model of white collar crime that leant itself somewhat more too empirical data
analysis was Herbert Edelhertz’s 1970 definition: “An illegal act or series of
illegal acts committed by nonphysical 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.”8
As a crime-based definition, it ignored offender characteristics and concentrated
instead on how the crime was carried out. As a result, it covered a far larger swathe of
criminality—including crimes (or other illegal acts—Edelhertz’s definition also reaches
to acts that are prohibited by civil, administrative, or regulatory law, whether or not the
perpetrators are ever called to answer for them) perpetrated outside of a business
context, or by persons of relatively low social status.
7
Laura Shill Schrager & James F. Short, Toward a Sociology of Organizational Crime, 25 SOCIAL PROBLEMS 407, 11–
12 (1978).
8
HERBERT EDELHERTZ, THE NATURE, IMPACT AND PROSECUTION OF WHITE-COLLAR CRIME 3 (1970), available at
https://www.ncjrs.gov/pdffiles1/Digitization/4415NCJRS .pdf. For various ways in which white collar crime has
been manifested today, see G. Robert Blakey & Michael Gerardi, Eliminating Overlap or Creating a Gap? Judicial
Interpretation of the Private Securities Litgation Reform Act of 1995 and RICO, 28 NOTRE DAME J.L. ETHICS & PUB.
POL’Y 435 (2014) (discussing the intersection been the Racketeer Influenced and Corrupt Organizations Act with
federal securities law and white collar crime); see also Cynthia A. Koller, Laura A. Patterson & Elizabeth B. Scalf,
When Moral Reasoning and Ethics Training Fail: Reducing White Collar Crime Through the Control of Opportunities
for Deviance, 28NOTRE DAME J.L. ETHICS & PUB. POL’Y 549 (2014).

12
Edelhertz identified four main types of white-collar offending:
 Personal crimes (“crimes by persons operating on an individual, ad hoc basis, for
personal gain in a non-business context”9)
 Abuses of trust (“crimes in the course of their occupations by those operating inside
businesses, Government, or other establishments, or in a professional capacity, in
violation of their duty of loyalty and fidelity to employer or client” 10),
 Business crimes (“crimes incidental to and in furtherance of business operations, but
not the central purpose of such business operations” 11), and
 Con games (“white-collar crime as a business, or as the central activity of the
business”12).

The FBI, when it specifically addresses white collar crimes (nowadays, it usually
references “financial crimes” instead)13, uses a very similar definition:

Those illegal acts which are characterized by deceit, concealment, or violation of trust
and which are not dependent upon the application or threat of physical force or
violence. Individuals and organizations commit these acts to obtain money, property,
or services; to avoid the payment or loss of money or services; or to secure personal or
business advantage.
This has been operationalized by the FBI’s Criminal Justice Services
Division to mean the Uniform Crime Report (UCR) offences of fraud,
forgery/counterfeiting, embezzlement, and a rather longer list of National
Incident-Based Reporting System (NIBRS) offenses.

Thus, while this definition and Edelhertz’s are very similar, the FBI’s definition
functionally excludes non-criminal illegal activity, as well as such incidents as are not
reported to police, and such incidents as don’t fit into a relevant UCR or NIBRS category
(for those jurisdictions that participate in NIBRS). On the other hand, the FBI’s

9
Id. at 19.
10
Id. at 19.
11
Id. at 20
12
Id. at 20
13
While the FBI has a white collar crime webpage, the crimes listed on it are various forms of fraud. However,
these crimes are actually worked by the Financial Crimes Section. See White Collar Crime, FED. BUREAU OF
INVESTIGATION, http://www.fbi.gov/about-us/investigate/white_collar.
The FBI focuses its financial crimes investigations on such criminal activities as corporate fraud, securities and
commodities fraud, health care fraud, financial institution fraud, mortgage fraud, insurance fraud, mass marketing
fraud, and money laundering. These are the identified priority crime problem areas of the Financial Crimes Section
(FCS) of the FBI. While they do not give an explicit definition of the term “financial crime,” they do say, when
talking about financial crimes, that “these crimes are characterized by deceit, concealment, or violation of trust
and are not dependent upon the application or threat of physical force or violence. Such acts are committed by
individuals and organizations to obtain personal or business advantage.” See FED. BUREAU OF INVESTIGATION,
FINANCIAL CRIMES REPORT TO THE PUBLIC FISCAL YEARS 2010–2011, available at http://www.fbi.gov/stats-
services/publications/financial-crimes-report-2010-2011. This sounds very similar tothe definition that the FBI used
to give for white collar crime. See FED. BUREAU OF INVESTIGATION, WHITE COLLAR CRIME: A REPORT TO THE
PUBLIC (1989).

13
definition dovetails well with already-collected data, making it a practical tool for
generating statistics on white collar crime activity.

As a practical matter, many people have rather informal interpretations of the term.
White collar crime can refer to:

• Financial crimes
• Non-physical (or abstract) crimes
That is, crimes that “occur” on a form, balance book, or computer
• Crime by or targeting corporations
• Crimes typically committed by the rich
• Criminal businesses or organizations
Including, for some, organized crime and terroristic organizations
• Corporate or professional malfeasance
For some, this can include acts that are immoral, but that are not specifically
prohibited by law (for example, an insurance company automatically targeting every
policyholder who gets diagnosed with breast cancer for an aggressive fraud
investigation to find any possible pretext to drop the account).
• Anything that is against the law that the average beat cop would not typically handle
Essentially, everything but street crime (blue collar crimes).

Finally, many people have a general sense that they know what counts as white collar
crime and what does not, but have no specifically articulated sense of what qualities
separate members of the class from Non-members.

Difference between Traditional Crimes and White- Collar Crimes

Motive of the White Collar Criminal is avarice and rapaciousness not lust or hate as is
the case in traditional crimes. Background of white collar crime is non-emotional
(unlike rape, murder, defamation etc.) whereas in case of traditional crimes some
emotional aspect is normally found. There is no reaction as between the victim and the
offender in care of white collar crimes. The victim is usually the State or a section of the
public, particularly the consuming public (the portion which consumes goods or
services, buys shares or securities or other intangibles). Even where there is an
individual victim, the more important element of the offence is harm to the society.
Mode of operation of the offender is fraud not force. Usually, the act is deliberate and
willful. Interest is protected in two-fold-
(a) Social interest in the preservation of
(i) The property or wealth or health of its individual members, and national
resources
(ii) The general economic system as a whole, from
(1)Exploitation or
(2)Waste by individuals or groups

(b) Social Interest in the augmentation of the wealth of the country by enforcing the
laws

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 Relating to taxes and duties, foreign exchange, foreign commerce, industries and
the like.

Limitation of the Term “White Collar Crime”14

Modern criminology generally rejects a limitation of the term by reference

to type of crime and the topic is now divided:

 By the type of offense, e.g. property crime, economic crime, and other corporate
crimes like environmental and health and safety law violations. Some crime is
only possible because of the identity of the offender, e.g. transnational money
laundering requires the participation of senior officers employed in banks. But
the Federal Bureau of Investigation has adopted the narrow approach, defining
white-collar crime as "those illegal acts which are characterized by deceit,
concealment, or violation of trust and which are not dependent upon the
application or threat of physical force or violence" (1989, 3). Because this
approach is relatively pervasive in the United States, the record-keeping does not
adequately collect data on the socioeconomic status of offenders which, in turn,
makes research and policy evaluation problematic. While the true extent and cost
of white-collar crime are unknown, it is estimated to cost the United States more
than $300 billion annually, according to the FBI.
 By the type of offender, e.g. by social class or high socioeconomic status, the
occupation of positions of trust or profession, or academic qualification,
researching the motivations for criminal behavior, e.g. greed or fear of loss of face
if economic difficulties become obvious. Shover and Wright (2000) point to the
essential neutrality of a crime as enacted in a statute. It almost inevitably
describes conduct in the abstract, not by reference to the character of the persons
performing it. Thus, the only way that one crime differs from another is in the
backgrounds and characteristics of its perpetrators. Most if not all white-collar
offenders are distinguished by lives of privilege, much of it with origins in class
inequality.
 By organizational culture rather than the offender or offense which overlaps with
organized crime. Appelbaum and Chambliss (1997; 117) offer a twofold definition:
Occupational crime occurs when crimes are committed to promote personal
interests, say, by altering records and overcharging, or by the cheating of clients
by professionals15. Organizational or corporate crime occurs when corporate
executives commit criminal acts to benefit their company by overcharging or
price fixing, false advertising, etc.

Relationship to Other Types of Crimes

Blue-Collar Crime

14
Mrs. Glory Nirmala.k , Sponsorship of the Justice and Legal System Research Institute
15
Appelbaum and Chambliss (1997; 117)

15
The types of crime committed are a function of the opportunities available to the
potential offender. Thus, those employed in relatively unskilled environments and living
in inner-
City areas have fewer "situations" to exploit 16 than those who work in "situations" where
large financial transactions occur and live in areas where there is relative prosperity.
Note that Newman (2003) applies the Situational Crime Prevention strategy to e-crime
where the opportunities can be more evenly distributed between the classes. Blue-collar
crime tends to be more obvious and attract more active police attention (e.g. for crimes
such as vandalism or shoplifting which protect property interests), whereas white-collar
employees can intermingle legitimate and criminal behavior and be less obvious when
committing the crime. Thus, blue-collar crime will more often use physical force
whereas in the corporate world, the identification of a victim is less obvious and the
issue of reporting is complicated by a culture of commercial confidentiality to protect
shareholder value. It is estimated that a great deal of white collar crime is undetected or,
if detected, it is not reported. In the truest sense, the terms white and blue collar crime
refers to police slang for an arrest of a suspect, or collar. Blue collar crimes are those
that involve local police (known for wearing blue, or, "Men in Blue") and white collar
crimes are those involving Federal agents, such as FBI (who typically wear suits and ties
with white shirts.)

State-Corporate Crime:
Because the negotiation of agreements between a state and a corporation will be at a
relatively senior level on both sides, this is almost exclusive a white-collar "situation"
which offers the opportunity for crime.

White Collar Crime Worldwide (Statistical data)

There’s been a drop in the overall prevalence of fraud, according to a recent global
report. However, a number of specific frauds are getting more common: In particular,
management conflict of interest, supply chain fraud, internal financial fraud and
corruption. Also, what’s interesting is that today’s fraudsters are getting increasingly
sophisticated in structuring their crimes and using tactics to prevent detection.

North America (7-7.9) *

66% **
North America has the lowest average fraud loss for any region as well as the lowest
regional incidence for many types of frauds covered, with the exception of information
and intellectual property theft. Investments have been made in a broad array of anti-
fraud measures, including IT security, IP & Financial controls, risk management.

Europe (4-4.9)
71%
Even though the overall prevalence of fraud has decreased, companies feel most
vulnerable to information theft, loss or attack. Despite growing concerns, the region is
less likely than average to adopt most anti-fraud strategies.

16
Clarke, 1997

16
Latin America (3-3.9)
74%
The picture here is one of transition. Although the overall number of companies
suffering at least one fraud has declined, there has been a striking increase in companies
reporting they’re at risk. Firms are investing in a range of fraud prevention strategies,
including IT & physical asset security and financial controls.

Africa (2-2.9)
85%
Africa reported the highest incidence of fraud among all regions. 78 percent of
companies in Africa indicate a moderate to high vulnerability to bribery and corruption.
While companies are widely adopting anti-fraud strategies, weaker internal controls
make them less effective.

India (5-5.9)
84%
Corruption and information theft, loss or attack are key challenges for companies in
India. 78 percent of respondents indicated that their organization is highly or
moderately vulnerable to corruption and bribery. Fewer than 50 percent invest in anti-
fraud measures, such as employee background screening and risk management, even
though 59 percent of those that suffered from fraud said it was an inside job.

China (3-3.9)
84%
China had the highest prevalence figures for vendor, supplier or procurement fraud and
information theft, loss or attack amongst all countries surveyed, mostly due to high
attrition. While above-average investments are made in staff-related fraud prevention,
they aren’t enough when there is high level fraud perpetrated by senior management.

* Corruptions’ perception index: 10 - Very Clean; 0 - Highly Corrupt

** Percentage of companies affected by fraud 17

Statistical Survey of India of the Kroll Global Fraud Report 2011

Moreover, eight of the 10 frauds covered in the survey were more widespread in India than they
were globally, in particular: internal financial fraud (22% of Indian companies were affected
compared to 12% overall) and vendor or procurement fraud (20% compared to 12%). The
number of firms affected by corruption dropped in the last year from 31% to 20%. Nevertheless,
this is still well above the global average (11%) and corruption remains a leading fraud concern:
half of Indian companies still report themselves moderately or highly vulnerable to it. Indian
respondents appreciate that they have a significant fraud risk: except for management conflict of
interest, they are noticeably more likely than average to consider their companies moderately or
highly vulnerable to every type of fraud covered in the survey. However, this does not
automatically translate into addressing the problem. In the next year, Indians are less likely than
17
: Kroll Global Fraud Report 2011

17
average to be investing in eleven of the twelve anti-fraud strategies covered in the survey. In
particular, despite high levels of concern about information theft, only 40% plan to spend on IT
security, compared to 53% globally. Moreover, in the last year, 22% of Indian firms have
weakened their internal controls, frequently as a result of budget constraints. This is one of the
highest figures for any country in the survey. The survey brings to light the need for Indian
companies to be more active in combatting fraud.

White Collar Crime Prosecutions for August 2016

The latest available data from the Justice Department show that during August 2016 the
government reported 468 new white collar crime prosecutions. According to the case-
by-case information analyzed by the Transactional Records Access Clearinghouse
(TRAC), this number is up 23.2 percent over the previous month.

18
The comparisons of the number of defendants charged with white collar crime-related
offenses are based on case-by-case information obtained by TRAC under the Freedom of
Information Act from the Executive Office for United States Attorneys (see Table 1).

When monthly 2016 prosecutions of this type are compared with those of the same
period in the previous year, the number of filings was down (-11.1%). Prosecutions over
the past year are still much lower than they were five years ago. Overall, the data show
that prosecutions of this type are down 43.6 percent from levels reported in 2011.

The decrease from the levels five years ago in white collar crime prosecutions for these
matters is shown more clearly in Figure 1. The vertical bars in Figure 1 represent the
number of white collar crime prosecutions of this type recorded on a month-to-month
basis. Where a prosecution was initially filed in U.S.

Magistrate Court and then transferred to the U.S. District Court, the magistrate filing
date was used since this provides an earlier indicator of actual trends. The
superimposed line on the bars plots the six-month moving average so that natural
fluctuations are smoothed out.
The one and five-year rates of change in Table 1 and in the sections that follow are all
based upon this six-month moving average. To view trends year-by-year rather than
month-by-month, see TRAC's annual report series for a broader picture.

19
Within the broad category of white collar crime, cases were classified by prosecutors
into more specific types.

Case types within white collar crime are

• Federal Procurement Fraud, Federal Program Fraud, Tax Fraud, Arson for
Profit, Other Insurance Fraud, Financial Institution Fraud, Bankruptcy Fraud,
Advance Fee Schemes, Other Fraud Against Businesses, Consumer Frauds,
Securities Fraud, Commodities Fraud, Other Investment Fraud, Antitrust Violations
– Other, Computer Fraud, Health Care Fraud, Fraud Against Insurance Providers,
Intellectual Property Violations, Insider Fraud Against Insurance Providers, MEWA
(Multiple Employer Welfare Arrangements) Fraud/MET, Antitrust Violations –
Airlines, Antitrust Violations – Banking, Antitrust Violations - Defense Procurement,
Antitrust Violations - Extraterritorial Application Of, Antitrust Violations - Finance
Markets, Other than Banking, Telemarketing Fraud, Corporate Fraud, Identity Theft,
Aggravated Identity Theft, Other White Collar Crime/Fraud.

The largest number of prosecutions of these matters in August 2016 was for "Fraud-
Other", accounting for 27.4 percent of prosecutions. Prosecutions were also filed for
"Fraud-Tax" (12%), "Fraud-Federal Program" (10%), "Fraud-Health Care" (8.8%),
"Fraud-Financial Institution" (8.5%), "Fraud-Identity Theft-Aggravated" (6.8%),
"Fraud-Identity Theft-Other" (6.8%), "Fraud-Other Business" (5.1%), "Fraud-Other
Investment" (3.6%).

See Figure 2.The lead investigative agency for white collar crime prosecutions in
August 2016 was FBI accounting for 22 percent of prosecutions referred.

20
Other agencies with substantial numbers of white collar crime referrals were: IRS (15%),
Postal (8%), SecServ (7%). See Figure 3 18

NOTE:
It is important to point out that there is no such thing as the “right” white
collar crime definition—only the definition that is right for the purposes of
the entity employing it.
It is, however, vital to understand what the term means to the person who
is using it, in order to understand what they are actually saying. This can
be especially important when dealing with abstracted statistics.
The statement “white collar crime is increasing” is meaningless without
understanding what white collar crime means to the person stating it. The
definition impacts what questions are asked, what kinds of answers are
meaningful, and where researchers look for the answers to the questions.
As has been noted by other researchers in the field, “how we define the
term ‘white-collar crime’ influences how we perceive it as a subject matter
and thus what and how we research.”
As the point of what we can deduce is not to advocate for any particular
interpretation of the term, the term “white collar crime” is normally used
in the widest possible sense, so as not to exclude any of its definitions.

18
Tracsreport.com

21
 CHAPTER 2

Types of White Collar Crimes and Elaborated Details on some

of common crimes.19

 Bank Fraud: To engage in an act or pattern of activity where the objective is to

defraud a bank of funds.

 Blackmail: A demand for money or other consideration under threat to do

bodily harm, to injure property, to accuse of a crime, or to expose secrets (also in
IPC).

 Bribery: When money, goods, services, information or anything else of value is

offered with intent to influence the actions, opinions, or decisions of the taker.
You may be charged with bribery whether you offer the bribe or accept it.

 Cellular Phone Fraud: The unauthorized use, tampering, or manipulation of a

cellular phone or service. This can be accomplished by either use of a stolen
phone, or where a person signs up for service under false identification or where
that person clones a valid electronic serial number (ESN) by using an ESN reader
and reprograms another cellular phone with a valid ESN number.

 Computer fraud: Where computer hackers steal information sources

contained on computers such as: bank information, credit cards, and proprietary
information.

 Counterfeiting: this normally happens when someone copies or imitates an

item without having been authorized to do so and passes the copy off for the
genuine or original item. Counterfeiting is most often associated with money
however can also be associated with designer clothing, handbags and watches
(i.e. branded items).

 Credit Card Fraud: The unauthorized use of a credit card of certain person to
obtain goods of value.

19
http://lexhindustan.com

22
  Currency Schemes: The practice of speculating on the future value of
currencies.

 Educational Institutions: Also, this is another field where collar criminals

operate with impunity are the privately run educational institutions. The
governing bodies of those institutions manage to secure large sums by way of
government grants of financial aid by submitting fictitious and fake details about
their institutions. The teachers and other staff working in these institutions
receive a meager salary far less than what they actually sign for, thus allowing
a big margin for the management to grab huge amount in this illegal manner.

 Embezzlement: When a person who has been entrusted with money or

property appropriates it for his or her own use and benefit. (Criminal
misappropriation in IPC -S404).

 Environmental Schemes: The overbilling and fraudulent practices exercised

by corporations which purport to clean up the environment (fictitious bills are
produced/shown for higher money generation).

 Extortion: Occurs when one person illegally obtains property from another by
actual or threatened force, fear, or violence, or under cover of official right (IPC S
383).

 Engineering: In the engineering profession underhand dealing with contractors

and suppliers, passing of substandard works and materials and maintenance of
bogus records of work-charged labor are some of the common examples of white
collar crime.
Scandals of this kind are reported in newspapers and magazines almost every day in the
World.

 Fake Employment Placement Rackets: A number of cheating cases are

reported in various parts of the world by the so called manpower consultancies
and employment placement agencies which deceive the youth with false promises
of providing them white collar jobs on payment of huge amount ranging from 50
thousands to two lakhs of rupees.

 Forgery: When a person passes a false or worthless instrument such as a check

or counterfeit security with the intent to defraud or injure the recipient. ( IPC
S463)

 Health Care Fraud: Where an unlicensed health care provider provides

services under the guise of being licensed and obtains monetary benefit for the
service.
The white collar crimes which are common to Indian trade and business world
are hoardings, profiteering and black marketing. Violation of foreign exchange
regulations and import and export laws are frequently resorted to for the sake

23
 of huge profits. That apart, adulteration of foodstuffs, edibles and drugs which
causes irreparable danger to public health is yet another white collar crime
common in India.

 Insider Trading: When a person uses inside, confidential, or advance

information to trade in shares of publicly held corporations.

 Insurance Fraud: To engage in an act or pattern of activity wherein one

obtains proceeds from an insurance company through deception.

 Investment Schemes: Where an unsuspecting victim is contacted by the

person who promises to provide a large return on a small investment.

 Kickback: Occurs when a person who sells an item pays back a portion of the
purchase price to the buyer.

 Larceny/Theft: When a person wrongfully takes another person’s money or

property with the intent to appropriate, convert or steal it.

 Legal Profession: The instances of fabricating false evidence, engaging

professional witness, violating ethical standards of legal profession and dilatory
tactics in collusion with the ministerial staff of the courts are some of the
common practices which are, truly speaking, the white collar crimes quite often
practiced by the legal practitioners.

 Money Laundering: The investment or transfer of money from racketeering,

smuggling, drug transactions or other embezzlement schemes so that it appears
that its original source either cannot be traced or is legitimate.

 Medical profession: White collar crimes which are commonly committed by

persons belonging to medical profession include issuance of false medical
certificates, helping illegal abortions, secret service to dacoits by giving expert
opinion leading to their acquittal and selling sample-drug and medicines to
patients or chemists in all parts of the world.

 Racketeering: The operation of an illegal business for personal profit.

 Securities Fraud: The act of artificially inflating the price of stocks by brokers
so that buyers can purchase a stock on the rise.

 Tax Evasion: When a person commits fraud in filing or paying taxes.

The complexity of tax laws in India generally has provided sufficient scope for the
tax-payers to evade taxes. The evasion is more common with influential
categories of persons such as traders, businessmen, lawyers, doctors, engineers,
contractors etc. The main difficulty posed before the Income Tax
Department is to know the real and exact income of these

24
 Professionals. It is often alleged that the actual tax paid by these
persons is only a percentage of their income and rest of the money
goes into circulation as black money.

 Telemarketing Fraud: Actors operate out of boiler rooms and place telephone
calls to residences and corporations where the actor requests a donation to an
alleged charitable organization or where the actor requests money up front or a
credit card number up front, and does not use the donation for the stated
purpose.

 Welfare Fraud: To engage in an act or acts where the purpose is to obtain

benefits (i.e. Public Assistance, Food Stamps, or Medic Aid) from the State or
Federal Government.

 Weights and Measures: The act of placing an item for sale at one price yet
charging a higher price at the time of sale or short weighing an item when the
label reflects a higher weight.

Reasons for Growth of White Collar Crimes20

 White collar crimes are committed out of greed. The people who generally are
involved in committing these crimes are financially secure.

 Financial or physical duress.

 White collar crimes are estimated to cost and damage society many times more
than crimes such as robbery and burglary (blue collars crimes). The amount of
death caused by corporate mishap, such as inadequate pharmaceutical testing,
far outnumbers those caused by murder.

 The emergence of cutting edge technology, growing businesses, and political

pressures has opened up new avenues for these criminal organizations to
prosper. And these organizations have become a hide out for these criminal to
cover up these offences. Due to the emergence of these organization, the visibility
of the offences has gained better camouflage.

 This increase is due to a booming economy and technological advancement such

as the Internet and fast money transfer systems. Law enforcement is sometimes
reluctant to pursue these cases because they are so hard to track and investigate.
And well as, these offences gets diluted in the society at large and their detection
becomes a hurdle for the legal system. As a result, most of these offences goes
invisible.

20
http://lexhindustan.com

25
  It is very difficult to detect as white collar crimes always committed in privacy of
an office or home and usually there is no eyewitness. Differentiating the impact
of white collar crimes and blue collar crimes it can be said that the former causes
far much damage to the country. However, the detection of the street crimes are
easily done since they bear eye-witnesses to give evidences against the
commission of these Acts.

 But normally a very serious question arises that if we have specific legislations to
trace out White Collar Criminality then why these offenders go unpunished?

Main reasons for which these white Collar criminals or occupational criminals go
unpunished are
1. Legislators and the law implementers belong to the same group or class to
which these occupational criminals belong
2. Less police effort
3. Favorable laws
4. Less impact on individuals.

The judiciary is equally, if not more, guilty of delaying justice. With white-collar crimes
on the escalation, it is imperative for the judiciary and police to distinguish between
white-collar crimes, petty crimes and acts of homicide and violence.

Sending everyone to the same jail is also highly unfair. India needs different
detention centers for different kinds of criminal misconduct. At this present
time, what we require is the strengthening of our enforcement agencies such as
Central Bureau of Investigation, the Enforcement Directorate, The
Directorate of Revenue Intelligence, The Income-tax Department and the
Customs Department. Concentration and distribution of national wealth must be
done in a proper manner. Speedy trial should be arranged by appointing more Judges.
Central Vigilance Commission must keep a constant vigil on the workings of the top
ranking officers. General public must not avoid being engaged themselves in the
prosecution of the White-collar criminals as the offence in general is directed towards
them. Lastly if they are traced and proved guilty then Deterrent Theory of punishment is
an option one.

In my concluding words it can be said that if everyone at a particular

business or company would keep an eye out for anything suspicious that
alone would detour potential thieves.
The real solution to this predicament is going to have to come from the
people who are being affected by it. They are the most likely to stop it. They
cannot let anyone take advantage of them anymore.

Most of us do not give white collar crimes much thought because they are only things
that we normally read about in newspapers and hear it on the news. If these crimes
continue to grow at the present rate, they will be out of control before we know it.

26
Hence, the population at large, be it the high class, middle class or lower class of the
society, each of us should give a helping hand in eradicating this social evil.

CHAPTER 3

White Collar Crimes in India

White collar criminality has become a global phenomenon with the advance of
commerce and technology. Like any other country, India is equally in the grip of white
collar criminality. The reason for enormous increase of white collar crimes in the recent
decade is to be found in the fast developing economy and industrial growth of this
developing countries. The Santhanam committee report in its finding a vivid picture of
white collar crime committed by persons of respectability such as businessmen,
industrialists, contractors and suppliers as also the corrupt the public officials. 21
Highlighting the magnitude of white collar crimes in India the commission of
prevention of corruption in its report observed:

“The advance of technological and scientifical developments is

contributing to the emergence of “mass society” with a large rank of file
and small control elite, encouraging the growth of monopolized, the rise
of a managerial class and intricate institutional mechanisms. The strict
adherence to high standard of ethical behaviors is necessary for the even
and honest functioning of the new social, political and economic
processes. The inability to all sections of society to appreciate this need in
full results in the emergence and growth of white collar and economic
crimes, renders enforcement of laws, themselves not sufficiently
deterrent, more difficult. Tax evasion and avoidance, share pushing,
malpractice in share market and administration of companies,
monopolistic control, usury, under invoicing or over invoicing, hoarding,
profiteering, substandard performance of contracts of constructions and
supply, evasion of economic laws, bribery and corruption, election
offence and malpractices are some examples of white collar crime”. 22

The Commission broadly classified white collar and socio economic crimes into various
categories and suggested insertion of a new chapter on white collar crime in the Indian
Penal Code.

The matter was referred by the government to the Law Commission of India of
consideration. The Law Commission, however, disagree with the proposal and observed
that “such offences are better left to be dealt with by special and self-contained
enactments which supplement the basic of criminal law”. The rapid industrialization has

21
Santhanam Committee Report, pp. 151-53
22
Law Commission of India Report of the commission on prevention of corruption para 213, p 11.

27
also led us to discover new modes of economic offences. New groups of individuals are
engaged themselves in manipulating of accounts and misuse of government permits and
licenses to make illegal financial gains.
Another reason for the increase in the white collar crime in India is the emergence of the
concept of the welfare of the State after the independence of the country. In a welfare
State, the government tends to control a vast number of means of production of goods
and essential services in the interest of the community. But the fact remains that such
controls provide the grounds for the emergence of white collar crime in the community
which is infested with severe shortage, corruption, fraud and endemic administrative
inefficiency of the management. 23

 Interestingly, the Report of the Vivin Bose Commission of Inquiry into the
affairs of Dalmia-Jain groups of companies in 1963 highlights how these big
industries indulge in white collar crimes such as frauds, falsification of
accounts, tampering with records for personal gains and tax evasion etc.
Similar observations were made by Mr Justice M.C Chagla about the big
business magnate Mundhra who wanted to “build up an industrial empire of
dubious means”. There were as many as 124 prosecutions against this business
tycoon and companies on controlled by him between 1958 to 1960 and as many
as 113 of them resulted into convictions.24

Hoarding, Black Marketing and Adulteration

The white collar crimes which are common to Indian trade and business world are
hoarding, profiteering and black-marketing.
Violation of foreign exchange regulations and import and export laws are frequently
resorted for the sake of huge profits. That apart, adulteration of food stuff, edible and
drugs which causes irreparable danger to public health is yet another white collar crime
common in India. The Law Commission in India has suggested drastic measures against
such offenders. In the Commission observations the tedious prosecution process
involved in the trial of such cases frustrates the cause of justice and often unjustified
acquittal due to defective report of the analyst or delay in examination of sample or lack
of legal expertise etc.

Tax-evasion

The complexity of tax laws in India as provided sufficient scope for the tax payers to
evade taxes the evasion is more common with influential categories of persons such as
traders, businessmen, lawyers, doctors, engineers, contractors, etc. The main difficulty
posed before the income tax department is to know the real and exact income of these
professionals. It is often alleged that the actual tax paid these person is only a fraction of
their income and rest of the money goes into circulation as ‘black money’. Despite
frequent modification in tax laws of the country the menace of tax evasion countries
unabated and it is causing considerable loss to government revenue.

23
Criminology & Penology, J.P.S SIROHI p 90
24
Fourth annual report on the working of Indian Companies Act 1956 Government of India (1960)

28
The supreme court in its majority decision in ‘R.K Garg vs. Union of India’ upholding
the validity of the special bearer bonds (immunities and exemption) act, 1981, observed
that the act was not intending to encourage tax evasion in future and condone such
evasion committed in past but the real object of the act was to nation-wide search to
uncertain undisclosed wealth by encouraging small incentives to those who declare their
undisclosed case. The main intention was to uncertain “black money” so as to prevent
further loss of government revenues.

It is significant not in this context that was constitutes crime is ‘tax-evasion’ not the
‘tax-avoidance’. Though both these terms appears to be synonymous, there is a fine
distinction between the two. While the former implied the non-payment of tax due to
be paid, the latter signifies arranging the spread over of one’s income in such a way
that it doesn’t incur tax liability legally and lawfully 25.

Main reasons of White Collar Crimes in India

Corruption in Government and Politics

Corruption is one of the most talked about subjects today in the country since it is
believed to have penetrated into every sphere of government and political activity.
Corruption of various forms have always existed not only in India but also in countries
which are materially and politically more advanced. What distinguishes India from
other societies is the variety and degree of corruption afflicting our society. To quote
James Cameron, an eminent journalist of Fleet Street:

In India, corruption, public or private venality, is sanctified by the oldest

tradition, it is denied by nobody, indeed, totality and pervasiveness of
Indian corruption is almost a matter of national pride. Just as India’s
droughts are the driest, her families the most cruel, the overpopulation the
most uncontrolled, so are all aspects of India’s corruption and bribery the
most wholly widespread and spectacular26.

Corruption in the modern context has acquired much wider connotation compared to
the traditional meaning given to the term which was confined to the concept of bribes of
illegal gratification taken by public servant. In its wider sense, corruption includes all
forms of dishonest gains in cash, kind or position by person in government and those
associated with public and political affairs.

Corruption in government:

The factors which make public servant corrupt are connected with the
economic condition of most of the government employees. In India,
though government service has some special prestige, the salaries given to
employees, by and large, are quite low. This factor in combination with

25
White Collar Crimes in India | Yogesh V Nayyar |
26
James Cameron

29
 some other factors like inflation contributes a great deal towards
corruption. Fortunately, the judiciary has been by and large, free from
corruption so far but lately some unhealthy trends have set in.27

Corruption in Politics:

Corruption among ministers and other political personages is more

dangerous than corruption in governmental machinery in terms of
enormity of the stakes involved in public life. The Santhanam Committee
noted that while there were elaborate rules to ensure probity among
officials, there were none for Ministers, legislators and political parties. 28
The more usual form of political corruption in India are grafts, violation of
election laws and the abuse of official and political machinery because of
the liaison of political forces with big business. The popular episodes,
known as Mundhra Sirajuddin Tul Mohan Ram, in the party
affairs involving Central Cabinet Minister and Members of
Parliament are typical example of political corruption.

The cases of political corruption in India is on increase. Over the years, we

have seen that the politician/ministers are involved in number of
corruption cases, some of which after pending even before the various
courts of the country. The Bihar Fodder Scam Case29, Centre for
Public Interest litigation V Union of India30 (2G spectrum
Case), cash for vote31, coal scam32 are some of the examples.

White Collar Crimes and Indian Laws

The process of development has its own inherent hazardous speedy economic growth
through industrialization, liberalization, globalization, and growing influence of market
force on economy has open huge possibilities for white collar crimes in India.

In the history of modern India, initially rampant white collar crime was noted during
World War II, when lots of discretion was given to the government officers through
licensing system. This trends continued after the independence of India.

Though Indian Penal Code does provide certain provision dealing with the crime similar
to white collar crimes, but they were not only found inefficient but also conventional as
they were inadequate in prohibiting white collar crimes. After independence, the
government of India formulated various regulatory Acts including the Essential

27
In quite a few decided cases, Magistrates have been found guilty of corruption. In Delhi as many as our civil
judges have been removed from their office in the recent past.
28
Santhanam Committee Report (p101-102)
29
Union of India v. Sushil Kumar Modi, (1997) 4 SCC 770
30
(2012) 3 SCC I
31
P.V Narasimha Rao V State, (1998) 4 SCC 626; 1998 SCC (Cri) 1108
32
Manohar Lal Sharma V. Union of India (2014) 2SCC 532

30
Commodities Act 1955, The Industrial (Development and Regulatory) Act 1951, The
Import and Export (Control) Act 1947, The Foreign Exchange Regulation Act 1974,
Companies Act 1956 and 2016, Monopolies and Restrictive Trade Practices Act 1968
etc..

Due to demand and the urgency of the making the market more accountable and
inherently resilient, MRTP Act 1968 was abolished into 2002, with the framing of
Competition Act 2002 which provide greater safeguard to market system and at the
same time provide greater sanction against violators. Other statutes dealing with the
White Collar Crimes include the Conservation of Foreign Exchange and
Prevention Activities (COFEPOSA), the Smugglers and Foreign Exchange
and Manipulators ( Forfeiture of Property) Act 1976 (SAFEMA) 33 and the Prevention of
Money Laundering Act of 2002.

CHA
PTER 4

Judicial Trends

Courts normally have been giving differential treatment to white-collar

criminals. At times. Instead of punishing the guilty our courts have been
using ceased and desist orders in case of white-collar criminals, a
method/technique which is not resorted to for ordinary criminals. There
seems to have occurred stiffening of the judicial attitude in the US of late as
manifested in the famous case of GENERAL ELECTRIC of electrical
equipment companies decided in 1961.

“The plea of nolo contender (no contest) by a person formally accused of a crime
is a backhanded plea of guilty. For decades, businessmen accused of violating anti-
trust laws have pleaded nolo contender when the evidence against them was clearly
overwhelming. Never, until 1959, did imprisonment follow such a plea. In that year, to
their astonishment, 4 Ohio businessmen were sentenced to jail for anti-trust violation.
In February 1961, 44 executives of 29 electrical equipment companies, together with
GENERAL ELECTRIC and Westinghouse, pleaded guilty or nolo contendre to charges
of price-fixing and rigging bids on $7billion worth of heavy electrical equipment. In
addition to fines ranging up to $12,500, 23 executives, one of whom was a
Westinghouse vice-president, were variously sentenced to 30 and 60 day jail terms.
Most of these sentences were actually served. The extensive Press coverage given to
this incident was apparently based not upon the enormity of the crimes involved, but
upon nationwide surprise at the jail sentences meted out upon the verbal reprimands
uttered by the sentencing judge.”34

Trial Courts in India at times fail to realize the extent of damage that the criminality of
white collar crimes causes, and, hence, they tend to be contended by providing light or
33
Kesar Devi vs U.O.I AIR 2003 SC 4195.
34
(Taft and England, Criminology 203)

31
even token punishments to white collar criminals. The Law Commission has been
completely aware of the judicial smugness vis-à-vis white-collar crimes and the dangers
inherent in it. In its 47th Report Commission observed:

Suggestions are usually made that in order that the lower magistracy
may realize/see the gravity of some of the social and economic offences,
few methods should be evolved of making the judiciary conscious of the
serious damage caused to the country’s economy and health by such anti-
social crimes.
We hope that the higher courts are completely alive to the injury, and we
have no doubt that on appropriate occasions, such as judicial conferences,
the subject will gain attention. It is of utmost importance that all State
instrumentalities involved in the investigation, prosecution and trial of
these offences must be oriented to the philosophy which treats these
economic offences as a means of grave challenge to the material wealth of
a nation35.

What has been normally been observed concerning offences by the

Commission is equally opposite to white-collar crimes generally.

CASE: M.H.HOSKOT v. STATE OF MAHARASHTRA

This case illustrates the attitude of the lower judiciary towards white collar criminals.
Hoskot, a reader in Saurashtra University, was found guilty of an attempt to concoct
degree certificates of the Karnataka University. The session court gave him a single day’s
imprisonment. The court justified the token punishment on the basis of the background
of the offender, his not having criminal tendencies as such and the unlikelihood of his
indulging in criminal activities in future.
On appeal by the State, the High Court enhanced the period of imprisonment to three
years. While upholding the sentence awarded by the High Court and the Supreme Court
termed the sentence provided by the Sessions court as “incredibly indiscreet”. Censuring
the Sessions Court for the wrong sentencing, the Supreme Court observed:

It is surprising that the Public prosecutor has consented on the behalf of the State, to this
unsocial softness to an anti-social offender on conviction for grave charges 36.

Does the administration sternly view white-collar crimes offenders, or

merely abet them by agreeing to award of token punishment, making
elaborate trials mere tremendous trifles?

Social defence is the criminological foundation of punishment……. That

Court which ignores the grave/serious injury to society implicit in economic
35
Law Commission 47th Report
36
M.H.HOSKOT v. STATE OF MAHARASHTRA

32
crimes by the upper-berth ‘mafia’ ill serves social justice. Soft sentencing is
gross injustice where many innocent are the potential victims….
While iatrogenic prison terms are bad because they dehumanize. It is
functional failure and judicial pathology to hold out a benignly self-
defeating non-sentence to deviants who endanger the morals and morale,
the health and wealth of society.

The Supreme Court has made its approach to white collar crimes absolutely clear in the
above observation. It is, however, submitted that the Hoskot case was, truly speaking,
not a case of white collar criminality, according to meaning given to the term by
Sutherland and others. It certainly would be an instance of white collar criminality if the
certificates were forged or manipulated by an officer. Hoskot despite being in the
university, did not commit the crime in the course of his trade, business or occupation
and he could have been regarded just an ordinary forger and dealt with as such.

Besides prescribing stiffer punishment for white collar offenders, the supreme court has
also held in a number of cases that liberal interpretation must be given to the penal laws
must be dealing with social welfare legislation to see that the legislative object is not
defeated.

In Murlidhar Meghraj loya vs State of Maharashtra, the Court observed:

Pedantic literal and lexical construction likely to leave loopholes for this dangerous
criminal tribe to sneak out of the meshes of the law should be discouraged. For the new
criminal jurisprudence must depart from the old canons, which make indulgent
presumption and constructions benefiting accused persons and defeating criminal
statutes calculated to protect public health and the nation’s wealth 37.

Similarly, in State of Maharashtra V. Mohd Yakub, the Court was of the view that
penal provisions calculated to suppress smuggling activities must be construed liberally.

It may be noted that these rulings in favor of the liberal interpretation of penal
provisions relating to socio-economic crimes are at variance with the ordinary rules of
construction of penal statutes which require strict interpretation and benefit of doubt, if
any, must be given to the accused.

Finally the Courts in India have given strict interpretation to the socio-economic
statutes which do not require any mens rea either in the form of intention or knowledge
for committing an offence. This is how it normally should be, though it may be pointed
out that courts have been somewhat reluctant in finding mens rea excluded from
statutes dealing with more traditional offences38.

Dealing with a violation of the Foreign Exchange Regulation Act, the majority in State
of Maharashtra V Mayer Hans George held that the very object and purpose of
this Act and its effectiveness as an instrument for the prevention of smuggling would be
37
Murlidhar Meghraj loya vs State of Maharashtra
38
State of Maharashtra V. Mohd Yakub

33
entirely frustrated if conditions were to be read into Section 8(i) or Section 8(i-A) of the
Act qualifying the plain words of the enactment that the accused should be proved to
have knowledge that he was contravening the law before he could be held to have
contravene the provision.39

Again in Pyarali K.Tejani V Mahadeo Ramchandra Dange, a case under the

Prevention of Food Adulteration Act, the Supreme Court said:

It is trite law that in food offences strict liability is the rule not merely under the Indian
Act but all the world over. Section 7 of that particular Act casts an absolute obligation
regardless of scienter, bad faith and mens rea. If you have sold any article of food
contrary to any of the sub sections of S7, you are guilty and there is no more argument
about it40.

J. Jayalalitha V. Union of India, the Supreme Court admitted that corruption is

rampant among the public servants. Court further stated that corruption corrodes the
moral fabric of the society and is harmful to the national economy. Corruption by person
occupying high post in Government, by misusing their power can cause considerable
damage to the national economy, national interest and image of the country 41.

Govt. of A.P V. P.V Reddy, the Apex observed that when the legislature has given
comprehensive of public servant to achieve the purpose of punishing and curbing
growing corruption, it would be appropriate not to limit the contents of the definition
close by construction which would be against the spirit of the statutes. The definition of
public servant, therefore, deserve a wide construction. The court is required to adopt a
purposive approach as would give effect to the intention of the Legislature. Employees
or servant of the corporative society which is controlled or added by the Government,
were said to have been by the definition of “public servant” 42.

R.K Garg V. Union of India, the Supreme Court in its majority decision upholding
the validity of the Special Bearer Bonds Act, 1981 observed that, the act was not
intended to encourage tax-evasion in future and condone such evasion committed in
past but the real object the act was to launch a nationwide search to unearth undisclosed
wealth by encouraging small incentive to those who declare their undisclosed case. The
main intention was to unearth “black-money” so as to prevent further loss of
government revenues43.

Lily Thomas V. Union of India, the court held that S8 (4) of the representation of
people act, 1951, was ultra vires the constitution. Court held that, from the “affirmative
terms of articles 102(1)(E) and 191(1)(e ) of the constitution the parliament has been
vested with the powers to make law laying down the same qualifications for person to be
39
State of Maharashtra V Mayer Hans George
40
Pyarali K.Tejani V Mahadeo Ramchandra Dange ,Prevention of Food Adulteration Act
41
(1999) 5 SCC 138; See also R. Sai Bharathi vs J Jayaalitha, 1999 AIR SCW 2257
42
AIR 2002 SC 3346.
43
AIR 1981 SC 2138

34
chosen as a member of parliament or a state legislature and for a sitting member of a
house of parliament or a house of a state legislature. The court added that the “provision
of article 101(3)(a) and 190(3)(a) of the constitution expressly prohibit parliament to
defer the date from which the disqualification will come into effect in case of a sitting
member of parliament or state legislature” 44.

Recent Cases and Case Laws

CASE: Sebi vs. Burman Plantation & Others45

3. Per contra, learned counsel appearing for the SEBI submits that during the winding
up proceedings before the Hon`ble High Court of Allahabad, counsel appearing for
company made a submission that company accused was not in a position to make
payment to its debtors (including investors). It is further submitted that no doubt, the
advertisement was given in the newspapers in the year 2003 during the winding up
proceedings, but the order was passed in the year 2004 wherein counsel made the
submission that company was not in a position to make the payment to its debtors. It is
submitted that in its letter dated January 29, 2001 (Ex. CW1/25), company accused
admitted that the total liability of the company was ` 24, 26,507/-, but convict failed to
produce any document to show that company accused had made the said payment to the
investors. It is further submitted that considering the gravity of the offence, legislature
has enhanced the punishment from one year to 10 years with a fine to the tune of ` 25
crore by way of Amendment which shows that the legislature is not intending to take
such type of white collar crimes lightly.

4. I have heard rival submissions advanced by counsel for both the parties, perused the
record carefully and gave my thoughtful consideration to their contentions. 46

5. By way of Amendment Act 52 of 2002 w.e.f October 29, 2002, the punishment
provided under Section 24(1) of SEBI Act had been enhanced to the extent of 10 years or
with fine which may extend to ` 25 crore or with both. Thus, at the time of determining
the sentence, Court has also to keep in mind the intention of the legislature. The said
amendment shows that the legislature intends to deal with the offenders of
such white collar crime with iron hands.

6. No doubt, there is no criminal antecedent against the convict Ravi Arora but it is also
true that in such white collar crime, there is hardly any instance where convict has
any criminal antecedent, thus it cannot be considered as sufficient mitigating factor.
Similarly, though the convict has taken the plea that no complaint of any investor is
pending before any authority but it is also true that during the trial no document has
been placed on record to show that company accused had refunded the amount to the

44
Writ Petition (civil) No. 490 of 2005. Constitution of India provisions
45
Sebi vs. Burman Plantation & Others (1st August 2013)
46
CC No. 69/10 Page no. 20 of 22 SEBI vs. Burman Plantation & others

35
investors. Since, the company accused had collected the amount, it was the duty of the
company accused as well as its directors to place documents on record to show that the
company accused had refunded the amount to all the investors. Thus, to my mind, the
said plea is also not a sufficient mitigating factor to impose a token sentence.

Case: Abhay Singh Chautala V. CBI 47

This case disposed of two special leave petitions, one fled by Abhay Chautala, as both the
petitioners revolve around the same issue. The issue was related to sanction for
prosecution under section 19 of the Prevention of Corruption Act, 1988. The issue in
particular was whether there was a need of sanction for prosecuting the appellants?

The facts which gave rise to this question is as follow: charge sheets were filed against
both the appellants for the offences under sections 13(1)(e) and 13(2) of the PCA read
with section 109 of the IPC in separate trials. It was alleged that both the accused while
working as the members of the Legislative Assembly had accumulated wealth
disproportionate to their known sources if income. Need of such investigation and
charge sheet had arisen from the direction of the court which had directed the CBI to
investigate the case of JBT recruitment. When the CBI started investigating the case, it
found that the father of the appellants had acquired huge properties and same was the
case with the both appellants. The CBI submitted that in the check period of 7.6.2000 to
8.3.2005, the appellant Abhay Chautala had amassed wealth worth Rs 1,19,69,82,619/-
which was 522.9% of known sources of income. During the check period, Shri Abhay
Singh Chautala was the Member of the Legislative Assembly of Haryana, Rori
Constituency.

Similarly, in the case of Ajay Chautala, his check period was taken as 24.5.1993 to
31.5.2006, had accumulated wealth worth Rs 27, 74,74,260/- which was 339.26% of his
known sources of income. In the said period Ajay Chautala held various post of MLA
and MP. It was on this basis that the charge sheet came to be filed.

In this case, the High Court was absolutely right to hold that the appellants in both the
appeals had abused entirely different office or offices than the one which they were
holding on the date on which cognizance was taken and, therefore, there was no
necessity of sanction under s19 of the act. The appeals are without any merit 48.

Case: Binod Kumar Vs. State of Jharkhand & Ors. 49

This case relates to a suspicion entertained by the CBI against various ministers of the
state of Jharkhand including the Chief Minister. The case was filed against the judgment
47
MANU/SC/0715/2011
48
Prevention of Corruption Act, 1988
49
(2011) 11 SCC 463

36
of the division bench of the High Court. In the impugned judgment, the High Court had
referred the matter to CBI to investigate the matter relating to unaccounted money
being found in the possessions of various ministers. The high court also directed the
Central Government to use its power under sect 45 (1A) to handover the investigation
from ED to CBI. It was the rational of the High Court that as the material have been
found indicating that the unaccounted monies are also invested in various countries, so
a specialized agency like CBI is more competent to investigate such complex matters.

Here it was submitted that the money alleged to have been so earned is of
unprecedented amounts. It is further recorded that, however, there is no clear allegation
so far about its laundering in the sense recorded in the Prevention of Money Laundering
Act. It is further observed that there is an allegation of his investment in the property,
shares, etc. not only in India, but also abroad. Having so observed it is recorded, that,
therefore, the basic investigation requires determining whether money has been
acquired by abuse of official position amounting to an offence under the Prevention of
Corruption Act and under the Indian Penal Code and persons by whom the same has
been done, the amount of money which has been so earned and the places where it has
been invested.

It was submitted that the Central Bureau of Investigation is investigating into the
commission of offences relating to IPC and Prevention of Corruption Act alone and
presently is not investigating any offence under the PML Act as the investigation under
PML Act is solely and exclusively within the jurisdiction of the Enforcement Directorate,
which is of course subject to the exercise of powers by the Central Government under
S45 (1-A) of the said Act.50

The arguments of CBI was upheld and the appeal was dismissed.

CHAPTER 5
50
Prevention of Money Laundering Act

37
Anti-White Collar Crimes Legislation: Problem Of Enforcement

As regards to the above discussion it can be clearly deduced that criminals are much
more dangerous to the society than the ordinary or blue-collar criminals. White collar
crimes by their very nature are such that the injury or damage caused as a result of them
is so widely diffused in the large body of the society that their gravity in regard to
individual victim is almost negligible.
It must be carefully noted that a white collar crime is far much more harmful to the
society than ordinary crimes because the financial loss to society from white collar
crimes to society is far greater than the financial losses resulting from burglary, robbery
and larcenies.51

Now here, a question arises as to why many white collar criminals go

unpunished?

According to Sutherland, the preferential treatment of white-collar offenders could be

explained in terms of their high socio-economic status, the remedial philosophy of the
laws in question and the relatively unorganized resentment of the public against the
white collar crimes. The reasons for the absence of such resentment were stated as to be
as follows:

 The violations of law in such cases are complex, and can be

appreciated only by experts.

 The public agencies of communication (like the media) do not express

the organized moral sentiments of the community, partly because the
crimes are complicated and cannot be easily presented as news items,
but probably in a greater degree because these agencies of
communication are themselves controlled by businessman involved
in the violation of many of these laws.

 The laws for the regulation of business belong to a relatively new and
specialized part of the statutes.

As to the reasons given above why such crimes went unpunished, Sutherland made the
following observations:

The difference in the implementation of the criminal law is due principally to the
difference in the social position and status of the 2 types of offenders. Because of their
social status, implementation of the criminal law in relation to white collar criminals
become difficult. They are more powerful than the traditional criminals. Consumers,
51
S.M.A. QADRI, AHMAD SIDDIQUE’S CRIMINOLOGY PENOLOGY AND VICTIMOLOGY P 83

38
investors and stock holders are unorganized, lack of technical knowledge and cannot
protect themselves.
White collar crimes goes undetected because it normally transcends the visibility of
ordinary cheating practices of small merchants.

Another obstruction in the prosecution and punishment of white collar criminals apart
from the fact that the public is not only indifferent and apathetic toward such violations
of law is that quite often the members of the community themselves contribute to the
commission of various white-collar crimes.

In other words, the “victims” of the crimes are also to blame for white collar
criminality.

In fact, such crimes cannot be committed unless there is a demand for illegal goods and
services in a community. Black marketing and illegal gratifications to public workers are
some of the common examples.

Ultimately, one more factor is believed to be responsible for the failure to punish or for
inadequate punishments so far as white-collar crimes are concerned. Judges of the
courts ordinarily belong to the upper strata of society and this factor may determine
their attitude, consciously or otherwise, towards white collar crimes offenders who also
come from the same social strata.

White collar crime being different in their nature and execution from
ordinary crimes present peculiar in terms of detection, investigation,
prosecution and trial relating to such offences. It is evident that for an
effective enforcement of the laws, specially trained personnel are needed to
detect and investigate such crime.

It is because of different kind of challenge that the trend now is to separate the
investigating and prosecution agencies for such crimes; a deviation from the
traditional practice of vesting the two functions in the same agency. This may be,
however, give the desired advantage only if there is a proper coordination between the
2 agencies.

 The next problem related to the forum of trial and the substantive and procedural
aspects of the law governing it. The issue regarding the forum has generated
some controversy. It has been argued that to secure greater efficiency and
effectiveness socio-economic crimes must be handled by tribunals or quasi-
judicial bodies which may not be fettered by some of the unnecessary, archaic
and disabling features of ordinary criminal law.

Apprehensions have been expressed on the other hand that such forums may not be
immune from the influence of the executive branch of the government and they,
therefore, may not command the confidence of the general public.

39
  One possible approach is to retain the jurisdiction of ordinary criminal courts but
to do away with some of the over-indulgent provisions of criminal law in the
context of white collar crimes. As a result of the recommendation of the
Santhanam Committee some of the relevant laws were amended on these lines.

By these amendments greater powers have been conferred on investigating officers and
on the magistracy and summary trials are also possible for some of the offences. 52The
law has also been made slightly less benevolent to accused person by incorporating
certain presumptions against them under certain circumstances.

Under Section 4 of the Prevention of Corruption Act 53, there is a presumption,

for instance, that money received other than legal remuneration by a public servant is an
illegal gratification.

REMEDIAL MEASURES

In a country like India where large scale starvation, mass literacy and ignorance affect
the life of the population, white collar crimes are ought to multiply in large ratio. 54

However, some of the remedial measures for combatting the white collar criminality
may be stated as follows:

 Creating public awareness against these crimes through the media of press,
platform and other audio-visual aids. Intensive legal literacy programs may
perhaps help in reducing the incidence of white collar criminality to a
considerable extent.

 Special Tribunals should be constituted with power to give sentence of

imprisonments up to 10 years for white collar criminals.

 Stringent regulatory laws and drastic punishment for white collar criminals
may help in reducing these crimes. Even legislations with retrospective
operation may be justified for this purpose.

Dr. RadhaKrishnan, the 2nd President of India, in this context once observed:

“The practitioner of this evil (i.e. White collar and socio-economic crimes) the
hoarders, the profiteers, the black marketeers, the speculators are the worst enemies of
our country. They have to be dealt with sternly, however well-placed, important and
influential they may be, if acquiesce in wrong doing, people will lose faith in us.”

52
Some of the more important legislative pieces in this direction are : Anti-Corruption Laws( Amendment) Act,
1964; Foreign Exchange (Amendment) Act, 1964; Prevention of Food Adulteration (Amendment) Act, 1964 and
Wealth Tax (Amendment) Act, 1964
53
Section 4 of the Prevention of Corruption Act
54
Prof. N. V. Paranjape Criminology and Penology

40
 The penalty for white collar crime which are a potential damages to
human lives may be extended to the imprisonment for life or even to death,
if the circumstances so demand.

 A complete separate chapter on white collar crimes and socio economic crimes
should be incorporated in the Indian Penal Code by amending the Code so that
White Collar Criminals who are convicted by the court do not escape
punishment because of their high social status.

 White Collar offenders should be dealt with sternly by prescribing stiffer

punishments keeping in view the gravity of injury caused to society because of
these crimes.

The Supreme Court, in M.H Hoskot V. State of Maharashtra 55, in this

context observed, “soft sentencing justice is gross injustice where many
innocents are the potential victims”.

 There is an urgent need for a National Crime Commission which may squarely
tackle the problem of crime and criminality in all its facets.
 Most significantly, public vigilance seems to be cornerstone of an anti-white
collar crime strategy. Unless white collar crimes become abhorrent to public
mind, it will never be possible to contain this growing menace.
In order to attain this objective, there is a need for strengthening of morals
particularly, in the higher strata and among the public services. It is further
necessary to evolve sound group norms and service ethics based on the twin
concepts of absolute honesty and integrity for the sake of national welfare. This
is only possible through character building a grass root level and inculcating a
sense of real concern for the nation among youngsters so that they are
prepared and trained for an upright living when they enter the public life.

Ultimately, it must be stated that a developing country like India where population
density is fast escalating, economic offences are increasing by leaps and bound besides
the traditional crimes. These are mostly associated with middle and upper class of
society (but not in all the cases) and have added a new chapter to criminal
jurisprudence.
To a greater extent, they are an outcome of industrial and commercial developments
and progress of science and new technology. With the growing materialism all around
the globe, acquisition of more and more wealth has become the final end of human
activity.

As a consequence, moral values have either changed or thrown to winds and frauds,
misappropriation, misrepresentation, corruption, adulteration, evasion of tax etc. have
become the techniques of trade, commerce and profession.

It is for the criminal law administrators to contain this tendency by stringent

legislative measures.
55
(1987)3 SCC 544.

41
It is rather disappointing to note that though white collar crimes such as black market
activities, evasive price violations, rent-ceiling violation, rationing law violations, illegal
financial maneuvering etc. by businessman are widespread in society, no effective
program for repressing them has so far been launched by the law enforcement agencies.

Maybe the reason for white collar crimes being carried on unabated is that these
crimes are committed generally by influential persons who are shrewd enough to
resist the efforts of law enforcement against them.

The economic offences which are often referred as white collar crimes are master-
minded and carried out on a planned manner by technocrats, highly qualified person,
well to do businessmen, corporate officials in the form of scams, frauds etc. facilitated
by technological advancements.

In these offences, not only individuals get victimized with pecuniary loss but also, such
offences often damage the economic and financial growth of a country and as well as
creates a disturbance in the national defence. These offences such as smuggling of
narcotic substances, counterfeiting of currency, financial scams, frauds etc. are some of
the white collar crimes which evoke serious concern and impact on national security and
governance. Hence, referring to all the measures above we should try to help in reducing
the rate of these offences since they cause an irreparable damage to the public at large.

Important Recommendations: Forty Seventh Law Commission56

The commission made suggestion regarding the inadequacy of the punishment and the
offenders being let off with minor punishments in the form of monetary fines or token
imprisonment. It was observed that the increase in these punishments will also give
message that the society disapproves these activities and as well as make these crimes
cognizable and non-bailable which will be helpful in investigating them.

It observed “Consistently, with our approach in dealing with the menace to social health
and wealth posed by socio-economic offences, we are also recommending an increase in
punishment for the principal offences under most of the Acts. In doing so, our main
object is to give adequate expression to the social disapproval of such crimes. One of the
objects of punishment is the emphatic denunciation of the crime by the community, and
we believe that this denunciation could be achieved only if the gradation of punishments
is so devised as to evoke in the public mind an intelligent reaction, and this in turn
would be facilitated if the scales of punishment exhibit a modicum of uniformity based
on rational considerations. Too many scales and variations in the quantum of
punishment lead to a failure of this object. The increase of the maximum punishments
will also make the offence cognizable and non-bailable and that we regard as a welcome
consequence.

One more recommendation is to provide for the trial of these offences by Special Judge
of a Senior Cadre, and it is further our intention that such cases should be assigned only
56
Forty Seventh Law Commission

42
to one particular Judge in an area, so that he may develop the expertise necessary for
the purpose, also require familiarity with the special feature of these offences.
That time has now arrived when Government should take suitable steps to
study in depth the important question of evolving one code dealing with
dealing comprehensively in one place with all these offences committed
under white collar crimes.

ENFORCEMENT IN THE U.S. AND THE U.K.

As opposed to the traditional crimes, the white collar crimes are regulatory offences
requiring malum prohibitum, i.e., an act that is wrong solely because it is prohibited by
the law. The jurisdictions such as the U.S. and the U.K. have treated insider trading as a
white collar crime.
During the late 1990s, a number of corporations had manipulated financial information
and made improper financial transactions, hand in glove with the accounting firms,
which undermined the investor confidence in the stock market and corporate
governance in general. For instance, the Enron andWorldCom episodes of corporate
scandals that emerged in 2001 involved the accounting firm of Arthur Andersen.
As a consequence of the Enron scam and many other financial scams that surfaced in
the U.S., the U.S. Congress had realized the need to strengthen its legislative framework
as well as the enforcement of the existing legislations. Consequently, the U.S. Congress
in 2002 enacted the Public Company Accounting Reform and Investor Protection Act
popularly referred to as the Sarbanes-Oxley Act. SOX includes a variety of new offenses,
stiffer penalties for existing offenses, requirement for the companies to have audit
committees, mandate to create a board to regulate auditors, new duties on CEOs and
CFOs, simpler process to file class actions against corporations and directors, new
regulatory compliance requirements, and the extended authority of the SEC over the
corporate governance matters. Title IX of SOX has five (5) substantive sections, which
has the title “White-Collar Crime Penalty Enhancement Act of 2002.”
This title relates to the rules and penalties regarding white-collar crimes. This Title IX
increases penalties for various forms of fraud and also issues a mandate for a general
review of the sentencing guidelines regarding white collar offenses and also requires
corporate officers to certify financial reports. The SOX had increased the penalties for
the white-collar crimes of mail fraud and wire fraud from a maximum of five (5) years to
twenty (20) years in prison.
Additionally, falsifying the financial reports by the corporate officers was also regarded
as
crime punishable with fine up to US $5 million and imprisonment up to ten (10) years.
Most importantly, the SOX had categorised a new crime of securities fraud. A person
convicted of this crime could be sentenced to twenty-five (25) years in prison. The SOX
had also directed the U.S.’
Sentencing Commission57 to review and amend its sentencing guidelines regarding
white-collar crimes. As regards the enforcement, although the SEC has not always
57
The United States Sentencing Commission is an independent agency in the judicial branch of government. Its
principal purposes are: (1) to establish sentencing policies and practices for
the federal courts, including guidelines to be consulted regarding the appropriate form and

43
succeeded in policing the white-collar crimes, compared to the other jurisdictions, the
SEC has been more effective in prosecuting the white collar criminals. Numerous
brokers and dealmakers have been prosecuted over the years 58.
Recently, in the Galleon Cases59, the SEC had charged the billionaire Raja Rajaratnam
and his New York based hedge fund advisory firm, Galleon Management, for indulging
in a massive insider trading scheme that generated more than US$52 million in illegal
profits or losses avoided.
The SEC’s complaint alleged that Rajaratnam had paid bribes in exchange of inside
information regarding the corporate earnings or takeover activity and then used the
non-public information to illegally trade on behalf of Galleon. In related Galleon actions,
the SEC had charged nineteen (19) other high ranking corporate executives and insiders
involved in the insider trading scheme. The SEC has settled the dispute with two (2)
individual tippers and one of the entities involved.
The SEC is seeking permanent injunctions, disgorgement and penalties in the remaining
actions against Rajaratnam and others. The SEC’s investigation is continuing. This
clearly reflects the U.S.’ Congress’ efforts and activism in dealing with and curbing the
corporate frauds and prosecuting the offenders involved, notwithstanding their social
standing.

severity of punishment for offenders convicted of federal crimes; (2) to advise and assist Congress and the
executive branch in the development of effective and efficient crime policy; and (3) to collect, analyze, research,
and distribute a broad array of information on federal crime and sentencing issues, serving as an information
resource for Congress, the executive branch, the courts, criminal justice practitioners, the academic community,
and the public.
(http://www.ussc.gov/About_the_Commission/index.cfm, last visited July 2010)
58
Kathleen F Brickey, Corporate and White Collar Crime (4th Edn. Aspen Publishers (2006)) 366
59
SEC Annual Report 2010

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SUGGESTIONS: How to reduce the rate of White Collar Crimes?

White collar crime thrives on weak institutions, bad leadership and bad governance.
Something urgently needs to be done to nip in the bud, the increasing incidence of white
collar crime before the economy collapses.

Institutions that have been set up to fight economic crimes have not been effective
because they have not been truly independent; there may be political interference. It is
hoped that institutions such as the Commission on Human Rights and Administrative
Justice, the Economic and Organized Crime Office, the BNI would be adequately
resourced and given the necessary logistical support to operate effectively and fearlessly.
We equally need independent prosecutors when it comes to the prosecution of white
collar crime.

Every institution, private or public should have in place anti-fraud mechanisms that are
operational, effective and efficient to combat economic crime. Internal controls must be
strengthened and all loopholes plugged to prevent fraudulent deals from manifesting.

Internal auditors must be trained and motivated to perform their duties without fear or
favour. The training they receive should make them capable, effective and efficient
auditors.

External auditors must also be well paid so that they will not take bribes and cover up
economic crimes they discover during audit operations.

The judiciary must be made truly independent, sufficiently motivated with good salaries
and better working conditions so that they are not easily influenced when performing
their legitimate duties.

A severe penalty should be meted out to those found guilty of white collar crime so as to
deter others.

There is the need for a moral crusade in the country to instill important work values
such as diligence, hard work, integrity and honesty, self-discipline, a high sense of
responsibility and a commitment to excellence.

The media has an important role to play in our national moral recovery efforts. Just as
the media has been giving wide publicity to street crimes, it must do so with white collar
crime. They must report white collar crimes irrespective of who is involved.

Workers who exhibit a lifestyle of honesty and integrity must be motivated so as to

encourage others to follow suit. There is also the need to maintain confidentiality for the
whistle blower apart from motivating him/her.

45
There is also the need for us to collaborate with the international community to
effectively combat cross-border crimes that include economic crimes.

In conclusion, white collar crime is as detrimental to the economic well-being of a

nation as is street crime and therefore requires stringent measures to uproot it.
Stamping out white collar crime must be the concern of all.

CHAPTER 6
Conclusion

We conclude that by noting the privileges afforded those who commit white collar
crimes are pivotal to their crimes’ commission. The offenders’ relatively privileged
position permits them to choose crimes that pay and to protect themselves from the
criminal justice system and form the public’s scorn.
Although some are certainly more privileged than others, white collar criminals are
allowed to mitigate their deliberate criminal decisions using excuses unavailable to their
street-crime counterparts. Their stories resonate with those familiar with finance, office,
politics, business competition, and regulation, whereas street criminal’ explanations
often fall on deaf ears.
Academic understanding and public policy are inevitably influenced by empathy for
criminals of privilege.

Where advances have been made in combating white collar crime, they have originated
in movements against it. The demands of these movements counteract influence on
state policy from anti-regulation constituencies and constrain the ability of state
representatives to cozy up privileged interests and white collar criminals.

The movement against white collar crime, to the extent that one exists, is largely
reactive. Business is allowed to proceed freely until some tragic offense reminds people
and the government that an oversight is needed. When life-threatening or blatant white
collar criminal come to light, regulations are enforced and preventive measures are
taken until media and public attention subside.

Public opinion survey shows that some white collar offenses are judged to be as serious
as violent street crimes, particularly ones that result in physical harm to innocent
parties60. Those who expect that the public will be incensed to discover for example, that
they have been paid three cents extra for orange juice, because of fixed prices, therefore,
inevitably are disappointed61. Mundane crimes like price-fixing in the folding box
industry and insider trading do not hold the media’s attention. When damage from
white collar crime is imperceptible and diffuse, offenders easily escape detection and
condemnation.

60
Schrager and Short,1980; Wolfgang et al., 1985

61
Box, 1983

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Despite the perception in some quarters of a social movement against crimes in the
suites, it is unclear that the public generally has an abiding concern about white collar
criminals. Assessed against the accomplishments of the larger victims’ rights movement,
the movement against the white collar crime thus far has seen little success in raising
public consciousness or in changing public policy significantly.

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Bibliography and References

Book Referred:

1 S.M.A Qadri, Ahmad Siddique’s Criminology, Penology & Victimology

(Eastern Book Company, Lucknow, 7th Edition. 2016)
2 Joseph F. Sheley, Criminology (Wadsworth Thomason learning, Belmont,
USA, 3RD Edition)
3 Prof. N. V. Paranjape, Criminology and Penology (Central law Publications,
Allahabad, 14th Edition. 2010)
4 J.P.S SIROHI, Criminology & Penology (Allahabad Law Agency, Faridabad
(Haryana) 6th Edition, 2004)
5 MAGUIRE (M) & ETC., OXFORD HANDBOOK OF CRIMINOLOGY
6 Sponsorship of the Justice and Legal System Research Institute, Mrs. Glory
Nirmala.k

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