White-collar crimes
Necessity is not always the motive behind the commission of a crime. This idea evolved with the
criminologist and sociologist Edwin H. Sutherland, in the year 1939, who popularized the term
‘White-collar Crime’ by defining such a crime as one ‘committed by a person of respectability
and high social status in the course of his occupation’. The factors catalyzing such crimes in
modern times are technological and scientific development, a large rank and file and small
controlling elite, encouraging the growth of monopolies, the rise of a managerial class and
intricate institutional mechanisms. These crimes are usually violations of trust, either
‘duplicities’ or ‘misrepresentations,’ placed in the person (or the corporation) by virtue of his
occupational norms and high position in the society. Advancement in commerce and technology
has invited unprecedented growth in one of the types of white-collar crimes, known as
cybercrime. Cybercrimes are increasing because there is only a little risk of being caught or
apprehended.
Sutherland’s study of White-Collar Crime was prompted by the view that criminology had
incorrectly focused on social and economic determinants of crime, such as family background
and level of wealth. Sutherland was of a view that crime is committed at every level of society
and by a person of widely divergent socio-economic backgrounds. In particular, according to
Sutherland, crime is often committed by persons operating through large and powerful
organizations. White-Collar Crime, as Sutherland concluded, has a greatly underestimated
impact on our society.
Examples of White-Collar Crime include embezzlement, securities fraud, tax evasion, Ponzi
schemes, insider trading, cybercrime, racketing, identity theft, forgery, money laundering,
misrepresentation through fraudulent advertisements, infringement of trademark copyright or
intellectual property by the industrialist, hoarding, black – marketing, food adulteration, etc.
White-Collar offences can be committed by individuals or corporations.
Defining White Collar Crime
White-Collar Crime is difficult to define because it can be committed by anyone with money and
apply to many different activities. Prof. Hugh Barlow on White-Collar crime was of the opinion
that White Collar crime is not only committed by the people of high social status in their
occupational capacity but also is committed by the people of lower strata.
Sutherland defines white-collar crime as: “a crime committed by a person of respectability and
high social status in the course of his occupation”. He defines white-collar criminal as: “the
white-collar criminal is defined as a person with high socio-economic status who violates the
laws designed to regulate his occupational activities.” He excluded many crimes of the upper
class, such as murder, adultery, and intoxication, because these are not customarily part of the
occupation procedures. Likewise, he excluded con games operated by “wealthy members of the
underworld, since they are not persons of respectability and high social status. The main
deficiency in Sutherland’s definition is that it could not withstand the evolution of time. It is too
broad and ambiguous to be considered the most universal definition of white-collar crime.
In 1970 Herbert Edelhertz, the chief of the fraud section of the Federal Department of Justice
defined white-collar crime. He defined white-collar crime as “an illegal act or series of illegal
acts committed by non-physical means and by concealment or guile to obtain money or property
to avoid the payment or loss of money or property or to obtain business or personal advantage.”
Edelhertz laid emphasis on the nature of offence rather than on the characteristics of the
offender. The definition given by Edelhertz is democratic as the same crime could be committed
by a bank clerk as well as the head of his institution.
In India, white-collar crimes were first discussed by the Santhanam Committee which was
appointed by the government in 1962. This committee was appointed to review the problem of
corruption and to make suggestions to ensure speedy trial in cases of bribery, corruption, and
misconduct. In the report, the committee attached great importance to the emergence of the
concept of white-collar crime.
Later on, the Law Commission of India in its twenty-ninth report on the proposal to include
certain social and economic offences in the Indian Penal Code used the term white-collar crimes.
The Commission did not go into the detail of the definition of white-collar crime and stated that
“White-collar crime may be defined approximately as a crime committed by a person of
respectability and high social status in the course of his occupation.” This definition has some
ambiguity. The term ‘high social status’ as used in the definition also leads to the discrepancy,
since the term is a relative one and therefore not specific. The ‘occupation’ term used in the
definition leads to ambiguity as it does not categorize what occupation should come within its
ambit. The word approximately means the definition is not exhaustive.
The National Crime Record Bureau of India in its glossary defines white-collar crime as
including criminal breach of trust, cheating, counterfeiting, corruption, and all other organized\
economic crimes.
National White Collar Crime Centre which is a non-profit organization of the United States
defines white-collar job as: “Illegal or unethical acts that violate fiduciary responsibility or
public trust, committed by an individual or organization, usually during the course of legitimate
occupational activity, by persons of high or respectable social status for personal or
organizational gain.”
Characteristics of White-Collar Crime
1. White-collar crimes differ primarily from other types of crime in that they are non-violent
offenses.
2. They use deception to obtain money, property or some other advantage or to cover up
other criminal activity.
3. Both mens rea and intention in the crime are to obtain money, property or some other
advantage or to cover up other criminal activity.
4. In most white-collar crimes multiple actors are involved who conspire together to commit
fraud.
5. White-Collar offences can be committed by individuals or corporations.
6. White-Collar crime is not only committed by the people of high social status in their
occupational capacity but also is committed by the people of lower strata.
7. It is an illegal act or series of illegal acts committed by non-physical means and by
concealment or guile.
Causes for White Collar Crime
Individuals have various degrees of tolerance toward conscientious and ethical behavior.
Academic research shows that environmental signals and cues can nudge individuals to behave
differently when faced with ethical choices. Most white-collar misbehaviors occur due to the
perceived ambiguity in the environmental signals and cues. Work environments can elicit good
or bad behavior out of individuals.
Greed:
The father of modern political philosophy, Machiavelli, strongly believed that men by nature are
greedy. He said that a man can sooner and easily forget the death of his father than the loss of his
inheritance. The same is true in the case of commission of white-collar crimes. Why will a man
of high social status and importance, who is financially secure, commit such crimes if not out of
greed?
Poorly designed job incentives:
When incentive programs are introduced hastily or without a thorough thought process, or not
sufficient to suffice expectations of the employee, it may start to encourage the wrong behavior.
Easy, swift and prolong effect:
Technology has made it easier and swifter to inflict harm or cause loss to the other person. Also,
the cost of such crimes is much more than other crimes like murder, robbery or burglary, and so
the victim would take time to recover from it.
Management nonchalance towards ethics:
Expected managerial traits are dignity, respectfulness, helping others, compassion, serving
others, justice, teamwork, and most importantly honesty. If management itself is not giving
importance to honesty, then there is a possibility of wrong behavior. Many investment firms use
expert networks to legitimize the use of inside information for stock trading. Such cues may lead
an employee of these firms to breach securities laws.
Unethical behavior perceived as harmless:
Sometimes offender may think himself as omnipotent and he is invincible, untouchable, and
hyper-capable. Similarly, the offender thinks as it is victimless crime and hence it is harmless.
Excessive pride in success can lead to a feeling of invincibility and magnify the effects of
decision-making biases.
Aggressive Goals / Motivational Blindness:
Aggressive goals are special characteristics of present merit-based culture but sometimes without
any goal post. Sometimes the offenders are blinded by their motivation to achieve the goal and
do the wrong behavior. They fail to acknowledge their failures.
Pilfering public or private entities:
Many times, it is found that offenders take stealing from a large company or government
alluring. They think there is a big pile of cash to steal from and no guilt of hurting “a person.” Or
even pilfering from such large cash is unnoticeable.
Disregard for the law and a false belief that everyone misbehaves:
In such cases, offenders argue that there is no victim and the law is stupid. Similarly, their
argument is that “I am not the only one.”
Lack of awareness:
The nature of white-collar crimes is different from the conventional nature of crimes. Most
people are not aware of it and fail to understand that they are the worst victims of crime.
Lack of stringent laws:
Since most of these crimes are facilitated by the internet and digital methods of transfer
payments, laws seem reluctant to pursue these cases as investigating and tracking becomes a
difficult and complicated job. Why it becomes difficult to track it is because they are usually
committed in the privacy of a home or office thereby providing no eyewitness for it.
Some White-Collar Crimes
o Black Mail: The act of blackmailing someone may involve various actions by the
perpetrator which could include the intimidation, embarrassment, loss, or an injury to the
victim. For the matter to be considered a white-collar crime, the person initiating the
illegal action usually must include someone in a position of power that generally involves
a business or job-related matter.
o Money laundering: Money laundering involves filtering dirty money through various
institutions to hide its origins. This can make the money ‘clean’ because its origins are
untraceable. However, in reality, the funding comes from illegal sources. In this case the
criminals use the form of businesses, banks, or other organizations to conceal the transfer
and/or origins of illegally obtained money.
o Tax Evasion: This is when an entity evades paying their taxes by hiding, misconstruing,
or lying about their revenue or some aspect of their business when paying their taxes.
o Wage Theft: This crime occurs when the employer refuses to pay wages or employee
benefits that rightfully belong to their employee.
o Embezzlement: Embezzlement is the fraudulent taking of personal property by someone
to whom it was entrusted. It is most often associated with the misappropriation of money.
Embezzlement can occur regardless of whether the defendant keeps the personal property
or transfers it to a third party.
o Ponzi Scheme: A Ponzi scheme is a type of fraud that creates a perfect environment to
lure investors. It is a form of fraud in which belief in the success of a non-existent
enterprise is fostered by the payment of quick returns to the first investors from money
invested by later investors, in fact, capital distribution.
o Bribery: Bribery is a criminal act that offers a person product or cash in order to get
them to do something in return. The object of bribery is something of value and meant to
influence a person’s behavior.
o Insider Trading: Insider trading is malpractice where people trade company secrets or
securities which they are not allowed to make public. This is when people who work in a
corporation collude with investors, stock brokers, and others with a financial interest in a
corporation to buy or sell shares before a company predicts a change in stock value. An
example of this would be a CEO telling their friends to sell their shares because of a
company announcement that will make the stock price drop. In other words, they used
their insider knowledge to cheat.
o Racketeering: Racketeering means taking part in an illegal scheme. It could be obtaining
a company via illegal activities, using a company to do illegal acts, or operating a
company with illegally procured income.
o Cybercrime: Cybercrime incorporates a wide range of crimes involving a computer
network and the use of a computer. Some examples include identity theft, privacy
violation, stealing intellectual property online, and hacking into a computer network.
o Identity Theft: This is when someone steals the personal ids, passwords, social security
number (Adhar/ PAN), banking information, passport, license, or other legal identifying
information from another person to impersonate them
o Art Forgery: Forged artwork is a crime that involves the creation and selling of art that
doesn’t belong to the credited owner.
o Match Fixing: In organized sports, fixing matches involves determining the outcome of
a match to get the desired result. This is often committed by violating the rules,
blackmail, or any other way to obtain monetary gain.
o Mail Fraud: This is when someone uses mailing communications or wire, radio, or
television communications to mislead others in an attempt to take their money.
o Copyright Infringement: Copyright infringement happens when a copyrighted work is
publicly displayed, distributed, or reproduced without asking for the owner’s permission.
o Credit Card Frauds: These frauds are committed when one person uses the credit card
of another person unauthorizedly to obtain goods of value, he is said to have committed
credit card fraud against the other person.
Methods of Curbing White Collar Crime
1. Strong ethics and corporate culture: Organizations should cultivate a culture of
integrity, honesty, and good governance. Implementing a strong code of ethics and
encouraging ethical behavior among employees can create a deterrent against white-
collar crime.
2. Effective internal controls: Organizations should establish robust internal control
systems to detect and prevent fraudulent activities. This includes regular audits,
segregation of duties, and a clear reporting structure. Adequate checks and balances can
help identify irregularities early on.
3. Employee education and training: Providing comprehensive training programs that
cover ethical conduct, recognizing signs of fraudulent behavior, and understanding the
legal consequences of white-collar crimes is essential. Educated employees are more
likely to recognize and report questionable activities.
4. Whistleblower protection: Encourage employees to report misconduct or suspicious
activities by establishing a confidential reporting mechanism. Protecting whistleblowers
from retaliation is crucial in maintaining a transparent environment.
5. Strict enforcement of laws and regulations: Governments should enact strict legislation
to punish white-collar criminals. Effective enforcement of existing laws, coupled with
appropriate penalties, acts as a deterrent for potential offenders.
6. Collaboration and information sharing: Encourage collaboration between law
enforcement agencies, regulatory bodies, and businesses. Sharing information and
intelligence can help identify patterns and trends related to white-collar crime, leading to
better prevention and detection.
7. Cybersecurity measures: With the rise of technology, protecting sensitive information
and data from cybercriminals is vital. Organizations should invest in robust cybersecurity
measures to safeguard against data breaches, identity theft, and other cybercrimes.
8. Risk assessment and management: Conduct regular risk assessments to identify
vulnerable areas within organizations. Implementing risk management strategies and
controls can help minimize the opportunities for white-collar crime.
Prevention of white-collar crime requires a proactive approach from both organizations and
regulatory bodies. By promoting a strong ethical foundation, implementing stringent controls,
and fostering a culture of transparency, the risks associated with white-collar crime can be
mitigated.
Difference Between White-Collar and Blue-Collar Crime
White-Collar Crime Blue-Collar Crime
Predominantly non-violent and often referred to as “paper Crimes often fuelled by
crimes.” emotions and passion.
Typically includes calculated
Includes offences like embezzlement, forgery, and fraud. acts meant to injure or damage
people or property.
Often committed by individuals
Committed by individuals from higher social classes, usually
from poverty-stricken or
with well-paid jobs.
working-class backgrounds.
Does not require access to large
Requires access to financial resources or institutional power. sums of money or institutional
control.
Damage is usually physical—
Damage is typically economic—affecting the victim’s money,
inflicting bodily harm on a
assets, or business.
person or damage to property.
Generally, harms individuals
Can harm large groups or entire communities through fraud or
directly through violent or
systemic abuse.
aggressive actions.
Example: In State of Gujarat v Mohanlal Jitamalji Porwal, No comparable need for
AIR 1987 SC 1321, Justice Thakker observed that while one planning; actions are often
may murder in the heat of the moment, white-collar crimes like immediate, driven by
economic offences require planning and strategy for personal opportunity, rage, or
gain. desperation.
Conclusion
White-collar crime is present in all types of occupations, professions, industries, and companies.
It varies based on styles and forms. White-collar crime encompasses the use of criminal activity
to get monetary gain. Often happening among the upper societal class, this crime can be difficult
to detect. The examples here can give you a general perspective of the most common white-
collar cases.
