White Collar Crime

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TOPIC- White Collar Crime

Concept Of White-Collar Crime In India

Edwin Sutherland for first time coined the term “White-Collar crime” in his address to the American Sociological society in 1939. The whole address was aimed to shatter the conventional and stereotyped images of the criminals as grown and brought up on the dark side of a town, and the belief that the epicenter of the overall Crime problem was that of the lower Strata of the society. He defined white-collar crime as “crimes committed by a person of respectability and high social status into the course of his occupation”.

Subsequently he modified his earlier definition of white-collar crime as “crimes committed by a person of the upper socio-economic class who violates the criminal law in the course of his occupational activities and Professional activities” and in his work he challenged the traditional image of the criminals and the predominant etiological theories of crimes of his days.

The white collar criminals, he identified were often middle aged men of respectability and high Social Status and his definition of white collate Crimes established Status, Occupation and Organization as Central features. He was of the opinion that White-Collar criminals were often found in the affluent neighborhoods, and they were all well respected in the community.

Sutherland opined that the conceptions and notions of crime in his days were not so satisfactory or rather to say were “misleading and incorrect” which were mainly based on the “biased samples” of criminals and their criminal behaviors.

Prior to Sutherland, Scholars like W. A. Bogner (1916) EA Ross (1907) Sinclair (1906) and Steffens (1903), laid emphasis on the misdeeds by businessmen and elites. Even before these scholars Edwin C. Hill laid emphasis on the Criminal behavior of the elites in the American Congress in 1872 in his paper ‘Criminal Capitalists’ but the work of Sutherland was more pioneering rather compared to others.

As 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. Thereafter Sutherland’s definition of White Collar crime faced a lot of criticisms as many Criminologists were of the opinion that Sutherland himself creates lots of confusion regarding the concept of White Collar Crime.

Sometimes he stressed crimes committed by individuals of high status, while at other times he stressed crimes carried out in the course of one’s occupation. He used various definitions and among them most frequently cited definition gained the importance of Occupational status as an important tool for the White Collar criminals.

The absence of a precise definition of White Collar crime has plagued Criminologists to analyze and interpret the concept of White Collar crime in their own manner. Subsequently it was very much advent that for some scholars, it was really very hard to accept ‘Position as primordial factor. For that very reason today there exists profound disagreement over the precise definition of White Collar crime.

White Collar Crimes may be divided into Occupational Crime and Organizational Crime but in common parlance there exist 10 popular types of White Collar Crimes as :—

  1. Bank Fraud.— To engage in an act or pattern of activity where the purpose is to defraud a bank of funds.
  2. A demand for money under threat to do bodily harm, to injure property or to expose secrets.
  3. When money, goods, services or any information is offered with intent to influence the actions, opinions and decisions of the taker, constitutes bribery.
  4. Cellular Phone Fraud.—Unauthorized use or tampering or manipulating cellular phone services.
  5. When a person who has been entrusted with the money or property, appropriates it for his or her own purpose.
  6. Copies or imitates an item without having been authorized to do so.
  7. When a person passes false or worthless instruments such as cheque or counterfeit security with intent to defraud.
  8. Tax-Evasion.—Frequently used by the middle — class to have extra-unaccounted money.
  9. Adulteration of foods and drugs.
  10. Professional crime.—Crimes committed by medical practitioners, lawyers in course of their Occupation.

If there is an industry in which India has surpassed the developed west then it is the field of White Collar crimes. White collar crimes in India is not in total based on the theory propounded by Prof. Sutherland but partially on the concept by Prof. Hugh Barlow as “Crimes committed by the people of lower strata in their occupational status”.

In India White Collar crime means and includes manipulation of funds or in stock exchanges or misrepresentation in advertising or in financial statements of a corporation or violations of labor laws, copyright, patent laws etc. which is mainly ‘job oriented’ i.e. which occurs during the course of one’s occupation but assaulting a personal secretary by her boss will not constitute as White Collar crime.

While resorting to Sutherland it was very much advent that crimes committed by the people of ‘High Social Status’ will amount to White Collar crime. But in India the situation is totally different. In India mostly White Collar crimes are committed by the people of lower social strata in their occupational capacity (by Prof. Barlow) as adulteration of milk by the milk man, selling adulterated food by the shopkeeper, selling expired medicine, taking out few kilos of gas from the cylinder and so on.

Gradually White Collar crimes acquired an established place within the society and with the introduction of famous license-quota-permit Raj in the earlier seventies it took a long strive forward to the increasing trend of White Collar criminality by giving tremendous power to the Trio as — the politicians, the bureaucrats and the businessmen. These unholy three put their jaws in our administrative system in such a manner that it nurtured the total system of quasi corrupt Indian society to a complete corrupted one.

While resorting to White Collar crime in India Businessmen as a part of that unholy trio normally used to engage themselves in Tax Evasion and Tax avoidance or violation of the Foreign Exchange regulations by under invoicing of exports or by over invoicing of imports.

Traders in India were not so far behind in creating an irreparable damage to the society at large. They have mainly engaged themselves in hoarding, profiteering and black marketing of the essential commodities. Moreover sometimes for monetary gains they used to engage themselves in adulteration of foods which may turn dangerous to a person’s life.

To comment specifically on Indian traders for Black Marketing of the essential commodities, profiteering and Hoarding, Monopolies Inquiry Commission gave a graphic account of that in the following words as—

“There is hardly anybody in India who has not been a victim of the practice of hoarding, cornering and profiteering. Whenever there is a slight shortage — even temporary — in any consumer goods for which the demand is urgent and inelastic, almost every trader — it is perhaps unnecessary to use the qualification ‘almost’ — conceals his stock and blindly tells the customers that he has not got the commodity in stock…”

In the course of their research Prof. Hugh Barlow and Sutherland repeatedly pointed out that White Collar crime was more dangerous than any ordinary street crime because the financial loss to the society from White Collar crimes is probably greater than the financial loss from ordinary burglary, theft or robberies. It was very much advent from their opinion that they were more concerned on the economic welfare of a country.

While computing the quantum of loss in India it was estimated that the average loss per theft or burglary is less than Rs. 5000/- or so is rare and the same amounted to lakh is unknown. But on the other hand embezzlement and frauds of lakhs and millions of rupees are very much advent.

Indian scholars took the after effect of loss happened from White Collar crimes very seriously as according to them without economic stability a country cannot stand up and for proper functioning of a state economic prosperity is very much necessary.

According to V. R. Krishna Iyer, J. “economic offences often are subtle murders practiced on the community or sabotage of the national economy.” So it may be termed as the “White Collar Economic Offences”.

These economic offences can devastate an entire community rather than robbing a lone victim. Their impact can last for years, stealing crucial services or a lifetime’s savings through crimes invisible to their victims.

Subsequently thereafter Santhanam committee was asked to report on the misdeeds of the elites to that corruption can be traced. Santhanam committee gave a graphic account of the misdeeds of businessmen and industrialists in the following words :—

“Corruption can exist only if there is some one willing to corrupt and capable of corrupting. We regret to say that both these willingness and capacity to corrupt is found in a large measure in the industrial and the commercial classes…”

Santhanam committee found that during 1958-1962, licenses valued at millions of rupees were obtained or wrongfully utilized by nearly 700 firms through misrepresentation, forgery or other branches of the Export/Import control regulation.

Similarly, illegal accumulation of foreign exchange through just one type of fraud or through under invoicing of exports and over invoicing of imports, — is calculated to be estimated between Rs. 4050 crores every year.

Two instances of embezzlement and fraud as provided by a report made by Vivian Bose Commission are — Notorious Dalmia-Jain and Mundhra case in which loss amounted were estimated at Rs. 3.5 crore.

While dealing with the investigation of Mundhra case, Mr. M. C. Chagla made following observations as—

“Mundhra is a flamboyant personality and a financial adventurer whose only ambition is to build up an industrial empire by dubious means.”

In spite of the fact that a large number of economic offences have been unearthed in our country in the last five years as Securities Scam, Hawala Scam, Urea Scam, Sugar Scam, Banking Scam, Telecommunication Scam, Fodder Scam, Stamp scam etc. and an effort from the government of appointing numerous Commissions as Vivian Bose Commission,

Bakshi Tek Chand Committee, parliamentary committee on the jeep scandal, Railway corruption Inquiry Commission, Sadasivam committee of enquiry, S. R. Ray Commission of Inquiry, S. R. Das Commission, M.C. Chagla Committee and many more in which thousands of crores of rupees were involved, surprisingly no offenders have been convicted so far.

Are there really any remedies to curb these malpractices at the advent of our Welfare state? Why those obligations imposed on the state to achieve the status of welfare state are not implemented properly?

Restrictions imposed on the ownership and the distribution of the national wealth run from the following provisions of our Indian Constitution :—

“The state shall in particular direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to sub serve the common goods; that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment”.

The above mentioned philosophy forced our law makers to pass certain legislations, violations of which may lead to tremendous fillip to White Collar criminals or occupational related crime in India which are :—

Essential Commodities Act, 1955, Industrial (Development and Regulation) Act, 1957. Import and

Export (Control) Act, 1947, Companies Act, 1956, Foreign Exchange (Regulation) Act, 1973, Central Excises and Salt Act, 1944, Income-tax Act, 1961, Customs Act, 1962. The Conservation of Foreign Exchange and Prevention of Smuggling Activities and Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.

Specifically, Section 4 of the Prevention of Corruption Act, 1947, where there is a presumption for instance, “that money received other than legal remuneration by a public servant is an illegal gratification”. They laid more emphasis on the workings of the public servant as they may use their occupational capacity to exploit the mass in general.

Subsequently on the report submitted by Santhanam committee certain legislations earlier enacted were amended as – Anti-Corruption Laws (Amendment) Act, 1964; Foreign Exchange (Amendment) Act, 1964; Prevention of Food Adulteration Act, 1954, Wealth Tax (Amendment) Act, 1964 and more powers have been conferred on the investigating officers and on the Magistrates for conducting the proceedings of the summary trials.

After Santhanam committee report was published it was very much advent that for the first time Anti White Collar legislations include Prevention of Food Adulteration Act because it is an act of mischief done by a person out of his occupational capacity and therefore it will also be termed as a White Collar crime.

The main object of Prevention of Food Adulteration Act is to eliminate the danger to the human life from the sale of unwholesome articles of food. It is enacted to curb the widespread evil of food adulteration and is a legislative measure for social defense.

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 :— i) legislators and the law implementers belong to the same group or class to which these occupational criminals belong; ii) less police effort; iii) favorable laws; iv) less impact on individuals.

At this present juncture what we need 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 apt one.

White Collar Crime

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