WHITE COLLAR CRIMES AND ITS SENTENCING

Introduction
“The practitioners of evil, hoarders, the profiteers, the black marketeers, and speculators are the
worst enemy of our society. They have to be dealt with sternly. However well placed important
and influential they maybe, if we acquiesce in wrongdoing, people will lose faith in us.” -Dr. S.
Radhakrishnan • The most influential criminologist of the 20th century and also a sociologist,
Edwin Hardin Sutherland, for the first time in 1939, defined white collar crimes as “crimes
committed by people who enjoy the high social status, great repute, and respectability in their
occupation”.
Definition
• The concept of white-collar crime found its place in criminology for the first time in 1941 when
Sutherland first published his research paper on white-collar criminality in the American
sociological review. He defined white-collar crime as a ”crime committed by persons of high
social status in course of their occupation.” • E.g.- misrepresentation through fraudulent
advertisement, infringement of patents, copyrights, and trade-marks, a publication of fabricated
balance sheets and profit and loss account of business, etc. • Sutherland further pointed out that
white-collar crime is more harmful to society than ordinary crimes because the financial loss to
the society from white-collar crime is far greater than the financial loss from burglaries,
robberies, larcenies, etc. white-collar crimes are committed by persons of status, not for need but
for greed - Sir Walter reckless
Blue-Collar vs. White-Collar Crimes
• The difference between white-collar crime and blue-collar crime stems from the different types
of criminal activity that the criminal has access to engage in. • Blue-collar crime, because of the
more limited means of the people committing it, tends to be more straight-on – robbery,
burglary, etc. In contrast, white-collar criminals are more often in a position – such as being a
loan officer in a bank – to commit widespread and complex fraud schemes.
The five attributes of the given definition are:
• It is a crime.
• That is committed by an important person of the company.
• Who enjoys a high social status in the company.
• And has committed it in the course of his profession or occupation.
• There may be a violation of trust.
Classification of White Collar Crimes
• Theoretically, various white-collar crimes may broadly be classified into four major categories
as follows:1. Ad hoc crimes: they are also known as personal crimes because in this category of
white-collar crimes, the offender pursues his own individual objective having no face to face
contact with the victim. Hacking on computers, credit card frauds tax evasion, etc. are common
forms of ad hoc whitecollar crimes.

2. White-collar crimes involving a breach of trust or breach of faith bestowed by an individual or

institution on the perpetrator. insider trading, financial embezzlements, misuse of funds fictitious
payrolls, etc. are common illustrations of this type of white-collar crimes.
3. Individuals occupying high positions or status who commit crime incidental to, and in
furtherance of their organizational operations constitute this category of white-collar crimes.
people occupying high position commit such crime, not because it is their central purpose, but
because they individually find an opportunity in the course of their employment to earn quick
money or gain undue advantages by using their power or influence. example of such crimes is
fraudulent medical bill claims, fake educational institutions, issuance of fake mark
sheet/certificates, etc. 4. White-collar crimes may also be committed as a part of the business
itself. violation of trademarks or copyrights, patent law or competition law, etc. the violation of
domain name and other corporate crimes are also white-collar crimes of this type.
Reasons for the Growth of White Collar Crimes
Greed
• Human beings are greedy by nature, as rightly quoted by the father of modern political
philosophy, Machiavelli. He also said that a man can sooner and easily forget the death of his
father than the loss of his inheritance. • The same holds true for the people who intend to commit
any type of white-collar crime. Else, why will a man who is financially secure and belongs to
high social status commit such crimes? It is this vice- greed which can make a person aim for the
things that has no limit.
Competition
• “Survival of the fittest "is the main moto of competition followed in the market.It implies that
in a battle to succeed, there will always be a competition between the people, and only the best
who is able to adapt to the conditions shall survive. • White-collar crimes usually eventuate out
of the same intent. To win, they do not mind committing crimes like forgery, bribery and frauds.
It is often seen that professionals are monetarily compensated and elevated in the organization
for short-term superlative profits. • To maximize their performance in competition to others,
some even hesitate to proceed to circumvent the existing laws. People who are involved in such
crimes are smaller in number, higher in hierarchy, and losses incurred are huge.
Technology
• With the advancement of technology, white-collar crimes have become a global phenomenon
and increasing at a tremendous pace in India too. • The proliferation of personal computers and
smartphones have further aggravated this problem as the use of these not just results in the
generation of many more ideas, but also gives open opportunities to the people residing in any
corner of the world to commit these crimes
Rationalisation
• As the nature of these crimes is different from the traditional ones, people fail to define and
understand them. • This leads to offenders committing the crimes and later convincing
themselves that the actions performed by them are not criminal in nature. • Many stock traders
engaged in insider trading view it as a victimless crime and does not see who is being cheated. •
Salespeople bribing their clients feel they are doing their job by putting the deal together, while
not harming anyone.
Work Environment
• Work environments can elicit both- good or bad behavior out of individuals. The environmental
indicators like poorly designed job incentives or management nonchalance toward ethics can
tempt individuals to behave very differently when faced with ethical choices. • Consequently,
certain individuals succumb to such temptations and compromise on their ethical values, leading
to criminal acts. Rarely, is there a direct order to break the law.
Access to Information
• The availability of important sensitive information of individuals such as bank details,
investments, passwords, etc. on their smartphones and laptops can provoke the criminal minds to
use the data for their own benefit. • The target for such white-collar criminals can be rich
people/organizations like banks, casinos and financial firms where a huge amount of money flow
daily. Hackers can thus steal access codes, retina images, and other information that can easily
fool biometric systems and manipulate it further for personal gains.
TYPES OF WHITE COLLAR CRIME IN INDIA
Blackmail
• For blackmailing to be considered under the ambit of white collar crime, it should be
committed by or show an involvement by someone enjoying higher social status in an
occupation.
CREDIT CARD FRAUDS
• These frauds are committed when one person uses the credit card of another person
unauthorized to obtain goods of value, he is said to have committed credit card fraud against the
other person.
• For example, in 2003 in Mumbai, Amit Tiwari, a 21 years old engineering student was arrested
for using too many names, for having too many bank accounts and too many clients, all false
managed to defraud a Mumbai-based credit card company, CCAvenue, of around 9 lakhs rupees.
• This case brought to the notice of the authorities that credit card frauds have not been
recognized by the Information Technology Act, 2000. The loophole in the law has caused a great
loss to the company.
BANK FRAUDS
•Imitating a financial institution
•False approval of loans
•Bank fraud using internet
BRIBERY
• Where public official bribes or is bribed
• Where a witness is bribed
• Bribing bank officials
• Bribing sportsman/ athlete to play or fix a match
Cybercrimes
•Against property
•Against individual
•Against government
Money Laundering
• Investment
• Manipulating details
• Making illegal, legal
• In the case of Anosh Ekka v. Central Bureau of Investigation, Anosh Ekka was alleged to have
been involved in money laundering as, after becoming the minister acquired a huge amount of
movable and immovable assets in his name and in the name of his family within a short span of 3
years. The Supreme Court held the accused liable for looting and laundering huge amount of
public wealth.
Tax Evasion
• Tax evasion is when a person deliberately forges his state of affairs in order for the authorities
to levy less amount of tax. This can either be done by an individual, a corporation or a trust. It is
a false means of escaping government taxes. In simple terms, Tax evasion and avoidance both is
an offence which is used to reduce one’s tax burden. The offence of tax evasion is punishable
under Chapter XXII of the Income-tax Act, 1961, which can impose heavy amount of fine or
even send you to jail.
Counterfeiting
• Counterfeiting is a criminal act defined under section 28 of the Indian Penal Code, 1860, where
the imitation of something authentic takes place in order to steal, destroy or replace somebody’s
original work. This facilitates gaining profits from illegal transactions and deceiving a person
who believes that the representation is made to him is true and the imitated work is of more value
• The crime of using counterfeiting is generally related to coins and currencies and is punishable
under section 489B of the Indian Penal Code, 1860. In some cases, it also relates to imitating of
products like clothes, bags, shoes, watches, art, toys, etc. Counterfeit products carry fake logos
and brand names and in some products, harmful chemicals have also been found leading to the
death of the person using it.
Extortion
• Extortion is a crime under section 383 of the Indian Penal Code, 1860. When one party coerces
another party for payment of money, or property or services, he is said to have committed the
crime of extortion. It is called a white collar crime because an officer may use his official right
and make use of his higher position in the company to threaten another person for giving money,
or transferring property, or for providing services.
EFFECTS OF WHITE COLLAR CRIME
• Effect on the company - White collar crimes causes huge loss to companies. In order to
recover the loss, these companies eventually raise the cost of their product which decreases the
number of customers for that product. This works according to the law of demand states that,
other things being equal, when the price of a commodity rises, it’s demand would fall and when
the price lowers, its demand would increase.
• Effect on the employees - White collar crimes endanger employees. They become conscious
of their working conditions, whether it is safe anymore or not. They start doubting if they are
safe and that they can still be given in their trust to the company.
• Effect on customers - The most important concern of the customers is whether the products
which they are using is safe or not. This doubt rise to see the rate at which white collar crimes
have been increasing.
• Effect on society - White collar crimes are harmful to the society for those people who should
be cited as a moral example and who must behave responsibly are one committing such crimes.
The society thus becomes polluted.
• Effect on offenders - These crimes have no eyewitnesses as they are committed in camera,
which means that the offenders commit these crimes while sitting in a closed room or in their
personal space using their computers, and nobody could know about what they are doing on their
computer.
• This makes it difficult to track the offenders. All these loopholes becomes an incentive for the
offenders to fearlessly commit such crimes because the punishment is also for a short term unlike
in blue-collar crimes. Offenders are mostly seen roaming freely which poses a danger to the
society.
THE REPORT ON THE COMMISSION ON THE PREVENTION OF CORRUPTION,
1964
• In the recommendations by the Committee on Prevention of Corruption, headed by Shri K.
Santhanam, the Central Vigilance Commission was created in 1964.
• The Central Vigilance Commission is now the apex institution for vigilance, independent of
any executive authority.
• Its function is to address corruption in government offices and to monitor all vigilance under
the Central Government. This organization seeks its advice in planning, executing and reviewing
their vigilance work.
THE REPORT BY SANTHANAM COMMITTEE
• The Santhanam Committee was the first body to recognize the intensity of the crimes
committed by the people of high social standards, which was acknowledged by the 29th report of
the Law Commission released in 1972. Santhanam Committee in its report on the Prevention of
Corruption has talked about the reasons behind the prevalence of white collar crimes in India.
• The technological advancement and development in scientific temperament has been assigned
as the major reason behind the growth of white collar crimes. These large numbers with
advanced disposition is being regulated by only a handful of elite who form the monopoly. The
need of this technologically and scientifically advanced era is to make these masses adhere to the
rules laid down by the elites to conduct them. Those who fail to do so land up becoming the
offender of white collar crimes.
• The committee showed its concern regarding the great damage that these crime can cause to the
public morals. The case of white collar crimes are so complex and since people are not much
aware about it, it is only the experts who can recognize such crimes and protect themselves from
becoming a victim of it.
LAWS RELATING TO WHITE COLLAR CRIMES
• The government of India has introduced various regulatory legislations, the breach of which
will amount to white-collar criminality.
• Some of these legislations are Essential Commodities Act 1955, the Industrial (Development
and Regulation) Act, 1951.,The Import and Exports (Control) Act, 1947, the Foreign Exchange
(Regulation)Act, 1974, CompaniesAct, 1956, Prevention of Money LaunderingAct, 2002.
• The Indian Penal Code contains provisions to check crimes such as Bank Fraud, Insurance
fraud, credit card fraud etc. In case of money laundering several steps have been taken by the
government of India to tackle this problem.
• The Reserve Bank of India has issued directions to be strictly followed by the banks under
KYC (Know Your Customer) guidelines. The banks and financial institutions are required to
maintain the records of transactions for a period of ten years.
• In order to tackle with computer-related crimes, Information Technology Act, 2000 has been
enacted to provide legal recognition to the authentication of information exchanged in respect of
commercial transactions.
• Section 43 and 44 of Information TechnologyAct prescribes the penalty for the following
offences:
1. Unauthorised copying of an extract from any data.
2. Unauthorised access and downloading files.
3. Introduction of viruses or malicious programmes.
4. Damage to computer system or computer network.
5. Denial of access to an authorised person to a computer system.
6. Providing assistance to any person to facilitate unauthorised access to a computer.
WHITE COLLAR CRIME IN DIFFERENT PROFESSIONS
IN MEDICAL AND HEALTH
• Making of false medical certificates by the doctors.
• Fake and intended prolong the treatment in order to increases the bills.
• Sex discrimination of the child by the doctors on the compulsion of the patient to gain money.
• Delaying of time by doctors to increase the amount of money in the bills.
• Sale of sample medicines which are not allowed to the chemists.
IN LEGAL PROFESSION
• Fabrication of forged documents
• Threatening the witnesses of the other party
• Violation of ethical standard of legal profession to gain money
• Engaging professional witnesses
ENGINEERING PROFESSION
• Underhand dealing with suppliers
• Passing of substandard works and
• Maintenance of bogus report of the labour works
IN EDUCATION
• Collecting huge sums of money in the name of donations by students in order to give them
admission.
• Merit based admission is replaced by donations.
• Collect huge amount of money in the name of government grants.
LEGISLATIONS AGAINST THE WHITE COLLAR CRIME IN INDIA
• CompaniesAct, 1960.
• Income TaxAct, 1961.
• Indian Penal Code, 1860.
• CommoditiesAct, 1955.
• Prevention of corruptionAct, 1988.
• Negotiable InstrumentAct, 1881.
• Prevention of money launderingAct, 2002.
• ITAct, 2005.
• Imports and Exports (Control)Act, 1950.
MEASURES TO CURB WHITE COLLAR CRIME
1. Employee Screening be made more strict
2. Introduce multi-level Verification System
3. MonitoringActivities of Employees
4. Prioritise InternalAudit Function
5. Inventorying Equipment
6. Creating awareness among users
7. Transparency
GOVERNMENT ACTION
1. Enacting laws and regulations
2. Implementing Strong Regulatory Policies
3. Proper Training of Investigating Officers
4. Strict Enforcement of Laws
5. SpreadingAwareness
ENFORCEMENT AGENCIES
• When India is moving steadily up the growth scale, enforcement agencies such as the Central
Investigative Agency (CBI), Serious Fraud Investigation Office (SFIO), Enforcement Directorate
(ED), Income Tax (IT), Department of Vigilance DFS of Ministry of Finance, SEBI, RBI and
IRDA are duly motivated to improve their capabilities to meet the challenges of the changing
scenario though reactive in nature.
• These departments which are the eyes and ears of the Govt for combating white-collar
criminals are trying to revamp their capabilities in terms of manpower, technical capabilities and
the spear of their activities. They either thinking or some have already of the way forward to
cope with the rise in white collar crimes to defend the greater economic interest of various
investors.

CASE LAWS
MUNDHRA SCAM- FIRST SCAM OF INDEPENDENT INDIA, 1958
• Haridas Mundhra, an industrialist and stock speculator sold fictitious shares to Life Insurance
Corporation (LIC) and thereby defrauding LIC by 125 crores.
• Mr. Jawahar Lal Nehru, (the then Prime Minister), set up a one-man commission headed by
Justice Chagla to Investigate.
• Justice Chagla concluded the matter and Haridas was found guilty and was sentenced to
imprisonment and T.T. Krishnamachari, the then Finance Minister, resigned from his position.
HARSHAD MEHTA SECURITIES FRAUD (1988-1995)
• Stockbroker Harshad Mehta founded Grow More Research & Asset Management Limited, a
security company, in 1990. Investors blindly followed Mehta’s lead because he was a well-
known name in the stock market and was known as the “Sultan of Dalal Street.”
• The Harshad Mehta Scam shocked the entire economy of India. He fooled many investors by
taking advantage of the loopholes of the system. He obtained fake Bank receipts from small
Banks and further passed on to other banks as security to obtain cash. This money was used to
drive up the prices of stocks in the stock market. Bubble of stock market manipulation and fake
bank receipts busted putting drastic impact on the stock market, economy and progress of the
country. Banking system was swindled of a whopping of Rs. 5000 crores. Even, the chairman of
one of the bank committed suicide. This scam can be called as one of the biggest white collar
crime as the case was mainly regarding the manipulation of accounts and providing misleading
information
SATYAM SCANDAL 2009: BIGGESTEVER CORPORATE ACCOUNTING FRAUD
• Satyam was the biggest scam in the history of India. The Satyam scam of 2009 has shatter the
peace and tranquility of investors in the share market. The Chairman Ramalinga Raju has
manipulated the financial statement and the books of accounts. Satyam's books of account
shows, Over stated Assets of Rs. 490 crores, Fake cash balance over Rs. 5000 crores in the
balance sheet, Interest component of Rs. 376 crores which never flowed into the company's
coffers, Understated Liabilities of Rs. 1,230 crores. He has also inflated with revenues and net
profit figures of the company, with which he was charged with heavy penalty. Investors got
panicked as Stock Plummeted reacted sharply and dumped shares, pushing down the scrip by 78
percent to Rs. 39.98 on Bombay Stock Exchange (BSE). Chairman, Managing Director, Chief
Executive Officer and Chief Finance Officer and the Key Managerial Personal were arrested.
Partners of audit firm were also arrested.
PUNJAB NATIONAL BANK FRAUD
• The 85th richest person in India is the diamantaire and eminent jewelry designer Nirav Modi.
Bank claimed that Modi and the businesses connected to him conspired with the bank’s
representatives to obtain guarantees or letters of undertaking from other foreign banks to help
finance buyer’s credit. According to PNB’s preliminary investigation, two bank employees
fraudulently issued Lous to the aforementioned firms without following the proper procedure.
Then, based on these Los, credit was extended to the aforementioned firms via the SWIFT
messaging system. PNB claimed that the money purportedly raised for the purpose of buying and
selling diamonds was not put to use. PNB released information to the stock exchange regarding
the identification of unauthorized and fraudulent transactions. A ₹11,400 crores fraud was
discovered at PNB, making it one of the biggest in the Indian banking industry.
KETAN PAREKH SECURITY SCAM
• From 1999 to 2001, Parekh engaged in circular trading and stock manipulation. He borrowed
money from financial institutions like Global Trust Bank and Madhavpura Mercantile Co-
operative Bank and used it to manipulate many K-10 stocks. The scandal cost roughly ₹ 1,250
crore. Despite serving only one year in prison, he will not be permitted to trade on the Indian
stock market until 2017. Although he has been accused of performing from behind the scenes his
name still echoes down the street. Parekh and his associates were allegedly involved in insider
trading and circular trading through front companies, according to an Intelligence Bureau Report.
SARADHA CHIT FUND CASE
• The collapse of the Ponzi scheme run by Saradha Group, a group of 200 private companies that
were allegedly running collective investment schemes popularly and incorrectly referred to as
Chit Fund, resulted in a significant financial fraud as well as an alleged political scandal. With
the promise of a multiplied substantial sum in return in the form of cash or real estate and other
assets, this group amassed around ₹30,000 crores from more than 17 lakhs depositors. It was
claimed that at least 10 Saradha group entities had defrauded the public by participating in
money-pooling schemes. SEBI banned Saradha Realty India and its managing director Sudipta
Sen from the securities market until the group wound up all the Collective Investment Schemes
(CIS) and made the refund, as the same amounts to CIS Violation, despite ongoing public protest
against the group’s alleged fraudulent activities.
2G SCAM
• This scheme involves the fixed-price sale of licenses for the 2G spectrum. A Raja also took this
action because using an auction resulted in less profit. He granted licenses to applicants who
weren’t qualified. In addition to lying, these applicants provided false information, missing
information, and concealed them. As a result, ₹ 1.76 lakh crore were lost as a result. On
November 16, 2010, the Comptroller and Auditor General of India released a report on their
crime. Also, the charge sheet was 80,000 pages long because the crime was so heinous.
Additionally, the CAG report noted that these significant stakes were sold to both Indian and
foreign companies at a high premium. Then, they completed the task in a very short amount of
time. Finally, they assert that the value earned by these ineligible applicants and the real value of
the spectrum were exactly the same.
CWG SCAM
• Athletes from the Commonwealth of Nations compete in a variety of sports at the
Commonwealth Games, which is an international competition. It occurs once a year. It is run by
the Commonwealth Games Federation. The Commonwealth Games scam was carried out by
Suresh Kalmadi. He oversaw the Games’ planning committee as its chairman. As a result, he
awarded the Swiss Timings the ₹141 crores contract. Furthermore, Swiss Timings’ time
equipment cost ₹95 crores. Additionally, the sports officials were required to live in subpar
accommodations by the chairman. The Central Vigilance Commission learned about the CMW
scam at this time. Along with providing fewer facilities for athletes, this scam resulted in the
theft of ₹ 70,000. They were detained on charges of cheating, conspiracy, corruption, and
forging documents with the intent to cheat. In India, this is unquestionably a serious white-collar
crime.
CONCLUSION
• White Collar Crime is tremendously increasing in India. So it has become necessary to take
steps for eliminating this crime. Government should pass stringent punishment against While
collar criminals. Moreover, media can also help to reduce this crime if it actively publishes
frauds and scams done by people at higher position and aware general public about white collar
crime. Enacting legislation alone will not help but its proper implementation is necessary.
Judiciary should strictly interpret the penal provisions so that deterrent effect is created upon
society. White Collar Crime is in our society since centuries so it is not easy to eliminate it but
we, government, media, legislators and judiciary should try to reduce such crime.
Thank