What is White Collar Crime?

White-collar crime is a non-violent crime where financial fraud is involved. White-collar criminals usually occupy a professional position of power and prestige in society. Thus societies tend to accept white-collar crimes over blue-collar crimes. White-collar criminals are most often very well-mannered, well-bred, and well-educated. They do not appear as conventional criminals who are involved in crimes like murder and shoplifting.

Background:

The term ‘White Collar Crime’ was first defined by the sociologist Edwin Sutherland in 1939 as “a crime committed by a person of respectability and high social status in the course of their occupation”. White Collar Crimes refer to financially motivated, nonviolent crimes committed by individuals, businesses, and government professionals. Edwin Sutherland used the phrase to describe the types of crimes commonly committed by respectable people who are recognized as possessing high social status.

Is White Collar Crime Victimless?

White-collar crime is often referred to as a Victimless Crime. This is because white-collar crime is generally an economic or financial fraud that leads to a wrongful gain of property to a person or an institution. However, it is incorrect to refer to White Collar Crime as a Victimless Crime. A single scam can destroy a company; devastate families by wiping out their life savings, or cost investors billions of rupees. For instance, the Harshad Mehta Scam of 1992 not only resulted in wrongful gain to Harshad Mehta but also destroyed the lives of many small investors.

Some famous White-Collar Crimes in the history of India:

1.HARSHAD MEHTA SECURITIES FRAUD (1988-1995)-Harshad Mehta, a stockbroker established his security firm in 1919. He misused his status and manipulated the stock prices of various scripts, which resulted in an unnatural pumping of money and causing an abnormal rise in the price of the shares.

The problem arose when Harshad Mehta obtained capital from investors in the stock market by misappropriating the bank’s money. Through this misappropriation, he earned around 5000 crores. This scam was exposed by renowned journalist Sucheta Dalal.

Thus, this was the biggest crash ever which the Indian Stock Market had ever experienced as this unabated selling caused a loss of 0.1 million in a day in the stock market.

2.PUNJAB NATIONAL BANK-NIRAV MODI SCAM-Nirav Modi, who is a diamantaire and India’s 85th richest person. As per the bank’s statement, Modi and the companies linked to him colluded with its officials to get the letter of undertaking to help fund buyer’s credit from other overseas banks.

PNB’s preliminary investigation showed that two officials of the bank had fraudulently issued to other firms without following the due procedure. The Punjab National Bank alleged that the funds raised were not used for the said purpose.

It was one of the largest frauds to be detected in the Indian banking sector.

3.2G Scam-This scam being the largest telecommunication and political scandal involves the sale of the 2G spectrum licenses using a fixed price. 

In 2008, Mr. A. Raja, the Former Telecom Minister had evaded the norms and carried out a dubious scam.

4.Satyam Scandal-This was one of the biggest corporate accounting frauds. On 7th January 2008, this scam came to light through a confession letter which was regarding the manipulation of books of accounts by overstating the assets and understanding the liabilities.

5.Ketan Parekh Security Scam-Parekh, who was involved in stock manipulation from 1999-2001, borrowed from various banks and manipulated a host of K-10 stocks.

The scandal amount was approximately Rs. 1250 crores.

6.Mundhra Scam-This was the first scam in independent India. Mr. Haridas Mundhra, an industrialist and stock speculator sold fictitious shares to Life Insurance Corporation and then defrauded them by 125 crores.

After the investigation, Haridas was held guilty, the court sentenced him to imprisonment of 22 years.

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Curbing White-Collar Crimes:

White-Collar criminals often appear to be role models and influencers. Thus white-collar crime often goes unnoticed. Even big White-Collar Crimes get very attention in society due to the sophisticated nature of the crime. Though not much discussed, white-collar crimes often have disastrous effects on society. White-Collar Crimes create big dents in economies which in return have an effect on common people. It is, therefore, necessary to curb White-Collar crimes. Strict laws must be included in the system to uproot the existence of such crimes.

Few measures that can be adopted by the government to prevent the commission of these types of crimes are-

  • The government must establish a separate body that would further look into the matter of such crimes and criminality prevailing in our country. Since the only motive of this body would be related to white-collar crimes, it could work more efficiently and hereby result in reducing criminality in the country.
  • Strict laws must be made and punishment should be given to the offenders for committing such crimes.
  • People should be made aware of white-collar crimes. This can be done by utilizing the media in the right way. As media will help in spreading awareness among people and also educating them about the remedies which they could seek in case they face such crimes.
  • Fast track courts should be set all over the country for the early disposal of these cases.

Article by Harshwardhan Pawar and Aditi Batra – Intern

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