“SOCIAL ACCEPTABILITY OF WHITE COLLAR CRIME”

SESSION- 2019-2020
SUBMITTED AS PART OF SEMINAR- II IN PARTIAL FULFILLMENT FOR
REQUIREMENT OF THE OF B.COM.LL.B. DEGREE

SUPERVISED BY SUBMITTED BY
Dr. SAGAR JAISWAL SHRUTI SHRIVASTAVA
HEAD OF DEPARTMENT B.COM.LL.B
DEPARTMENT OF LAW 10TH SEMESTER
ROLL NO. 15002048

DEPARTMENT OF LAW
GURU GHASIDAS VISHWAVIDYALAYA
BILASPUR (C.G.)

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 ABSTRACT

Title : Social acceptability of white collar crime in India

This paper provides a detailed understanding behind the social acceptability of white collar crime
and the motive of people committing white collar crime. White collar crime is a serious issue in
the India, responsible for an estimated 3,766 cases of fraud were detected in FY19, a 15 per cent
spike from a year ago; losses incurred due to frauds rose by 80 per cent a survey by Netrika
Consulting and Indian National Bar Association. White collar crimes include: bank fraud,
blackmail, bribery, counterfeiting, credit card fraud, embezzlement, extortion, forgery, insider
trading, insurance fraud, investment schemes, securities fraud, tax evasion, advanced fee scams,
service and repair scams. There are a number of factors to consider regarding crimes, both street
and white collar level including: the total cost of the damages and ripple effects that will reach
others, how likely the victims are to recover from the crime, and how likely the victims are to get
justice for being wronged, when considering the acceptability that society has placed on white
collar crimes versus street crimes. As seen in case studies, white collar criminals are far less
likely to experience justice than street criminals, who are also more likely to be caught in their
wrongdoing. Because white collar criminals have this additional safety barrier of anonymity,
there is require of more laws by the legislations to get the record of suspected individuals in
order to find any trace of white collar criminal activity. As compare to the white collar crime
criminals the street crime criminals were more vulnerable in the society and in the legal system.
Therefore, white collar criminals are seen and treated as more socially acceptable than street
criminals in India.

Keywords

White collar crime, punishment, acceptability, loss,India, education.

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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

One of the reason for arguing that why white collar crime is more socially acceptable than
street crimes in India is that the media and other news sources have prevented the public from
being fully informed about these types of crimes. Although it is quite likely that this would not
be the case if the public are educated and aware about what is white collar crime and how it is
affecting their day to day economy, in our current general lack of awareness everyone thinks
and know only about street crimes and also population is far more concerned about street crimes
and their consequences. Because of this, citizens don't take action against those who are hurting
them from a position of high power in their life because they don't realize just how destructive
these criminals are. This is a major problem for our future generations because nobody is
spearheading a strong fight against wealthy criminals, rather they have seemingly free reign to
do what they chose to with very few punishments, or any at all. As you'll see, this is a cyclical
issue beginning with the money which many white collar criminals possess. Using highly-priced
defense attorneys, many such criminals wind up with extremely lenient punishments or no
consequences whatsoever because the prosecutorial team doesn't have the resources to compete
with the defense. Ultimately white collar crimes are socially acceptable when compared with
other forms of deviance at a lower social level.
Corruption, fraud, and bribery are some of the most common white collar crimes in India as well
as all over the world. The Business Standard on 22.11.2016 published a report titled „The
changing dynamics of white collar crime in India‟ stating that in the last 10 years, the Central
Bureau of Investigation (CBI) has found a total of 6,533 cases of corruption out of which 517
cases were registered in the past two years.

This research analyses a critical study on white collar crime in India and to understand the
concept of white collar crime. It can be also called the crimes of educated and professional elites.
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 in white collar crime in recent decades is to be found in the fast
developing economy and industrial growth of this developing country.White-collar crime is
pervasive and widely spread in almost all the professions and occupations in our society. The
problem is quite acute, both in terms of variety and the extent of white-collar criminality. In
India there is requirement for making powerful of percept specifically in the upper class and
among the public assistance. It is therefore essential to develop low profile group rules and

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services morals related on the basics or base of unqualified fairness and morality for the baenefit
of national prosperity. This is effective by medium character goodwill at deep level and infuse
warmth of real worry for the country among young public so that they are ready for an greater
living when they enter real world. The accused persons against whom the cases are pending in
the courts are yet to be prosecuted and punished. We read in the newspapers of the systematic
raids conducted by the Income Tax Department and the Enforcement Directorate against
business tycoons but we never read anything about their prosecution. Politicians support them for
the funds they receive from them for elections and for filling up their personal coffers. Policemen
do not take them into custody for the fear that they (businessmen) might retaliateand reciprocate
with court actions or might get them transferred by seeking help from the politicians. The courts
also do not impose serious punishment on these economic offenders. In case of big capitalists
(like Kirloskar), the judges grant bail by hearing the case in their houses even at night.

Statistics showed that 4,000 crores worth of trading was carried out using fake or duplicate PAN
cards. Maharashtra showed a rapid increase in the number of online cases with 999 cases being
registered. The report also mentioned that around 3.2 million people suffered a loss because of
the stealing of their card details from the YES Bank ATMs which were administered by Hitachi
Payment Services.

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. India‟s rank on Transparency International‟s
corruption perception index (CPI) has improved over the years.

In 2014, India was ranked 85th which subsequently improved to 76th position in 2015 because of
several measures to tackle white collar crimes. In 2018, as per the report of The Economic
Times, India was placed at 78th position, showing an improvement of three points from 2017,
out of the list of 180 countries.

India is a developing country and white collar crimes are becoming a major cause for its under
development along with poverty, health, etc. The trend of white collar crimes in India poses a
threat to the economic development of the country. These crimes require immediate intervention
by the government by not only making strict laws but also ensuring its proper implementation.

The five attributes of the given definition are:

 It is a crime.

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  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.

Related to the corporate sector, white collar crimes are defined as non-violent crimes, generally
committed by businessmen and government professionals. In simple words, crimes committed
by people who acquire important positions in a company are called white collar crimes. This is a
major problem for our future generations because nobody is spearheading a strong fight against
wealthy criminals, rather they have seemingly free reign to do what they chose to with very few
punishments, or any at all. As you'll see, this is a cyclical issue beginning with the money which
many white collar criminals possess. These criminals hire highly priced defense lawyers to get
easily rid from the offences they have committed in their high posts which rescues them from
harsh punishments and many such criminals wind up with extremely lenient punishments or no
consequences whatsoever because the prosecutorial team doesn't have the resources to compete
with the defense and also the advocates of prosecution are unable to protect their clients from
such lawyers.

Ultimately white collar crimes are socially acceptable when compared with other forms of
deviance at a lower social level. Criminal activity is never an acceptable action according to the
majority of People, however, some criminals not only go unpunished for their crimes, but they
are rewarded. In the end they get compensation from their opposition of falsely implicating them
in the case. Executives of financial firms have taken large bonuses from bailout money intended
to rescue their company from certain failure and caused the company to fall further behind,
ultimately punishing the taxpayer as well as the company's clients.

Evolution of white collar crime-

Popularly known as the Carrier’s case,1 it was the first case of white collar crimes which was
documented in the year 1473 in England. In this particular case, the agent was entrusted with the
responsibility of the principal to transport wool from one place to another. The agent was found
guilty of stealing some of this wool. The English Court after this case adopted the doctrine of
„breaking the bulk‟ which means that the bailee who was given the possession of goods tried to
break it open and misappropriate the contents.

1
https://definitions.uslegal.com/c/carriers-case/

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However, the growth of industrial capitalism has taken criminality to the next level. The
bourgeois institution dwells into committing such crimes out of greed and misery to have and to
be able to attain more. In 1890 in America, the Sherman Antitrust Act was passed, which made
monopolistic practices illegal. The penalties imposed on offenders of white collar crimes in
Great Britain and the adoption of competition or antitrust laws by other countries were not as
sweeping as the Sherman Act.

In the late 18th and early 19th century, a group of journalist rose the sentiments in the mass
seeking reforms. By 1914, Congress was seen making great efforts in strengthening the
sentiments laid down by the Sherman Act. This Act proved out to be more stringent in
comparison to the Sherman Act in dealing with the monopolistic illegal practices.

Historical background

Edwin Sutherland’s Definition. It was in 1939 when for the first time Edwin Sutherland, an
American sociologist, defined white collar crimes. He described it to be crimes committed by a
person of high social status and respectability who commits such crimes during the course of
their occupation. In the case of street crimes, nobody presents these "reformed criminals" with
money to repair what harm they have caused, trusting them to be honest and not to abuse the
freely given funds. Further, street criminals convicted of even minor crimes are almost certain to
receive sanctions that are at minimum a burdensome inconvenience. Therefore, white collar
crimes are more socially acceptable than street crimes. This is because a lack of awareness and
education about white collar crime prohibits the public from understanding how they are being
victimized mainly because the media doesn't present stories of elite corruption in an unbiased
manner to the public.

Furthermore, most of the laws that deal with white collar crimes are federal, not state laws,
meaning local prosecutors won't usually deal with white collar crimes. The Attorney General's
office is responsible for the investigation and prosecution of federal crimes, but prosecutors don't
want to make enemies with powerful business people because of the potential harm it poses to
their political future. If a prosecutor pits himself against a well-connected individual their
political future is likely to find itself in jeopardy

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Furthermore, white collar criminals are romanticized in some popu1ar T.V. shows and movies,
the prosecution team responsible for bringing these criminals to justice is often times
underfunded, and white collar criminals rarely directly cause physical harm leading many
individuals to not concern themselves with bringing these deviants to justice. This is a major
issue for our society because white collar criminals are the individuals in a position to cause
much irreversible damage to the way we live. Not only do direct financial costs play a role in the
demise of our economy but indirect, ripple-effects presents massive issues for many citizens.

RESEARCH QUESTIONS

1. What is white collar crime?

2. What are the types and legislations related to white collar crime?
3. Upto what extent white collar crime persist in india?
4. What are the commissions form for the control of white collar crime?
5. Is white collar crime accepted in the society?

OBJECTIVES OF THE RESEARCH

1. To know what is white collar crime.

2. To analyze presence of white and blue collar crime in society.
3. To know the legaislative measures in India against white collar crime
4. To know how and why white collar crimes are accepted in society.
5. To know how it can be controlled by the legislatures and society.
6. To study the impact of White Collar Crimes on Indian economy and its effect on
development activities.
7. To suggest reforms in law for the enhancement of penalty.

Hypothesis
There is significant difference between White collar Criminality and other types
systematic crimes . Enhancement of penalty in case of conviction of the accused of white
collar crimes which will further result a deterrent to the people indulge in this activity.

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 LITERATURE REVIEW
In the book titled,Criminology, Victimology and Penology”, author Dr. S.S. Srivastava,
has interestingly provided an outstanding work on white collar crime, which have always
been recognized as un-parallel and incomparable works with any other book on the
subject, much because of the in-depth study of different types of offences and
punishments for that, from the standpoint of Comparative law in addition to the
exhaustive and analytical study of the theme and throughout of social acceptability of
white collar crime. This book is eminently readable and the contents are easily accessible
because they are set forth in a jargon-free language.
In the book titled, Indian Penal Code author S.N. Mishra , has provided nicely about
many times of white collar crime, its essentials with case laws related to every aspect has
been properly covered in a very easy language.
Sutherland (1940)2: Sutherland was the first person who coined the term „white collar
crime‟. According to him, white collar crime means „crime committed in the upper, white
collar class, which is composed of respectable, or at least respected, business and
professional men‟. Although many writers before him had stressed the need to study the
crimes of the business elite but Sutherland was the first person to draw the attention of
the criminologists towards this much neglected field. He believed that the existing
theories of criminology laid too much emphasis on poverty or with psychopathic and
sociopathic conditions related to poverty. According to him the existing theories were
based on the data collected by the law enforcement agencies which was biased as they
did not take into account the crimes committed by the „upper class‟ in the society.

RESEARCH METHODOLOGY
The method of research of this project is based on doctrinal method. This seminar is both
descriptive and analytical in approach. It is largely based on literature. Literature review
has been done extensively in order to make a comprehensive presentation. The Primary

2
Edwin H. Sutherland, “White Collar Criminality”, American Sociological Review, Vol. 5, No.1, February 1940, pp. 1-
12.

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sources of information are Bare Act of Indian Penal Code, Code Of Criminal Procedure,
Indian Contract Act, Companies Act, Prevention of Corruption Act and the secondary
sources are articles and books.

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TABLE OF CONTENTS

Abstract ……………………………………………………………….2

Introduction to White Collar Crimes…………………………………... 3

Latest developments related to white collar crime…………………….11

Types of white collar crime……………………………………………12

Causes of white collar crime……………………………………………16

Projects on white collar crime…………………………………………..19

Case Studies of White Collar Criminals and Scandals…………………. 23

Conclusion and Recommendations…………………………………….26

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LATEST DEVELOPMENTS RELATED TO WHITE COLLAR CRIME IN
INDIA

The PCA was amended in 2018. Prior to the amendment, the prosecution and punishments under
the PCA were aimed only at public officials who received and accepted bribes. Companies
which facilitated or paid bribes to public officials could only be prosecuted under the offence of
conspiracy to commit a crime. Now, payment of a bribe to public officials has been included as a
distinct offence, opening up the scope for direct prosecution of bribe givers. Moreover, the
investigative agencies have been granted broader powers to investigate and prosecute a company
along with its director, managers and other officers who consented or connived to commit the
said offences.

Additionally, the Fugitive Economic Offenders Act, 2018 was enacted with a view to dealing
with the increasing number of instances of high-value economic offenders fleeing India. This
legislation enables the relevant authorities to confiscate the assets and properties of individuals
accused of specified economic offences (such as money laundering), where the value of the
offence in question is in excess of INR1 billion, who have left India and refuse to return to face
prosecution.3

New amendments to the Companies Act, 2013 were recently notified. These amendments enable
the Serious Frauds Investigations Office (SFIO) to identify the beneficiaries of a corporate fraud
and initiate legal action for disgorgement of benefits by such persons. Prosecution of corporate
fraud cases by the SFIO, including the production of the arrested and accused persons will now
take place in special courts.

Recent amendments to the PMLA have substantially enhanced its scope. A person shall now be
guilty of money laundering if he or she is actually involved or knowingly a party to one or more
of the following processes concerning tainted assets: concealment, possession, acquisition, use,
projecting as untainted property and claiming it as untainted property, in any manner whatsoever.
The amended PMLA now enables the Enforcement Directorate (ED) to attach property which is
not only derived from the proceeds of crime but may also be derived from any criminal activity
related to the proceeds of crime.

3
https://practiceguides.chambers.com/practice-guides/white-collar-crime-2019/india

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TYPE OF WHITE COLLAR CRIMES AND LAWS RELATED TO IT IN
INDIA-

Criminal Company Law and Corporate Fraud

The Companies Act, 2013, specifically recognises fraud as an offence in relation to the affairs of
a company. This operates in addition to the general offences in relation to fraud, dishonesty, etc
that are set out in the IPC.
Fraud, in relation to the affairs of a company, includes any act, omission, concealment of any
fact or abuse of position; committed by any person (or with the connivance in any manner of
another person); with intent to deceive, gain undue advantage from, or injure the interests of; the
company, its shareholders, its creditors or any other person; whether or not there is any wrongful
gain or wrongful loss.
Bribery, Influence Peddling and Related Offences
Anti-bribery prosecutions in India have usually been initiated under the provisions of the PCA
and the IPC (specifically the offences of criminal conspiracy).
The main bribery offences in India are:

 a public official taking illegal gratification as a reward or motive for undertaking or

refraining from an official act, or for showing or refraining from showing any favour
or disfavour to any person in the exercise of their official functions;

 an individual taking illegal gratification to influence a public servant to commit the

above-stated offence;

 a public official obtaining a valuable thing without consideration from a person in

respect of business dealings with that person;

 a public official dishonestly or fraudulently misappropriating or converting any

property entrusted to them or under their control, for their personal use, or allowing
any other person to do so;

 a public official obtaining an item of value or a monetary advantage for themselves or

for any other person, through corrupt means, abuse of their office, authority or other
illegal means;

 an individual giving or promising to give another person any advantage with the
intent to induce a public official to perform a public duty improperly; and

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  being associated with a commercial organisation that gives or promises to give an
undue advantage to a public official.

ANTI-BRIBERY REGULATION
Under Section 9 of the amended PCA, officials and associated persons of companies can be
prosecuted for giving bribes to public officials. However, commercial organisations can use the
defence that they had „adequate procedures‟ in place to prevent their associated persons from
undertaking such conduct. In the absence of such procedures, a commercial organisation,
irrespective of its size or operations, is vulnerable to liability under the anti-bribery law of India
for all the dealings of its officials and associated persons.
INSIDER DEALING, MARKET ABUSE AND CRIMINAL BANKING LAW
The Securities and Exchange Board of India (SEBI) regulates and prohibits collective investment
schemes such as ponzi schemes and chit funds. Any fraudulent or unfair trade practice in relation
to the securities market, including collective investment schemes, attracts strict sanctions from
the SEBI in the form of restrictions on operating in the market. Moreover, unregulated deposit
schemes are banned under the Banning of Unregulated Deposit Schemes Act, 2019 and any
persons soliciting or receiving deposits for such schemes can be prosecuted and punished with
imprisonment for between two and seven years depending on the specific acts, along with
monetary fines up to INR1 million.
Insider trading is expressly prohibited in India through two pieces of legislation: the Companies
Act, 2013 and the SEBI (Prohibition of Insider Trading Regulations), 2015 (Insider Trading
Regulations).
Section 195 of the Companies Act 2013 prohibits any person with access to price sensitive
information, including the directors or key managerial personnel of a company from entering
into insider trading, except for situations where price communication is required in the ordinary
course of business or under any law. Any person who contravenes the provisions of Section 195
will be liable to pay a fine ranging from INR500,000 to INR250 million or three times the
amount of profits made out of insider trading, whichever is higher. Violators can also face
imprisonment for a term of up to five years.

TAX FRAUD
The Income Tax Act, 1961 (Tax Act) provides for several specific criminal offences in relation
to tax fraud, these include:

 Fraudulent removal, concealment, transfer or delivery of property to thwart recovery

of tax (Section 276 of the Tax Act) – the elements of the offence necessitate
intentional and fraudulent removal, concealment or transfer of property, specifically

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 with a view to avoid payment of the legitimate tax amount. This offence is punishable
with imprisonment for up to two years and may also include levy of a fine.

 Failure to timely furnish tax returns and failure to pay taxes withheld from the
government are punishable with imprisonment for up to seven years and with a fine
(Sections 276 B and 276CC of the Tax Act).

 Making a false statement in verification or delivery of a statement of accounts

(Section 277 of the Tax Act) – the elements of the offence necessitate that an
intentional and deliberate false statement has been made under any necessary
declarations and forms required to be signed under the legislation, or any accounts
which are presented to the tax authorities. This offence is punishable with both
imprisonment for up to seven years (where the amount of tax evaded is in excess of
INR2.5 million) as well as a monetary fine.

 Abetting or inducing another person to make or deliver a false statement of accounts

(277A of the Tax Act) – Any person who wilfully abets the commission of the
offence stated above shall also be subjected to the same punishment as described
above. The elements necessitate that the abetter act with the intent of enabling the
offender to make a false statement or present false statements of account.

MONEY LAUNDERING
In terms of the PMLA, the offence of money laundering has been described as the act of
deliberate and knowing concealment, possession, acquisition or use and projection or claiming of
the "proceeds of crime" as untainted. Each of these elements has to be established to make out an
offence of money laundering.
Further, "proceeds of crime" has been defined as any property derived by a person as a result of
criminal activity related to a "scheduled offence", as per the PMLA. The PMLA has a list of
scheduled offences, which, inter alia, include a list of offences under the IPC, PCA, Customs
Act, Companies Act, 2013 and other pieces of legislation which are likely to result in generation
of tainted assets and funds.
The following sanctions may follow a conviction on a charge of money laundering under the
PMLA:

 imprisonment for a minimum term of three years and up to a maximum term of ten
years, depending on the nature of the predicate offence (Section 4(1) of the PMLA);
and

 property suspected to be generated from the proceeds of crime may be provisionally

attached for the duration of the trial under the PMLA, the property may be

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 confiscated and vested with the central government upon a conviction for the offence
of money laundering.

FINANCIAL/TRADE/CUSTOMS SANCTIONS

Trade and customs related sanctions are governed by the Customs Act, 1962. The sanctions
in question are either civil/administrative or criminal. The civil sanctions include imposition
of monetary penalties and confiscation of goods. Importing or attempting to import
prohibited goods, avoiding duty payment, importing in violation of foreign trade policy, mis-
declaring goods or violating rules regarding movement, storage, unloading or use of imported
goods (Section 111 of the Customs Act); knowingly making false declarations or making
false documents in relation to any business transacted with customs (Section 132); intentional
obstruction of any customs officer in exercise of their powers under the Act (Section 133)

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WHY WHITE COLLAR CRIME PERSIST

People in India consider crime as where there is a physical harm to a person. Financial loss in the
society cannot be easily seen and considered. White collar crime is by no means an invisible
issue facing by our society; however, many people are not aware of the extent to which it
damages our society. The fact is that millions are affected by the greed and corruption of white
collar criminals, and many don't even realize it. Holtfreter's article in the Journal of Criminal
Justice, stated that, "Although financial losses from white-collar crime continue to exceed those
of street crime, the criminal justice system has traditionally focused on the latter. Past research
suggested that citizens are more likely to support punitive sanctions for street offenders than
white-collar offenders". Perhaps it is fear of street crime that drives citizens to pursue steeper
punishments for those criminals who are more visible on the streets than those who sit
comfortably in office chairs. It is also possible that a lack of education about white collar crime
has prevented Indian‟s from seeing the full damage that white collar crime is responsible for.

General lack of awareness about the prevalence and damage involved in white collar crimes are
the corporations control over media sources which report to the public daily. Furthermore, the
(which collects and compiles information about crimes into the Uniform Crime Report every
year) doesn't collect statistics about white collar crimes, leading to a further lack of awareness
and lack of emphasis on white collar crimes in the law enforcement community. To add to that,
there are very few classes and educational seminars dedicated to issues regarding white collar
crime. Naturally what criminal justice students are taught they will tend to focus on and they
may never diverge from the well-beaten path in order to explore other areas of criminal activity.
Finally, many law enforcement professionals, particularly those who serve in a "local level"
capacity, aren't trained in the recognition of and don't have the tools to successfully prosecute
many white collar criminals from the upper classes. The interesting thing about white collar
crime is that the definition of this criminal activity encompasses several types of crimes
committed by those in lower classes including service frauds, which can be more easily detected
and prosecuted by local police. Some of the reasons for the cause of white collar crime are-

GREED : High class people are financially stable however, they still commit crime because of
their interest in earning more which we call as greed and more earning more they coose illeagay
means to earn more and causes economic losses. It is same as economic theory of need, want,
desire. As the white collar crimes are committed by high profile persons, the element of
greediness is also present mainly among them.

COMPETITION: Drawin in his theory of evolution4 has stated that Survival of the fttest is
necessary and thus there will always be competition for survival. In order to be ahead from the

4
On the Origin of Species" in 1859

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competitors people come in greed for their own sake and started doing the illegal things which
causes crime.

NO FIXED LAWS FOR THE OFFENDERS: after committing the crimes most of the
offenders get away without getting any punishment because there is not enough laws to deal with
that crime. In many of the cases due to supreme political connections most of the offenders get
released easily without any harsh punishment being served. Moreover, in some cases after
committing abnd causing a huge loss to the society and the members of society knowing about
crime also, left with no witnesses to give evidence against them. The high profile people buys all
the witness and represent themselves as clean hand. And the other reason why there is no
evidence against them is because these crimes are done in private and no ones know about the
committing of such crimes.

EASY, SWIFT AND PROLONG EFFECT: The rapid growing technology, business, and
political pressure has introduced the criminals to newer ways of committing white collar crimes.
Technology has also 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. This would cut down the competition.

LACK OF AWARENESS: Most of the people did not know about the presence of this type of
crimes. They all know that bribery and all exist in our society but they were not aware that these
all are considered as crime. 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. In one‟s perception when the word crime comes, they perceive it as crime
where there is physical harm to a person. This is the biggest reason behind not knowing about the
presence of white collar crime in the society.
As consumers, we may unknowingly be victimized by various corporations through price-fixing
scams, unsafe products which are released and sale out into the market, and various other
fraudulent and unethical practices. When the prices of common items rise in grocery stores
across the nation, it may be due to an increase in the cost of production or some other legitimate
cause, or it may be attributable to price fixing arranged between multiple large companies. The
definition of white collar crime doesn't dictate that the perpetrator must be of high social
standing or even wealthy, only that they are committing this crime from a position of trust in the
course of doing their job.Therefore, crimes such as: service frauds (auto repair fraud, home
repair fraud), bank fraud (committed by branch employees), and lower-level counterfeiting (by
salespeople) are considered types of white collar crime. These white collar offenses are much
more likely to be detected and the offender prosecuted than other higher-level offenses where the
crime is ambiguous and the offender well-defended. Not only do high-level executives often
have well-paid legal defense teams to get them out of trouble, but they have the resources to
prevent the public from having a full

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understanding of what they really did. One area of strong control is the media where the
stories can be told in a favorable manner. The media will rarely ever publish a story about such
dishonest business practices because it is in large part controlled by corporations who sponsor it.
This is perhaps best explained by Anup Shah of Globalissues. org, In some places major
multinational corporations own media stations and outlets. Often, many media institutions
survive on advertising fees, which can lead to the media outlet being influenced by various
corporate interests. Other times, the ownership interests may affect what is and is not covered.
Stories can end up being biased or omitted so as not to offend advertisers or owners. The ability
for citizens to make informed decisions is crucial for a free and functioning democracy but now
becomes threatened by such concentration in ownership

NECESSITY : People also commit white collar crimes to meet their own needs and the needs of
their family. But the most important thing that the people of high social status want to feed their
ego. They consider doing crime as a part of their life. Mentality of every high profile person is
that business cannot be done and exist for life long unless they get involve in the illegay things
and doing economic harm.

Lack of Statistics
There is no proper agency to give date about the white collar crimes. As there is no proper record
of it the society don‟t know about its presence and persist in the society. There are lot of
economic losses in India but there data statistic is being concealed by the media which does not
provide any resources.Satyam Scam, 2009: 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:5

 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.

5
https://blog.ipleaders.in/white-collar-crime/

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PROJECT REPORT ON WHITE COLLAR CRIME IN INDIA
Various committees were formed to look into white collar crimes and set up rules and
regulations to prevent them and ultimately eliminate them.

 The Report on the Commission on the Prevention of Corruption, 1964

On 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 role that the Central Vigilance Commission plays is:

1. To supervise the work of Delhi Special Police Establishment in only those matters
which relate to the offences which have been committed under the Prevention of
Corruption Act, 1988.
2. To direct the Delhi Special Police Establishment in discharging their responsibility
given to them under sub-section (1) of section 4 of the Delhi Special Police
Establishment Act, 1964 .

 The Report on the Commission of Inquiry on the Administration of Dalmia Jain

Companies, 1963

In the 1930s Dalmia Group run by brothers, Ramkrishna Dalmia and Jaidayal Dalmia, merged
with Sahu Jain Family to form Dalmia-Jain Group. This business was ultimately split between
the two families and again between the two brothers in 1948. On the allegations of corruption
against the group, Vivian Bose Commission of Inquiry into the affairs of Damila-Jain group of
companies was set up in 1963.

The committee said that because of the group‟s collection of black money, undisclosed assets
and undetermined income tax liabilities, the dissolution or split had become so complicated that
it could not be officially said that the groups had split. The Commission headed by Justice S.R.
Tendulkar and after his death by Justice Vivian Bose, sentenced Ramkrishna Damia on charges
of tax evasion, perjury and criminal misappropriation of funds in 1962.

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  The Report on L.I.C. Mundra affairs

It was in the 1950s when, Haridas Mundhra, a stock speculator was arrested and imprisoned in
the case of the first big financial scandal of newly independent India. At that time, Jawaharlal
Nehru was the Prime Minister of India. His daughter Indira Nehru was married to Feroze
Gandhi, who was also a Member of Parliament. Feroze Gandhi was the driving force behind the
anti-corruption movement which led to the imprisonment of Ramkrishna Dalmia.

When Feroze Gandhi finally came to power he questioned whether the newly established Life
Insurance Corporation had used premiums from the policyholders. Ultimately a committee was
set up which was headed by the retired judge of the Bombay High Court, Justice M.C. Chagla
which came to the conclusion that Mundhra be sent to jail on the ground of, as many as 124
prosecutions against him and 113 of them resulting in convictions.

 Das Commission Report, 1964

In the case of R.P. Kapoor v/s Pratap Singh Kairon6, Pratap Singh Kairon, who was the Chief
Minister of Punjab was accused of using wealth to boast his high status of and also of his family
at public expense. The Commission exempted him on the ground that a father could not be held
liable for actions of his grown-up children. The Commission clarified that a son cannot be
stopped from carrying out a business of his choice except that the son cannot use his father‟s
political position and power to exploit others. The petition was therefore dismissed by the court.

 Administrative Reforms Commission on Reports

Administrative Reforms Commission‟s 4th report titled „Ethics in Governance‟ had made
amendments and included new provisions in order to reduce the number of white collar crimes in
India.

1. The report introduced a new provision stating that partial funding by the state is
allowed in elections so as to avoid illegitimate and unnecessary expenditures by the
political parties.
2. It suggested an amendment to section 8 of the Representation of the People Act, 1951,
keeping people facing charges in case of a grave or heinous crimes and corruption out
of participating in elections.
3. The report on the election of the Chief Election Commissioner and other Election
Commissioners decided to form a collegium in order to select them. The collegium
would consist of the Prime Minister of India, the Speaker of Lok Sabha, the Law

6
(1964 (1) Cri LJ 224 (SC)
20
 Minister and the Deputy Chairman of the Rajya Sabha as its members. This would
prevent in wrongful exercise of power and prevent manipulation by the authorities
enjoying dominance.
4. It was proposed that an office of „Ethics Commissioner‟ be formed by each House of
the Parliament. This office would be regulated by the Speaker or the Chairman to
follow the code of ethics, to advise the body whenever required and maintain records
of the office.
5. Most importantly the Commission asked the Government to recognize „collusive
bribery‟ as a special offence. The Commission advanced that section 7 of the
Prevention of Corruption Act needs an amendment for the inclusion of „collusive
bribery‟ as an offence. This would prevent the public servants from performing such
acts which leads to loss to the public.
6. The Commission also recommended to take immediate measures for the
implementation of Benami Transactions (Prohibition) Act, 1988.
7. The Commission gave protection to whistleblowers on the grounds of confidentiality.
And also made harassment and retaliation against them a punishable offence.
8. The Commission said that the media should have their Code of Conduct and self
regulating mechanism to avert from wrongful actions and government be allowed to
disclose the cases of corruption to media in order to help them fight against corruption
in the country.
9. The Commission made an important decision stating that the head of the office should
be given the responsibility to take proactive vigilance on corruption.

There are other provisions that were presented by the Commission before the Government
thereby assisting the Government in their fight against corruption and other malpractices by the
people at higher positions in the authority.

 Law Commission 47th Report

In its 47th report, the Law Commission said that since a corporation does not have a physical
body, no pain can be inflicted upon them as a punishment. A corporation does not have a mind
that can be accused of guilty intent and therefore new penalties should be created to punish them
for their illegal and wrongful acts.

The Commission found that the real penalty for the corporation would be to experience a
curtailment in their reputation. And that they be called a disgrace. The commission said that not
only the directors or managers should be punished but the corporation as well. The people should
be able to link the offence with the name of the corporation also.

21
The Commission recommended the inclusion of the following provisions in the Indian Penal
Code, 1860:

1. In every one of those cases where the offence has been committed by the corporation
and the punishment includes imprisonment or fine and imprisonment both, the court
will have the power to impose on these offender fine only.
2. In every one of those cases where the offender is the corporation and the punishment
for his offence can be either imprisonment and any other punishment other than fine,
than in that case the court shall have the power to impose on such offenders fine only.
3. In this section, „corporation‟ should mean an incorporated company or other body
corporate. It would also include firms and other association of individuals.

Like the above mentioned provisions, the Commission in its report has mentioned the
punishment the offender corporation or company would be subjected to.

 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.

22
RECENT CASES IN INDIA:

SEBI v. Burman Plantation and Others-

Before the High Court of Allahabad, the learned counsel on behalf of SEBI claimed that the
company is being wrongly accused as the company was not in a position to pay its debts,
including payments to its investors. When the advertisement by the company was put to
question, the council said that the advertisement was given in 2003 while the order was passed in
2004, when the company was not in a position to payback its debts.

Moreover, the sum of money which the investors were claiming was nowhere cited. The main
claim of the counsel made the legislatures raise the punishment from 1 year to 10 years and also
increased the fine which may now extend to 25 crores by amending the laws under section
24(1) of the SEBI Act. At last, Ravi Arora, the accused, was held liable.

Abhay Singh Chautala v. C.B.I. 7

There were two appellants in the present case against whom a charge sheet was filed for
committing an offence under Section 13(1)(e) and 13(2) of the Prevention of Corruption Act,
1988 read with Section 109 of the Indian Penal Code, 1860 in separate trials. It was alleged that
both the accused had accumulated disproportionate wealth as per their income when they were
they members of the Legislative Assembly.

When the Central Bureau of Investigation (CBI) initiated its investigation it was found that the
father of the appellant had acquired huge properties and same as the case with the appellants.
The High Court held that the appellant had provided a totally different office(s) of the accused
than they were actually holding at that time. Thus the sanction under Section 19 of the
Prevention of Corruption Act, 1988 was held to be without any merit.

Binod Kumar v. State of Jharkhand & Others

This case was filed against several ministers of the State of Jharkhand along with the Chief
Minister for having the possession of unaccountable money. The High Court had requested the
Central Government to transfer the case from Enforcement Directorate to CBI by way of power
given to it under Section 45 (1A).

7
(2011) 7 SCC 141

23
It was alleged that the ministers were in possession of hefty amounts of money and though no
evidence was found to charge them with money laundering case, a strict investigation was
proposed.

The ministers were said to be the owners of property not only in India but abroad as well.
Therefore, the court asked for an investigation to determine this wealth was acquired by making
use of the official position. It was to be clarified if a white crime has been committed under the
Prevention of Corruption Act, 1988 and under the Indian Penal Code, 1860.

The CBI started its investigation under Prevention of Corruption Act, 1988 and the Indian Penal
Code, 1860 as the power to carry on investigation under Prevention of Money Laundering Act
was only with the Enforcement Directorate, which is of course subjected to the power given to
the Central Government under Section 45 (1-A) of the Prevention of Money-laundering act.

Some of the other case laws are-

1. ICICI Bank: ICICI Bank resorted to internal investigation amidst investigations by the
Reserve Bank of India, Securities and Exchange Board of India and Central Bureau of
Investigation pertaining to allegations of fraud against Chanda Kochhar, the erstwhile CEO of
ICICI Bank for breach of provisions relating to the Code of Conduct and regulatory provisions
relating to conflict of interest. ICICI Bank engaged retired Supreme Court Justice B. N.
Srikrishna, to head an internal probe panel in the matter. Justice Srikrishna was assisted by a law
firm and a forensic audit company.

In July 2018, ICICI Bank instituted yet another internal probe to examine the allegations of
irregularities in 31 loan accounts as per reports from another whistle-blower. The bank hired a
law firm to investigate these allegations of inflation of profits by $1.3 billion over 8 years by
delaying provisioning of the 31 Non- Performing Assets accounts.

2. Punjab National Bank ("PNB"): The Bank was faced with a USD 2 Billion fraud involving
diamantaire Nirav Modi and Mehul Choksi. The fraudulent activities of Nirav Modi and Brady
House Branch of PNB were revealed after complaints made to Central Bureau of Investigation
by forex banks. An internal probe conducted by PNB suggested that officials from Brady House
Branch of PNB had fraudulently issued undertakings to forex banks, from whom Nirav Modi had
taken credit. This raised huge concerns about PNB's audits, compliance, vigilance systems and
internal governance. PNB appointed a consultancy firm to undertake forensic audit of five group
companies of Nirav Modi. The investigation revealed 54 officials of PNB ranging from clerks to
senior managers were involved in the fraud. Based on the report, 21 officials were suspended by
PNB. The internal report has been handed over to the police and relevant investigating
authorities and is being used as part of evidence.

24
3. Flipkart: Pursuant to allegations raised against Flipkart co-founder and group chief executive
Binny Bansal for serious misconduct, an independent investigation was done on behalf of
Flipkart and Walmart. This led to subsequent resignation by the co-founder. There were reports
that the allegations pertained to certain instances of sexual harassment in 2016, which were
denied by Mr. Bansal.

4. Cognizant Technologies Solutions: Lifshitz & Miller announced investigation into possible
securities laws violations and Foreign Corrupt Practices Act against officials of Cognizant
Technologies Solutions relating to improper payments in facilities in India. The company
reported the violations in their regulatory filing before the Securities Exchange Commission
("SEC") and US Department of Justice to ensure voluntary disclosures to reduce or limit the
imposition of penalties.

5. HDFC Bank: An employment fraud by a consulting firm on HDFC Bank was recently
unveiled pursuant to an internal investigation conducted by the Bank. The consultancy agency
had pulled off the fraud by puffing up resumes of candidates through forged documents, along
with falsified salary slips, forged certificates and documents, as well as non-existent references.

25
CONCLUSION AND RECOMMENDATIONS

Conclusion-

As we come to a close it is important to re-iterate the evident disparity in treatment and attitudes
towards white collar criminals versus street criminals. On account of a lack of awareness,
education, and statistics regarding white collar crimes many citizens are not aware of the true
nature of elite deviance in the India. Furthermore, white collar crimes are labelled as
comparatively more socially acceptable than street crimes by the lawmaking process of which
the wealthy and affluent have primary control. Major corporations also exercise control over
regulators and regulatory agencies because of agency capture and self-regulation initiatives
which have been introduced. Finally, the idea of white collar criminals has been romanticized
and distorted in the media and movies which twist Indian's perceptions towards these criminals.
This perfect storm of conditions has created a social system where white collar crimes are more
socially acceptable than street crimes.

White collar crimes have two surprising features, first, that they are non-violent crimes, though
the criminals have the tendency to gain control or have a sense of entitlement, and, second, that
they are committed by people in the higher profession. The reason behind its acceptability in the
society is that the criminals of white collar crime have enough resources to defend themselves
not only the strong legal defence but also the media which have control over mind setup of
many people they never reveal any news of big business man. The fraud committed by them are
concealed as they are the part of media corporations and media are sponsored by them only.

However, these crimes are also committed by poorly paid underlings, although the mastermind
behind the commission of such crime could be a rich person enjoying a higher social status in his
occupation. white collar crimes are often committed because of peer pressure or are dependent
on the culture of the company.

As our society is growing towards modernity and the world is experiencing new technological
advancement, the rate of crime is also increasing at a faster rate. Particularly the growth in white
collar crimes has been enormous. From the medical profession to educational institutions, these
crimes are being committed everywhere.

26
The cases of online fraud are also increasing at an alarming rate. India, as a developing nation,
has faced difficulties in leading its economy towards growth because of these crimes in general
and corruption in particular.

The investigating officials are in need of training where they could acquire the skill to trace these
criminals, otherwise tracking of whom is difficult, complicated and tiresome job. The
investigating officials‟s work should be scrutinized to ensure transparency in the work as the
white collar crimes are committed by people enjoying higher social status in their occupation.

The government must make laws that are strict enough to reduce the commission of such crimes.
And the system should be such that not only there exist laws giving strict punishment to the
accused but also dispose off maximum cases in a short while. If not done so then people will
soon lose complete faith in the system, as these crimes are committed by people who should act
as a role model for the society.

The media has a key role to play in reducing the rate of increasing white collar crimes. It has
been noted that most of the white collar crimes go unreported. So, if the media becomes more
active towards publishing frauds and scams at higher levels and revealing how do the people at
higher position in a company use their powers arbitrarily, and also make efforts in making people
aware about the white collar crimes, and avoid corrupt practices, then this would definitely help
in reducing the rate at which the white collar crimes are being committed.

White Collar Crimes are quickly expanding in our nation with the headway of trade and
innovation. The ongoing improvements in the innovation have given new measurements to PC
related violations known as digital wrongdoings. In that capacity, the professional violations are
expanding with the advancement of new sites. The regions influenced by these violations are
keeping money and budgetary establishments, industry, business and so on. Along these lines
wrongdoing is a demonstration or oversight which constitutes an offences and is culpable under
the law. As the office violations are expanding on consistent schedule, it harms the general
public on an extensive scale on the grounds that the laws are not appropriately directed and along
these lines there is a need to check the variables that are helping in the commission of such
wrongdoings.
In order for our system of justice to be practiced fairly among all the social classes represented
in the India it is important for several key things to happen.
Firstly, the National Bureau Crime Record and other agencies collecting data related to crimes
need to collect specific data regarding all known white collar crimes. This data needs to be
reported in a separate category of the Uniform Crime Report (UCR) in order to raise awareness

27
of the severity of white collar crimes. It is clear, however, that only reporting known white collar
crimes will not fix the issue alone because we are not aware of the full extent of
white collar crime in the India.
Secondly, the punishments related to known white collar crimes should be stricter as harsh
punishments can prevent crime to a great extent.
Thirdly, public awareness should be increased to make people more familiar about the white
collar crimes through any communication medium is also necessary
Fourthly, government should impose strict regulations regarding economic thefts of the country.
And lastly justice system should remain fair while assessing the bribery and corruption cases.

RECOMMENDATIONS-
The measures that can be adopted to prevent the commission of white collar crimes are:

1. The top investigating agencies of the country like the Central Bureau of Investigation,
the Enforcement Directorate, the Income-tax Department, The Directorate of Revenue
Intelligence and the Customs Department, needs strengthening, by way of
implementing strong regulating policies. The Central Vigilance Commission should
monitor the working of the officials sitting at top positions and also cross-check their
works, so as to ensure transparency in the system.
2. As the method of commission of such white collar crimes is advancing, so should the
training of the investigating officials. It often happens that ageing officers are well
experienced to understand the nature and techniques, but are not able to utilise the
technology for tracking the suspect. This happens due to lack of training. So, every
investigating officer must be trained in such a manner that, no matter how
complicated the case is, they would be able to easily resolve it.
3. To uproot the existence of such crimes, it is very important to include strict laws into
the system. Less amount of fine and shorter period of imprisonment makes it very
casual for the offenders to commit such crimes.
4. “Special Courts must be set up to adjudicate cases of white collar crimes” It is
recommended that Special Courts should be set up in the country to try cases of white
collar crimes. The setting up of special courts will ensure speedy trial in cases of
white collar crimes. In order to ensure efficient functioning of these courts, the courts
should function of following lines:

Special Judges: It is recommended that special judges should be appointed. Over the
years all the branches of law have grown enormously. The laws have multiplied,
judicial precedents have grown, and lot of literature and information is available for
study in each of these branches. It is not easy for every Judge to be able to master all

28
 the branches. Therefore, judges should be especially trained in laws relating to white
collar crimes.

Case Management: Case management system should also be introduced in the courts.
A study should be made to fix the number of cases that can be heard by a judge on a
particular day. The courts should try to finish the trial in white collar crimes within 6
months from the date of taking cognizance.

Monitoring: Each trial should be monitored. If the trial does not end within the
stipulated time period a report of the same should be sent to the High Court which
shall review the reasons for delay. Thus the unified machinery skilled in adjudicating
similar types of cases 335 will reduce the time taken for completion of cases and will
ensure that the judicial system of the country is resilient, accessible, speedy and
inexpensive. Fast track courts and tribunals should be set in all the parts of the
country for the early disposal of these cases. The tribunal should be provided with the
power to fine or imprison someone who has been held guilty. Such measures would
lower the rates of occurrence of white collar crimes.

5. The electronic and print media should be utilized in the right way to spread awareness
about white collar crimes. The general people need to be aware of such crimes and
that they are taking place everywhere, from a small cafe to big multinational
companies. Also, they need to be aware of the remedies they could seek in case they
become victim to such crimes.
6. Stringent laws and hefty fine and long term imprisonment should be given to the
offenders for committing such crimes. And for this to happen, the Indian Penal Code,
1860 should be amended and include provisions for the white collar crimes. For
example, the IPC could have a separate chapter dealing with white collar crimes.
7. The government may establish a separate body which would look into the matter of
crimes and criminality prevailing in the country. The independent body could be
named as the National Crime Commission. Since their entire work would be related
only to the crimes and would be an independent body, it could work more efficiently
towards reducing criminality in the country.

29