CHAPTER-2

GENESIS, CAUSES AND UNDERSTANDING OF

WHITE-COLAR CRIME AND CORRUPTION: AN
OVERVIEW
Offences are of two types viz., (1) conventional offences where mens rea is
an essential ingredient, (2) non-conventional offences where no mens rea is
required and they are termed as public welfare offences,1 white-collar crimes,2 and
socio-economic offences.3

White collar crime is a relatively new addition to criminal science. Though

some of such crimes for instances, bribery and other corrupt practice were in
vogue in India even during Hindu and Muslim period and western countries like
United States European Countries and Britain even since they existed 4. However,
the present study of white collar crime is the outcome of research conducted by
late Prof. Edwin Sutherland. He published his major first major study of white
collar crimes committed by seventy of the two hundred largest non official
corporations in the United States during 1940-50. The study revealed the
magnitude of various forms of anti – social activities prevalent in America which
was being committed by person of high social, status and repute while following
their professions.5

White-collar crime thought has its roots in a socialist, anti-business mindset

that defines the term by the socioeconomic class of persons it demonises. While

1
Francis Bower Sayre,“Public Welfare Offences” 33 Col.L.R. 55 (1933).
2
E.H. Sutherland, White Collar Crime 4 (National Criminal Justice Reference Service.1949)
3
Fortv-seventh Law Commission Report. (1972), p.4.
4
. Government of India, “Report of the Commission on the prevention of corruption”
(1964)para2.3.Kautilya in his Arthasastra refers to various kinds of corruptions prevalent during that
time ;See Law Commission of India, “29th Report: proposal to in clued Social and Economic
offences in the Indian penal code”, Pp. 1-9.
5
. K.D. Gaur Criminal law and criminology 280 (Deep and Deep Publication pvt.Ltd.,1ST edn.,2002)

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

Edwin Sutherland is credited as being the first to examine white-collar crime, the
field's development and the concept of white-collar crime did not occur in
isolation. The importance of conceptualising several types of white-collar
misbehaviour may be demonstrated by tracing the origins of the notion of white-
collar crime and explaining its subsequent changes.

The general indifference and casual attitude to words white collar criminals
has often precipitated a debate whether white collar crime is a crime per se or just
a mere aberration or flawed and may be deliberate, miss-Interpretation of law.
White-collar crime is not only a crime but a very serious type of crime with wide
and often gory repercussion. While saying this all the images of Norco money
laundering. Norco-terrorism, Systemic anarchy of southern and central Italy of
mafia heyday comes to mind. On other hand, its seriousness can be gauged from
the fact that effect of even a few white collar crime on the economic fabric of
society can be for more devastating than all the thefts, burglaries, robberies and
dacoities put together, If we consider the infamous securities seam case of 1992,
for example, the net losses of one case would well take care of losses by
conventional crime for scores of years. Mens rea is never lacking in any act of a
white collar criminal along with actual criminal act. In addition, he also inflicts
social injuries which are always graver then individual injuries. If there exist any
difference it is that of form and not of substance. One distinguishing factor
between an ordinary crime and a white collar crime, however, is that whereas a
professional thief is at least afraid of the enforcement agencies, white collar
criminals are rarely so.

White collar crime has been characterised in a variety of ways, including as

a crime perpetrated by a person of respectable or high social standing, or as a
criminal done in the course of, one’s vocations, as well as a crime involving
deception or a violation of trust, as non violent crime under taken for personal
gain, as crime that involves a combination of these factor and simply as business
crime.6

6
Sanjeev Mahajan, Criminology and penology 68 (Arjun Publishing House, New Delhi, 1stedn.,2008)

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Another important phenomenon which has further aggravated the problem

of these criminal activities in recent times is the concept economic globalization.
Globalization is the growing reality of the modern time. The concept of
globalization has changed the social, economic and political relations among the
countries of the world and world have become a global village. The phenomenon
of globalization has caused increase in trade, more mobility, opening up of
economy, removal of control structure and braining in liberalization. Technology
advances and innovation have greatly accelerated in recent times and we have
been affected by such changes. Consequently trafficking in drugs and narcotics,
arms and explosives trafficking, phoney financial agreements, foreign exchange
manipulations, and other crimes are adding new layers to the criminal landscape.
As a result, new illegal activities such as money laundering and 'dealing in
proceeds of crimes' have emerged, generating black money or parallel economies
and jeopardising the nation's financial security.7

It is clear that "the falsity of the traditional theory of crime, which attributes
criminal behaviour backward socio-economic conditions, has been exposed
beyond doubt in view of the presence of crimes committed in large number by
powerful and resourceful forces in the area of business, politics and bureaucracy.
The reports of the enforcement agencies of government as well as of Commissions
of Enquiries are revealing the perpetration of a great variety of crimes by the
people of upper socio-economic group. This type of the criminality is on the
increase in view of the current rapid social and economic changes. Modern
practices of automation, mechanization and development of new and more
complex financial schemes have opened new avenues for criminal exploitation.8

2.1. What is corruption?

Corruption Various Meanings and Definitions Ordinarily, corruption

means guilty of dishonest practices such as bribery.9 Bouvier, in his Law
Dictionary, defines corruption as “An act done with intent to give some advantage
7
National Crime record Bureau, (MHA) “Crime in India (1994) Economic Offences” P. 327.
8
Gurpal Singh , “Problems of White-Collar crime in India and its control” Punjab University Law
Journal 51(1977).
9 Dictionary of the English Language 328 (The Randam House The Unabridged edn., 1964)

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

inconsistent with official duty and the rights of others. It includes bribery” but is
more comprehensive, because an act may be corruptly done though the advantage
to be derived from it is not offered by another. Something against Law as, a
contract by which the borrower agreed to pay the lender usurious interest. It is said
in such case that it was correctly agreed. Bouvier defined “Bribery” as the
receiving or offering any undue reward by or to any person whomsoever, whose
ordinary profession or business relates to the administration of public justice, in
order to influence his behaviour in office, and to incline him to act contrary to his
duty and the known rules of honesty and integrity.10 According to Cowel bribery is
a high offence, viz., when any man in judicial place or any great officer takes any
fee, pension, reward, or gift for doing his office, save from the kind only.11 Bribery
is a penal offence generally defined as the giving or receiving of consideration for
official favour.12

There are a number of judicial decisions dealing with the definition and
meaning of corruption. The concept of corruption was discussed at length in State
v Barnett.13 In which it was. Held corruption as something against or forbidden by
law, moral turpitude or exactly opposite of honesty involving intentional disregard
of law for improper motives. It covers the act of an officer in accepting a bribe. It
covers every class of crime amounting to felony when intentionally committed by
ministerial or judicial officer. In R. v Smith.14 it was held “corruptly” means with
the intention to corrupt.

The Supreme Court viewed in Madam Mohan Singh v State of U.P15 that
when the accused rendered no service to the complainant but actually had done
disservice in his official capacity, to the complainant’s knowledge will make the
story of bribe improbable.

10
Ibid. p. 394.
11
Cowel, Stround’s ludicial Dictionary. 3rd ed.,. Vol.I .335.
12
Encyclopaedia Britannica. Vol.6, 549.
13
Okl, Cri. App., 69, p.2d 77, 87.
14
(1960)2 QB 35 A.R. 256.
15
AIR1954 SC 637.

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The Madya Pradesh High Court in Sheokumar v M.A. Khan16 opined that
the expression “corrupt or illegal practice” is equivalent to corrupt practice or
illegal practice. The word practice applies even to a single act and is not confined
to habitual repetition of an action. A single act of the nature would amount to
corrupt practices.

Supreme Court in State of M.P v Ram Singh17held that “The menace of

corruption was found to have enormously increased by the First and Second World
War conditions. Corruption, at the initial stages, was considered to be confined to
the bureaucracy, which had the opportunities to deal with a variety of State
largesse in the form of contracts, licences and grants. Even after the war, the
opportunities for corruption continued as large amounts, of government surplus
stores were required to be disposed of by public servants. As a consequence of the
wars, the shortage of various goods necessitated the imposition of controls and
extensive schemes of post-war reconstruction involving the disbursement of huge
sums of money which lay in the control of the public servants, giving them a wide
discretion, with the result of luring them to the glittering shine of wealth and
property.”

In State of Jammu and Kashmir v Vinayananda18, the Apex court said that
“Corruption at any level, by any person of any magnitude is condemnable which
cannot be ignored by the Judicial courts, when proved. No leniency is required to
be shown in proved cases under the prevention of corruption Act, 1988, which
itself treats the offence under it as of a special nature to be treated differently than
the general penal offences. No populous or sympathetic approach is needed in
such cases.”

A division bench of the Supreme Court in State v. Bangarappa19, made the

following observation:

“No doubt corruption affects the normal fabric of the society. The
citizens lose, their faith in the political leaders whoshout that they are for

16
1960 Mdh. Pra. 37.
17
AIR 2000 SC 870 at 873.
18
AIR 2001 SC 611 at
19
A.I.R. 2001 S.C. 222 at p.223. .

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

the people. No doubt many people go unpunished although corruption

causes considerable damage to. the economy of the nation. The roots of
corruption are so deep that it is an uphill task toeradicate them. It is only
possible if and only if each citizen in our country, follows the philosophy
of contentment. To quench the thirst ofgreed and lust one must be
drenched in shower of honesty and the foundation of sublime lover
should sprinkle the magic drops on the eyes for the reality of the life.
Unless one tries to find a golden key to open the gates of wisdom, the
heavenly life remains as a myth and we are all making the futile effort to
attain divinity in our life. The public man should have crystal clear and
transparent personality. Caesar’s wife must be above suspicion”.

In Jayalalitha v Union of India20. Nanavathi says, "Justice." stated that corruption

corrodes morality, and that corruption by public officials is not only damaging to
the national economy and national interest, but also to the moral fabric of society.

High-ranking government officials may cause substantial harm to the

country's economic, national interests, and reputation. By abusing their power to
commit corruption.

Mr. N. Vittal, the Former Central Vigilance Commissioner (C.V.C.),

Government of India opined that21 : Fighting corruption is like fighting a War.
War is too dangerous a matter to beleft to the generals. Fighting corruption is also
an important matter notto be left only to the agencies like the Central Vigilance
Commissioner or the Central Bureau of Investigation. Hence Mr. Vittal
emphatically points out that it is necessary to sensitise the entire population of the
country and bring together every citizen who wants to fight corruption.

The term corruption comes from the Latin verbrumpere, which means “to break”.
Corruption is a complex phenomenon. Its causes. Are always contextual, rooted in
a country’s policies, bureaucratic traditions, political development and social
history. It covers broad range of human actions that encompasses four main

20
1999 Cri.L.J. 2859.
21
N. Vittal, Corruption in India : The Roadblock to National Prosperity 14(Academic
Foundation,delhi.1stedn. 2003)

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

distinguishing features, namely, misuse of a position of power; gaining of

advantage for those who actively and passively are parties to the misuse;
undesirable effects on third parties; and secrecy surrounding the transaction.
Corruption takes many forms it can be found in polities and the bureaucracy, in
police, in the election process and in the private sector. It can be systematic or
isolated. Public works construction projects airports, dams, highways, subways
and water systems traditionally have provided the biggest, most publicized and
most dramatic cases of corruption worldwide. Because it is pervasive and because
it undermines free and fair system based on trust, corruption is a principal threat to
democracy.22

The simplest definition of corruption is any act or omission by a public

servant for securing monetary or other financial gain for himself, his family, or
associates, either directly or indirectly, is corruption. As an American scholar
rightly opined, polities plays an important role in corrupt activities and
“Corruption is political behaviour that deviates from the official obligations of a
public position for personal, close family, or private clique) financial or status
benefits, or that breaches regulations prohibiting certain forms of private regarding
influence.”23

Defining corruption can be a challenge. It takes many forms, and

perpetrators are skilled in developing new ways to be corrupt and cover their
tracks. Prof. (emeritus) dr. Petrus van Duyne established a scientific definition for
the notion of corruption:

“Corruption is an improbity or decay in the decision-making process in which a

decision-maker consents to deviate or demands deviation from the criterion which
should rule his or her decision-making, in exchange for a reward or for the
promise or expectation of a reward, while these motives influencing his or her
decision-making cannot be part of the justification of the decision.”24

22
G.B. Reddy, “Corruption in High Places - Judicial Response in India” A.L.T. 20 (Jou).(2001)
23
J.S. Nye, “Corruption and Political Development : A Cost Benefit Analysis” American Political
Science Review LXI (June, 1967), 419.
24
Petrus C. van Duyne ( Tilburg University, Netherlands) ,Published in: Forum on Crime and Society,
2001, vol. 1, nr. 2, 73-98
The problem with delineating the concept of corruption is that it does not stem from the behavioral
or legal science. Being once used in the sense of moral decay-, it is now used many overlapping
contexts and legal, economic, political or cultural comparative perspectives (Lancaster and

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Motional, 1997; Bull and Newell, 1997; Passas, 1998).Most definitions contain one or more of the
components described above and are frequently overlapping. The overlap or semantic intersection-
to be found in the literature are the original moral decay-and abuse of power-in return for an
advantage(Wertheim and Brasz, 1961; Hogties, 1982, Friedrich, 1989 and Hubert’s,
1992).Elaborating this semantic intersection I come to the following definition.
“Corruption is an improbity or decay in the decision-making process in which a decision-maker (in
a private corporation or in a public service) consents ordemands to deviate from the criterion, which
should rule his decision making, in exchange for a reward, the promise or expectation of it.”
This definition is has a broader scope than politics, public administration or good governance
(Goudie and Stasavage, 1998), because it is based on what is fundamental in corruption: the
behaviour of the individual deviant decision maker. The principal-agent model as described by
Groenendijk (1997) can be derived from this behavioral foundation. This behavioural definition
transcends the penal law definition: the violated decision making criteria do not need to be codified,
though they must be known and recognized by the community.
An objection against this individual decision maker approach may be that it renders the definition
rather broad in its application, covering decision making situations which are considered outside its
usual range of application. For example, in the upbringing of children there is much loving-
corruption with clever children playing mom off against dad, like sonny bribing dad with: If you let
me see Star War, I will wash the dishes. But do not tell mom! The tired dad accepts the offer: he
does not need to do the dishes and in addition gets some appreciation of his son. But: Get ready
before mom comes home. Otherwise there will be hell-Why should not we call this corruption? I
think this objection does not hold. Behaviorally corruption is not an exceptionable or pathological
behavior, but all too human indeed. It permeates many of our human relationships in which people
face decision makers: are not most churches and temples market places to buy divine favors of the
highest Decision Maker? As Defile (1995) observes, corruption is a feature of a certain type of
social (inter)action, and not of systems in the first place, however it may develop into a system.
Daily life is determined by values and moral standards for our small and big daily decisions, but
who follows the narrow path of virtue, never allowing a deviation from the norm in favour of and in
return for? Psychologically corruption is not an pathological state of mind, even if it is
reprehensible.
The broad reach of this behavioural definition is as such not problematic. It imprecise and capable
of encompassing more specific definitions applicable to the relevant sectors of the social life,
whether public, business or private, like the situations described by Gardener (, 1970; 1993). As a
matter of fact it should also be able to encompass historical variations of corruption (Johnston,
1992; Beare, 1997) or national variations owing to cultural different concepts of proper decision
making and accountability. This means that from this definition context specific operational is
actions may be deduced by projecting the responsible individual decision maker onto the social
contexts of the public administration or politics.
The concept of corruption should be clearly differentiated from fraud, embezzlement and the sheer
abuse of power, to enrich oneself or ones associates. Corruption is not about putting ones finger in
the till and other acts which prejudice the employer or the state, though such actions are frequently
associated with corruption. Technically corruption may entail fraud (and vice versa), but that
depends on the administrative requirements of the surrounding legal system. Likewise, stealing
from the boss or from the state as such is not corrupt, but corruption may be instrumental,
forexample to buy silence from those who are informed. This may induce questions with very
complicated answers like: were presidents like Suharto, Marcos, Mobutu or Abacha just thieves or
were they corrupt? Though such historical examples may be very confusing, this behavioral
definition maintains the conceptual dividing line. It provides also a suitable compliment to the
methodological questions related to cross-cultural measurement, raised by Lancaster and Motional
(1997).
The observation that corrupt conduct, though deviant, is not an abnormal behavior should not be
confused with the increased intolerance for this phenomenon in the last decade, which coincided
with the lessened need of the US to prop up corrupt, but anticommunist regimes. Indeed, the
attitude against corruption has changed dramatically in the last years and is nowadays found in
juxtaposition with organised crime and money laundering (Goldstock, 1993; Armache,
1993;Jacobs, c.s., 1994). Apart from this moral perspective, the empirical basis of this phenomenon

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Corruption may be defined as the abuse of public25 and entrusted26 power

for private gain. Transparency International uses this definition27. It captures three
elements of corruption:

1. Public and private sectors

Corruption occurs in both the public and private sectors. This includes
media and civil society actors. Actors can be individuals, companies, or
organisations such as political parties.

2. Abuse of power

Corruption involves abusing power held in a state institution or a private

organisation.

3. Benefit

Both sides involved in the corrupt act benefit, either in terms of money or
undue advantage.

Sometimes the ‘advantage’ gained may not be ‘undue’ or clear-cut, but is

nonetheless an advantage. For example, in some corrupt societies people can only
secure access to public health or education if they pay bribes. In such situations,
those who can afford to pay have an advantage over those who cannot. The bribe-
giver's ‘benefit’ is merely that which his or her rightful due is anyway. Bribe-
takers receive an advantage for carrying out functions that are anyway their duty
to perform.

2.2 Corruption impedes development

Corruption undermines economic development and threatens state security.

It also undermines democratic values. UN member states acknowledge the threat
corruption poses to development and have included Goal 16 into the 2030 Agenda

is the deviant decision making. In the next section I will project this decision maker in his various
social roles.
25
by elected politician or appointed civil servant
26
by heritage, education, marriage, election, appointment or whatever else
27
https://www.transparency.org/en/

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

for Sustainable Development – calling on states to ‘substantially reduce corruption

and bribery in all their forms.’28

2.3 History and Evolution of Corruption

In History, usually revolutions were the result of corruption and nepotism among
the rulers and administrators. The French Revolution was caused by widespread
corruption in the Government and the October Revolution in Russia was also
because of corruption among bureaucracy.29In early ages corruption was quite
rampant almost everywhere. The Code of Hammurabi, the Babylonian King
provided punishment for giving false evidence on receipt of grain or money as a
bribe. Similarly the Edict of Harmed, the King of Egypt provided capital
punishment for the priest or official who accepted bribe in the discharge of judicial
duties; Provisions also existed for punishment for taking bribe in the ancient laws
of Jews, Greeks, Romans and Indians.30 The giving and taking of bribes as a crime
is the outcome of refined jurisprudence. In earlier age, payment for favours shown
for services rendered was the rule. The payment to the Judge by the parties for
rendering justice was also a matter of course. This “paved the way to the sale of
justice to the highest bidder”. When a judge was permitted to accept fees from the
parties, he could not be expected to be objective in the administration of justice
and the scales of justice often tilted in favour of the party which could pay the
judge adequately. This practice led to corruption and such corruption gave birth to
the notion that it was the State’s responsibility to pay. its officers, judicial or
otherwise and that every officer of the State was expected to decide in accordance

28
Target 16.5: Substantially reduce corruption and bribery
The full text of Target 16.5: "Substantially reduce corruption and bribery in all their forms."The
target has two indicators:
 Indicator 16.5.1: Proportion of persons who had at least one contact with a public official and
who paid a bribe to a public official, or were asked for a bribe by those public officials, during
the previous 12 months.
 Indicator 16.5.2: Proportion of businesses that had at least one contact with a public official and
those paid a bribe to a public official, or were asked for a bribe by those public officials during
the previous 12 months.
With regards to bribery: Data from 38 countries over the past decade suggest that high-income
countries have the lowest prevalence of bribery (an average of 3.7 per cent), while lower-income
countries have high levels of bribery when accessing public services (22.3 per cent).
29
Surendranath Dwivedy and Bhargava, Political Corruption in India. 136 (Popular Book
Service,New Delhi.1st edn. 1967)
30
H.D. Lasswell, “Bribery”, Encyclopaedia of Social Sciences. Vol.II (Macmillan), 1959, Pp. 690-
691.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

with law and his conscience and not in accordance with the magnitude of reward.31
Thus bribery as a crime was the product of refined Jurisprudence and the concept
of Rule of Law which were more or less unknown to the earlier system.32

2.4 Types of Corruption

We often describe corruption as either ‘grand’ or ‘petty’ and ‘administrative.’

(i) Grand Corruption or White Collar Crime

Grand corruption typically takes place at the public sphere’s top tiers, and
within the highest levels in private business. It includes actors that make rules,
policies and executive decisions. It often involves large sums of money. Grand
corruption is also often called political corruption, highlighting the negative
influence of money in political processes, campaigns and political parties.

(ii) Petty / administrative corruption

Small-scale, administrative or petty corruption is the everyday corruption at

the interface between public institutions and citizens. We find petty corruption as
bribery linked to the implementation of existing laws, rules and regulations – for
example when civil servants issue documents only if they receive a payment that
is higher than the advertised official price for this service.

Petty corruption also refers to the abuse of power in daily situations. For
example, traffic police take payments from taxi drivers in return for not going after
them for the breach of traffic rules. Usually, modest sums of money change hands
in each case. However, when petty corruption is endemic, it can result in great
costs. It can place stress on the functioning of state systems similar to the effect of
grand corruption.

Often, it is not clear where petty corruption ends and grand corruption
begins. For example, political corruption, in addition to the features above, can
also encompass vote buying and other forms of petty corruption. And junior

31
Hari Singh Gour, Penal Law of India. Vol.I, 430 (Law Publishers, Allahabad.7th edn. 1963)
32
Report of the “Santhanam Committee on Corruption,1963”P.6, quoted in Twenty-ninth Law
Commission of India, 1966.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

officials who demand illegal payments from citizens may do so because their
managers demand a cut of their salaries in return for having been hired. These
managers may have superiors who, in turn, expect money from them. This corrupt
chain may stretch all the way up to senior state officials.

2.5 What Is a White Collar Position?

A white-collar worker is a type of employee who earns higher average

salary by performing highly skilled work rather than physical labour.
Traditionally, white-collar employees have been the "shirt and tie" kind, defined
by office employment and administration rather than "getting their hands
dirty.33Or belonging or pertaining to the ranks of office and professional workers
whose jobs generally do not involve manual labour or the wearing of a uniform or
work cloth.

The term "White-Collar34 worker" was coined in the 1930s by Sinclair, an

American writer who referenced the word in connection to clerical, administrative
and managerial functions during the 1930s. A white-collar worker is a salaried
professional, typically referring to general office workers and management.35

2.6 Concept of White-Collar Crimes

There are certain behaviours that are more harmful and detrimental to
society than others, in addition to standard crimes. Individuals or people from the
upper socioeconomic strata commit these crimes in the course of their jobs, and
most people are unaware of their dishonesty. The crime of this nature is white-
collar crime.36

33
Adam Hayes, https//www.investopedia.com (last visited on 4July 2015)
34
A white collar worker is a person who performs professional, desk, managerial, or administrative
work. White-collar work may be performed in an office or other administrative setting. White-collar
workers include job paths related to government, consulting firms, academia, accountancy, business
and executive management, management consulting, customer support, market research, finance,
human resources, operations research, marketing, information technology, networking, attorneys,
medical professionals, architects, research and development and contracting. Other types of work
are those of a grey-collar worker, who has more specialized knowledge than those of a blue-collar
worker, whose job requires manual labor and a pink-collar worker, whose labor is related to
customer interaction, entertainment, sales, or other service-oriented work. Many occupations blend
blue, white and pink (service) industry categorizations.
35
https://en.wikipedia.org/wiki/White-collar_worker?wprov=sfla1(last visited on 4July 2015)
36
Md. Nazir Ahmed, “Genesis of White-Collar Crime with Special Reference to Bangladesh” Prime
University Vol. 7 No.2. July-December 2013.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

White-collar crime has become extremely frequent in recent years37. When men
and women are asked if they have heard of white-collar crime, the majority of
them will reply that they have heard of the phrase and the position of those who,
despite stealing, do not go to jail. Though, the notion of white-collar crime is not
as straightforward as it appears. It really encompasses a wide range of social,
economic, and legal concerns, all of which have a significant influence on
society.38
2.7 Who is The White-Collar Offender?

In his definition of white-collar crime and in his many writings on the

subject, Sutherland described the white-collar criminal is a respectable and high-
status individual who commits a crime in the course of his or her employment. If
we follow Sutherland's approach, then the question posed in the title of this
chapter is already partially answered. The white-collar offender is a respectable
person of high social status. Of course, what Sutherland meant by “respectable”
and “high social status” is not completely clear, but he did indicate that by white-

51 Michael L. Benson, Sally S. Simpson, “Genesis of White-Collar Crime” 179 (Rutledge, NY 3rd
edn. January 3, 2018)
38
White-collar crime is a technical term that has migrated out of the realms of science and academia
to become part of public discourse. Stories about white-collar crime are often in the news. If you
were to ask the proverbial man or woman on the street, you would surely find that most of them
have heard of white-collar crime. However, if you pressed them to explain just what white-collar
crime is, the answers you would receive would not be very informative. Most people would
probably say something about men in suits who steal money and don't go to prison and let it go at
that. Yet, the problem of white-collar crime is enormously complex. It raises difficult social, legal,
and theoretical issues that have important implications for society and for the field of criminology.
This book is designed to help you better understand the complexities of white collar crime so that
you can think critically and analytically about this important social problem. Of course, thinking
critically and analytically about a social problem may strike some readers as not terribly exciting.
For those of you who are looking for a more compelling reason to keep going, we hope that what
you learn in these pages also will help you avoid being victimized by white-collar offenders.
Unfortunately, avoiding such offenders is not easy. White-collar criminals lurk in every industry
and profession. For example, whenever you engage in a business transaction with any sort of
professional, there is the potential for what we will call a “white-collar victimization.” We use the
term professional here in a very loose sense to include anyone who offers to provide a specialized
service for a fee. Besides the traditional professions such as law, medicine, and accounting, our
definition includes blue-collar and other service “professionals,” such as home remodelers, auto
mechanics, plumbers, electricians, and real estate agents. Typically, when you hire any sort of
professional to do something for you, it is because the professional knows more about it than you
do, or can do it better than you can, or simply has more time than you do. In other words, you need
the professional to do something that for some reason you can't or don't want to do yourself.
However, how do you know that the professional did the right thing (i.e., the thing that was
necessary and appropriate in your situation) in the right way (i.e., the most professional and cost-
effective way)? It is always possible that the professional took advantage of your lack of expertise
to defraud or cheat you in some way.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

collar he meant to refer to “business managers and executives” (Sutherland, 1983).

If we thought about it for a bit, we could probably come up with definitions for the
terms respectable and high social status that would make sense conceptually. To
answer the question, then, of who is the white-collar offender, we would have to
identify individuals who fit our definitions and who engage in occupationally
related crime. We would want to know what it is that distinguishes respectable
high-social-status people who are honest from those who are dishonest. Sutherland
had a theory about the answer to this question. Other theories have been put
forward by other scholars. We discuss these theories in the next chapter, but for
now, White-collar crime scholars have always taken it for granted that white-collar
offenders are not like ordinary street criminals. We assume that white-collar
offenders are better educated and more likely to be employed than common street
criminals. We assume that white-collar offenders do not grow up in poverty-
stricken families and that when they were children their parents did not beat or
abuse them, as is unfortunately the case with many common criminals. Yet, very
few studies have actually sought to compare white collar and common criminals
on their demographic and social characteristics.

2.8 Historical Background of White-Collar crime

The term "white collar crime"39 in addition to common crimes like assault,
robbery, dacoity, murder, rape, abduction, and other acts of violence, there are
some anti-social activities that upper-class individuals engage in as part of their
job or business. For a long time, these actions have been recognised as a vital
component of a perceptive professional's or occupation's and firm’s typical
business plan. As a result, any opposition to such a plan was usually ignored and
unpunished.

Sutherland was, however, predated by any other writer who focused on the
threat that the upper socioeconomic group poses to society. The present economic
structure is being demoralised to the disadvantage of regular people. Albert

39
"White -Collar crime" is the most commonly associated with E.H. Sutherland, whose pioneering
work in this field drew criminologists' attention to its dismal impact on the overall crime picture.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

Morris, for example, alludes to an article titled "Criminal Capitalist."40 The author
of this study emphasised the growing prevalence of crime as a planned business
and its societal consequences.41

Sutherland went on to say that white-collar crime is distinct from the

crimes perpetrated by criminal gangs. This disparity might be due to the perceived
level of respectability. Thus, selling inferior goods is a white-collar crime if the A
person who belongs to a highly regarded social group and has a solid reputation.42
However, it would not be a white collar crime if a number of people, unknown to
their victims, sold the same sort of poor items.43 Other than that, individuals
understood very little about the large corporate criminals' fraud, and even if they
did, they were unconcerned about the matter since "the legal44.................are
resolved.”45

The term "white collar crime" was used by renowned criminologist Edwin
Sutherland in the late 1930s to characterise illegal acts perpetrated by the wealthy
and powerful. Because most studies of crime were based on samples of
institutionalised offenders with a large number of impoverished individuals,
Sutherland gets interested in the notion of white collar crime. He noted that upper-
class individuals commit crimes as well, but that these crimes, particularly those
committed by the wealthy, are more serious. Related to their occupation, are
40
which was read by Edwin C. Hill before the International Congress on the Prevention And
Repression of Crime at London in 1872.
41
In 1934, Morris drew attention to the necessity of a change in emphasis regarding crime. He
asserted that anti social activities of person of high status committed in course of their profession
must be brought within the category of crime and should be made punishable. Finally
E.H.Sutherlandthrough his pioneering work emphasised that these upper world crimes which are
committed by the person of upper socio-economic groups in course of their occupation violating the
trust, should be termed ‘White Collar Crime’ so as to distinguished from traditional crime which he
called, “Blue Collar Crime”. Thus, he observed that if a broker shoots his wife’s lover, that is not a
white collar crime, but if he violates the law and is convicted in connection with his business, heis
white collar criminal
42
Sutherland carefully examined the depredation of about seventy large corporations involved in
white collar crimes and found that the charges against them included contracts, combinations or
conspiracies in restraint of trade, misrepresentation in advertising, infringements against copyrights,
financial frauds and violations of trust, breach of war-regulations and other miscellaneous offences.
43
Muralidhar Chaturwedi, “Criminology and Penology” Pp.42-43(Central Law Publication7th edn.
2007)
44
“the legal battles involved therein are dragged out for years in the courts, with the result that the
charges are forgotten long before they are settled.”
45
Supra note 5 p.182

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

frequently handled by administrative agencies rather than criminal courts, As a

result, the perpetrators are not deemed criminals and are excluded from
hypotheses, of criminal behaviour.46

The increase of white-collar crime in many nations has paralleled those

countries' industrial and economic progress. The increase of white-collar crime in
many nations has paralleled those countries' industrial and economic progress.

The Indian Law Commission has also noted the different factors
responsible for the increase of white-collar criminality in the following words:47

“The advance of technological and scientific development in contributing

to the emergence of ‘mass society’ with large rank and small controlling alit,
encouraging the growth of monopolies, the rise of a managerial class and intricate
institutional mechanism. Strict adherence to a high standard of ethical behaviour is
necessary for the event and honest functioning of new social, political and
economic processes. The inability of all sections of society to appreciate in full
this needs result in the emergence and growth of white collar and Economic
crimes.”

2.9 Nature and Definition of white collar crime:

For the first time in 1941, the notion of white-collar crime is established in
criminology. Sutherland's study article on "white-collar crime" was published in
the "American Sociological Review" at the time. He explained what "White-
Collar" meant. His line of work" He explained what White-Collar meant his line
of work “A white-collar criminal is a member of a higher socioeconomic level
who breaks the law in the course of his or her professional or vocational duties.”48

46
Sutherland farther pointed out that a white collar crime is more dangerous to society than ordinary
crimes because the financial loss to society from white collar crime is for greater than the financial
loss from burglaries, robberies, larcenies etc. The most dismal aspect of white collar crime is that
there is no effective programme for the enforcement of criminal law against them and the influential
persons involve in these crimes are able to resist enforcement of law against themselves .
47
Law Commission of India. 47th Report 1972 P.12
48
N.V. Paranjape, Criminology and penology 267( Central Law Publications,Allahabad.1th
edn.,2001)

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

The following are the five characteristics of ‘white collar crime' as defined above:

(1) It is a criminal offence,

(2) Committed by a respectable individual,
(3) He is of high social standing,
(4) he is engaged in his career or occupation, and
(5) it is generally a breach of trust.

The considerable point, the thing with 'white-collar crime' is that it has
nothing to do with poverty or unemployment. The social and personal pathologies
of the individual criminal as in case of traditional and conventional crimes.

2.9.1Criticism of Sutherland’s views on ‘White-collar crime’:-

Certain critics have criticised Sutherland's concept of white-collar crime.

According to some critics, such infractions are brought to the attention of special
commissions, tribunals, and boards rather than the "general criminal justice
administration." As a result, they cannot lead to the offender's conviction, and as a
result, he cannot be classified as a criminal in the true meaning of the word.
Commenting on this aspect of the situation, “Treating person committing white
collar crime as criminal would mean deviating from legal definition of crime
inasmuch as personal value considerations of the administrator would gain
primary in place of precision and clarity of legal provisions in deciding such
cases.” Tappan observes.49Sutherland, on the other hand, authorises administrative
agencies' use of a unique trial procedure for white-collar offenders on the grounds
that it would spare the offender from the "stigma of criminal prosecution."50

Another dissenter to Sutherland's concept of white-collar crime is that, it

does not always need the presence of 'mens rea,' which is a necessary component
of a crime. The common law notion of "mens rea" has applicability to statute
49
P.W. Tappan. “Who is criminal” American sociological Review 12. Pp.96-102.
50
An additional criticism quite often advanced not in favour of Sutherland’s definition of white-collar
crime is that it includes even those violations of law, which are not committed, in course of
profession or occupation and these violations, do not necessarily belong to higher class of society or
the so-called prestigious class. For illustration, tax evasion is not committed in course of profession
or occupation and it can be committed by persons belonging to higher, middle or even lower class
of society.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

offences. In such circumstances, the criterion of a guilty mentality may be

eliminated either explicitly or implicitly.51

On a close examination of Sutherland’s definition one would arrive at the

conclusion that the definition of the term white collar crime is neither exhaustive
nor complete in it. It is inadequate to explain various anti-social behaviour
committed by the persons of upper socio-economic and middle class. The every
term white collar is misleading. It is a colloquial term, often used to symbolize
office workers, who wear white shirts to work and has relevance to the upper level
of criminals. Similarly, many crime committed in business are the work of an
individual for his own benefit,(for example, fraud and cheating committed by an
individual for his own advantage) and have no concern with the operation of the
business as a whole. It is not clear from the definition whether an act would be a
white collar crime or a conventional crime. Again, Sutherland’s second and third
points are confusing, inasmuch as there can be persons of high social status who
may not be respectable, whereas an unskilled worker may be highly respectable
but of not high social status. Accordingly, for an understanding of criminal
behaviour in relation to social structure a broader definition is desirable.52

Sutherland’s definition is now somewhat outdated for students of the

criminal law. In the 1970s, white-collar crime began to gain the attention of
prosecutors and the general public.53 The term came to have definitions quite
different from the one Sutherland used. Indeed, studies have shown that crimes we
generally consider white collar such as Securities and tax fraud are committed not
just by people of high social position, but also by people from all walks of life.54
Despite the fact that the phrase "white collar crime" is a misnomer, it is
nevertheless widely used. This is probabably so because white collar crime
provides a convenient moniker for distinguishing such crime in the public mind
from common or street crime.

51
Supra note 48 Pp.96-97
52
Supra note 5 P.283
53
William J. Genego. “The New Adversary”, 54 Brook. L.Rew.P.781
54
. John. Braithwaite, “Crime and the Average American”, 27 Law and society Rev. P. 215, (1993).

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

Perhaps a better approach to look at white-collar crime would be to describe it as

criminality that does not:

(1). Imply the use of force against a person or property;

(2). Relate directly to drug and narcotics regulation, sale, or distribution;
(3). directly relate to, planned crime performance;
(4). directly connect to national policies such as immigration, civil rights, and
national security; or
(5). directly engage in "vice-crime" or regular property theft.

Sporadically, the criminal legislation will provide more or less guidance,

by definition; any crimes charged under that legislation are white-collar. For
example, given the preceding description, charges filed under the fraud and anti-
trust criminal statutes are generally white-collar crimes. On the contrary, certain
criminal legislation allow for the filing of accusations. For White-Collar and
traditional offenses depending on the nature of the defendants’ behaviour. For
illustration, conspiracy, extortion, and obstruction of justice are charges frequently
brought in both white-collar and traditional criminal cases.

2.9.2 White-collar crime can be defined in many ways.

“White collar crime is a financially motivated nonviolent crime done for

illicit monetary gain,” according to Encyclopaedia.”55

'White-collar crime,' according to Edelhertz, is: “A personal advantage.”

Lord Acton, according to Barnes and Teaters, said:

“Power tends to corrupt and absolute power tends to corrupt

absolutely.”Whatever citizens of a particular community become apathies’
to the working of their Government, grafts, corruption and alliance between

55
Edwin Sutherland in 1939 as “a crime committed by a person of respectability and high social status
in the course of his occupation”. Sutherland was a from interpersonal interactions. White collar
crime is similar to corporate crime as white collar employees are more likely to commit fraud,
bribery, ponzi schemes, insider trading, embezzlement, cybercrime, copyright infringement, money
laundering, identity theft, and forgery. White-collar crime _From Wikipedia the free encyclopedia.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

public servants and the criminal world are common phenomenon resulting
into breach of trust, fraud and other misdeeds”.56

Sir Walter Reckless proposes:-

According to Sir Walter Reckless, a renowned American

criminologist, “white-collar crime represents the offences of
businessmen who are in position to determine the policies and
activities of business”.57

Various authorities suggest that “White-Collar crimes are committed by persons of

status not for need but for greed.58
2.9.3 Modified Crime Definition

From the preceding discussion, it is clear that "white-collar crime" and

"social-economic crime" have spread at an alarming rate in Indian society,
affecting people from all walks of life. When compared to traditional crimes, the
effect of such crimes is that they not only cause significant financial losses to the
exchequer but also to the general population. They wreak havoc on the public's
health and foster apathy about them. The Statue of Liberty's legal system and
enforcement mechanisms. Simultaneously, those involved in these crimes are
neither treated as common criminals nor adequately punished; instead, they face
procedural as well as substantive law and enforcement system failures, a lack of
social awareness toward such crimes, and judicial class bias, with grave
consequences because such people come from the upper-class of society. It has
suffocated the nation's economy, slowed its growth, harmed the nation's health and
happiness, demoralised citizens, and fostered a lack of respect for the law and its
enforcement mechanisms. The definition of crime should no longer be limited to
crimes against the human body, property, or status, which are often perpetrated by
those from lower socioeconomic classes, but should also include:

56
Ibid, p. 93.
57
Walter Reckless, The crime problem. 345(Appleton-Century-Crofts, New York. 2 edn.1955)
58
P. Goswami, Criminology 249 (Kitab Mahal Delhi 1964)

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

“All those anti social and illegal acts which are committed by
persons of middle and upper socio-economic class irrespective of
whether the penalty is criminal, civil or administrative”59Finally
we can say, White collar crime may be committed by people
from various walks of life:60
2.10. Causes of Corruption

There are many causes of corruption at both institutional. and individual

levels. Experts of different specialities have highlighted various factors, e.g.,
decline in religious beliefs or in public morality, uncertainty in the standards of
appropriate behaviour, divergence between the formal and informal rules
governing behaviours in the public sector, value conflicts in the post colonial
settings where the standards andpractices embedded within traditional relationship
differ, from theinstitutions left behind by the departing colonial power.

Robert Klitgaard, a political scientist, hasconceptualized the opportunity

for corruption within an institution inthe following formula '

Corruption = (Monopoly) -f (Discretion) - Accountability

According to him -

59
Supra note 5 Pp.288-289
60
Kader. Monjur. Criminology 154 (Bangladesh institute of law and International Affair, Dhaka.2nd
edn.1995)
“Characteristics of white collar crime:-White collar crime has a variety of characteristics,
including The majority of white collar crime is nonviolent,. Profit-driven intentional behaviours,
Corporate Culture: Criminogenic: Differential Association, Element of Learning, peer support,
Rationalization and Neutralization, Victimization: Diffuse, Lack of reporting and defining, Civil vs.
Criminal violations, Sociological category, Sanctions: small fines, big payoffs, Investigation:
limited resources, problem of technology, Entail an abuse of power, Concealment”
Features of White collar crime:
Although ‘white-collar crimes’ are quite varied, most have several Features in common such as
(1) The crimes effect in social injuries for larger than traditional crimes where only individuals are
affected.
(2) Large numbers of these offenders are recidivists although repletion is not essentially of the
same type of crime.
(3) The white-collar crimes follow more or less the same modus operandi.
(4) White-collar criminal dose not lose his status among associates because it is not measured a
violation of the business system.
White-collar criminals believe and express hatred for law, for government, and for administration
officials. In this aspects, they are comparable to many professional criminals

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

“The opportunity for corruption is a function of the size of the rents under a
public official’s control (M), the discretion that official has in allocating those
rents (D) and the accountability that these official faces for his or her decisions.61

The empirical research done by Daniel Kaufmann and Jeffrey Sachs

suggests that there is a complex set of the determinants of corruption, e.g., poor
institutions (including the rule of law and safeguards for the rights of property),
civil liberties, governance (including the level of professionalization of the
administrative, service) and economic policies as also characteristics like the size
of the country a which seem to play an enabling role for corruption. 62 Along these
lines, the World Bank points out both institutional and economic policy factors
which generate a nourishing environment for corruption. In its report of 1997, it
states that corruption thrives:

Where distortions in the policy and regulatory provide scope for it and
where institutions of restraint are weak. The problem of corruption lies at the
intersection of the public and the private sectors. It is a two-way street. Private
interests, domestic and external, wield their influence through illegal means to
take advantage of opportunities for corruption and rent seeking and the public
institutions succumb to these and other sources of corruption in the absence of
credible restraint.

Thus opportunities for corrupt behaviour develop

(i) Whenever public functionaries have large discretion in exercising the powers
and little accountability for their actions taken therefore;

(ii) Whenever government policies leave some gap, then these gaps create
opportunities for middlemen or the actors of corruption;

(iii) Such opportunities also develop because of prevalence of administrative

secrecy which encourages corruption and lobbying and insularity from
democratic control.

61
Robert Klitgaard, Ccontrolling Ccorruption Berkely 75 (Uuniversity of California press. 1988)
62
See also Asia Foundation Working Paper Series on Corruption prepared by Amanda L. Morgan,
Consultant Asia Foundation, page 50.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

The general public also plays an important rolespreadinin spreading

corruption in the administration. People take undue advantage by bribing officials
and they very much admire the corrupt wealthy men.63 They never hate the corrupt
officials, boycott the local touts and condemn the black-marketers and hoarders.
This happensbecause of their illiteracy, ignorance and poverty. They are gained
overbuy the moneyed class of people.

The illiterate man takes it to be a part of the system, the law of the land and
the present order of the country it is worthwhile to know how inefficiency and
corruption have affected every branch of social system and how it has crushed our
valuable social order. This is due to economic, political, educational, social and
religious factors.64

(i) Economic Factors: The principle of mixed economy, given rise to private
entrepreneurship as well as public enterprises. In practice, private
entrepreneurs do not have free hand in all matters of trade and business. State
authority more or less controls almost 60 percent of its business deals. It has
control over the matters of finance advanced from Financial Corporations,
Banks and other Governmental institutions, issue of licences, acquisition of
land, registration and collection of sales tax and commercial taxes, issue of
quota for raw materials, issue of licences and permits for import and export,
and to some extent determination of prices of its products, sanction of
transport facilities.

(ii) Political Factors: In a democratic country political parties thrive on trying to

capture power. The leaders of the party, who win the election, adorn various
positions such as ministers, deputy ministers and parliamentary Secretaries.
Instead of serving the people, they remain busy for some personal and party
gains during their tenure of office. They try to acquire the heavy sums of
money which they spent in the election, to satisfy their party men,, supporters

63
Basudev Panda, Indian Bureaucracy - An Inside Story. 18 (Uppal Publishing House ,New Delhi.1st
edn. 1978)
64
Supra note 21. Pp. 19-22.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

and henchmen. For all these they exploit their authority and position, depend
on the dishonest officials, encourage the dishonest businessmen, do nottake
adequate action against the anti-social elements and indulge innepotism.
During elections the public try to extract the maximum fromthe candidates
and. they follow the policy of “No Vote without. Note”.All these have broken
the old social order and have cruelly destroyedthe cultural frame of our great
democracy.

(iii) Educational Factors : Everybody is of the opinionthat the present

educational system is completely rootless, aimless and totally un-suitable for
our boys and girls. Added to this is the corruptadministration, all-around
political hooliganism and party factions in.university campuses.

(iv) Social Factors : On the advent of modem civilisationin our country, the needs
of the people have increased ten-folds. Everyman dreams to enjoy the
facilities extended by the civilisation. Everyone is crazy to achieve them
overnight. Everyone wants to become prosperous and enjoy the fruits of
modernity. But as the resources are limited and financial position of those
aspirants are not suitable, they resort to immoral activities such as smuggling,
theft of national property, hoarding, black-marketing, bribing officials,
whiling away their time in bars, restaurants and brothels. As a result, there is
growing youth unrest in .the country. There is all-round economic disparity.
The other social factors of corruption are.65

(a) Emulation of high officers in respect of modem amenities.

(b) Dissatisfaction. Caused among low-paid employees and they remain as

neighbours of high-paid employees in the locality.

(c) Wives of high-officers play an important role in making their husbands

corrupt.

65
Id.,p.23.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

(d) Role of industrial and commercial private concerns in corrupting the

administration.

(v) Religious Factors: Religion was earlier playing a vital role in our social
fabric. But due to complexities of the present family life and existence of
economic problems, religion has failed to control the diffused and diverse
interests of individuals. Corruption in some form or other has also entered into
the religious institutions and has eaten away their, vital organs. There are wide-
spread scandals in the management of Lord’s citadels in our country.

2.11. The Harm Caused by White Collar Crime

Prosecutors have powerful reasons to target white collar criminals. Most

important, white collar crime causes huge financial losses to federal, state and
local governments, to private organizations, and to individuals.66

2.12. Difficulties in Enforcing White Collar Statutes

One reason white collar crime remains widespread is that it is often very
difficult to detect. Unlike street and common property crime, white collar crimes
are usually committed in the privacy of an office or home; usually there is no
eyewitness, and only occasionally is there a smoking gun. Instead, the
government’s proof is more likely to depend upon circumstantial evidence culled
from a complex paper trail.

Moreover, the government’s ability to identify white collar crimes is

sometime hampered by lack of resources and expertise. Particularly with respect to
financial crimes such as tax fraud and money laundering, prosecutors may require
technical assistance from government entities other that the Department of Justice.
Finally, the sheer scope of many white collar crime taxes money Union attorney’s
offices. Apart from investigations that often last years, trials in complex white
collar crime cases can easily last weeks or months. This is particularly true as the

66
In 1988 the Supreme Court acknowledged the severity of the white collar crime problem, stating
that white collar crime “is one of the most serious problems confronting law enforcement
authorities.”

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

federal government has expanded its white collar efforts in recent decades to areas
previously covered primarily by state and local law enforcement.

2.13. Application of General Criminal Law Principles to White Collar Crime

With the narrow exception of strict liability crimes, there is a presumption

that the elements of any crime will include a mens rea requirement. Determining
both the level of mens rea required, and whether that level of mens rea has been
proven, are difficult issues in many white collar cases.

Purpose and Knowledge

The most litigated level of mens rea in white collar criminal cases involves
the concepts of “purpose” and “knowledge”. For example, in gypsum, the court
held that mens rea is an element that must be proven in a criminal antitrust case.
The court further found that the required level of mens rea, in cases where
anticompetitive effects have been shown, is knowledge that the defendant’s action
would have such effects.67

Another issue arises in connection with the meaning of the term

“knowledge.” In some limited areas, the Supreme Court has held that the
government must prove that the defendant knew that the alleged acts violated the
law.68

Another mens rea issue that often arises in white collar cases concerns the
definition of the word “wilfully”. Many white collar statutes require proof that the
defendant acted “wilfully”.

Either by statutory authority or case law, some white collar convictions

may be based upon recklessness. This means that the government need not show
that the defendant intended or even knew that the harm would occur. But merely
was aware of the risk. In some limited areas such as certain environmental crimes,
a conviction may be based upon mere negligence.

67
United States v United States Gypsum Co., 438 v.s. 422, 441 (1978)
68
Liparota v United States, 471, v.s. 419 (1985)

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

In India the stream of scams continue to unfold every now and again, and
the prevailing corruption has assumed wide-ranging dimension, while these crimes
signify the plundering of the people’s resources for the selfish enrichment at the
powerful persons, the judicial system and law-enforcing agencies of the country
exhibit their helplessness, as the existing legal system does not provide proper
protective measures to eradicate these crimes from society. The “Santhanam
Committee” on prevention of corruption, had observed that the existing criminal
justice system is favourable to the accused person in India. The Ex-chief justice of
S.C. of India, Hon’ble Justice A.M. Ahmadi has also expressed his views that the
Nature, Extent and complexity of criminal activities has undergone a change
posing a great challenge to the agencies investigating crimes. This changing
pattern of white collar crime and its enormity have threatened the very foundation
of the rule of law and unless drastic action is taken, the very existence of the
criminal justice delivery system will be staken.69 It is rightly suggested that: “Of
political terrorism demands greater police power and modification in law, the
“economic terrorism” posed by serious corporate crime do warrant radical changes
in the criminal law and its administration’70Therefore, it is felt to eliminate the
virus of white collar crimes, a new code is now urgently required in India.

However, Sutherland's research was a good start in the subject, and it

sparked more research in this area. Since then, a variety of research on various
forms of anti-social behaviour have been conducted or are currently being
conducted. It would not be an exaggeration to say that white collar crime have
posed a challenge to many of our ideas of crime and punishment and have caused
a serious threat to the democratic institutions and to the well-being of mankind and
to the very existence of our social order.

2.14. The Menace of white-collar Crimes

In contemporary society the phenomenal rise in magnitude of white-collar

crimes throughout the world involving top leaders, posesa serious threat to the
economic structure of the countries. The Resignation of Japan Prime Minister on

69
Message of chief Justice of XXIV Criminological Congress Bangalore, 1996.
70
Dr. Madhav Menon’s “The case for an economic offence code” presented in XXIV criminological
congress Bangalore, 1996.

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 GENESIS, CAUSES AND UNDERSTANDING OF WHITE-COLLAR CRIME...

charges of corruption, the arrest of Korean Minister for bribery, fall of Italian
Government, and the present crime-polluted atmosphere in India are the glaring
examples of white-collar crimes which have shocked the human conscience and
made the common man lose faith in the “Rule of Law”. In this present devastating
devastate inroad to ruin, the character, morality, ethics and, virtues seem to have
no value and they are publicly auctioned for money.71

In India, the streams of scams continue to unfold every now and again, and
the prevailing corruption has assumed wide ranging dimensions. While these
crimes signify the plundering of the people’s resources for the selfish enrichment
of the powerful persons, the judicial system and law enforcing agencies of the
country exhibit their helplessness, as the existing legal system does not provide
proper protective measures to eradicate these crimes from the society.

To summarise, white-collar crime is just as harmful to a country's

economic well-being as street crime, and it necessitates tough efforts to eradicate
it. White collar crime must be a top priority for everyone. White collar crimes are
becoming an increasingly essential component of our criminal justice system.

In view of above discussion, it is necessary to take account of laws and

policies relating to white collar crime and its genesis of corruption, of law and
policies presently prevailing in India and wherever appropriate, to compare them it
must be from the views of other laws and policies of some developed countries.
This approach of a study may not only increase our understanding relating to
white collar crime and its genesis of corruption but the laws and policies will also
be helpful in identifying the gaps, ambiguities and loopholes in the existing laws
and suggesting measures for strengthening the existing mechanism for white collar
crime and its genesis of corruption. The present study will be a novel attempt in
this direction. The aim of this study is to present a coherent picture of the laws and
policies relating to white collar crime and its genesis of corruption in India and to
discuss and examine their adequacy in meeting challenges posed by the present
white-collar crime and its genesis of corruption.

71
Prabhat Chandra Tripathy, “The Menace of White collar crimes and need for a new code” 1997
Cri.L.J. P. 33.

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