WHITE COLLAR CRIMES AND THE RECENT

TRENDS IN INDIA
(Project Report)

Submitted to

Mr. Sandeep K. Suman

Faculty Criminology and Penology (Optional)

By

Arun Karoriya
B. A. LL. B. (Hons.) Student
Semester – VII, Roll No. 40

Hidayatullah National Law University

Uparwara Post, Abhanpur, New Raipur – 493661 (C.G.)

1
 ACKNOWLEDGEMENTS

I would like to take this opportunity to express my deep sense of gratitude towards my course teacher, Mr.
Sandeep K. Suman, for giving me constant guidance and encouragement throughout the course of the
project.

I would also like to thank the University for providing me the internet and library facilities which were
indispensable for getting relevant content on the subject, as well as subscriptions to online databases and
journals, which were instrumental in writing relevant text.

Arun Karoriya

Roll no. 40

2
 TABLE OF CONTENTS

1. Acknowledgements 2
2. Introduction 4
3. Objective 6
4. Research Methodology 6
5. Definition of white collar crime 7
6. Classification of white collar crimes 9
7. White collar crimes in India 10
8. Causes of white collar crimes 12
9. Recent trends of white collar crimes in India 12
10.Conclusion 17
11.Reference 18

3
INTRODUCTION

It is common knowledge that certain professions offer lucrative opportunities for criminal acts
and unethical practices which hardly attract public attention. There have been crooks and
unethical persons in business,' various professions and eve n in public life. They tend to become
unscrupulous because of their neglect at school, home and other social institutions where people
get training for citizenship and character building. These deviants have scant regard for honesty
and other ethical values. Therefore, they carry on their illegal activities with impunity without
the fear of loss of prestige or status. The crimes of this nature are called white-collar crimes' and
they are essentially an outcome of the competitive economy of mid -twentieth century.

The concept of white collar crime is usually associated with E.H. Sutherland whose penetrating
work in this area focused the attention of criminologists on its demoralizing effect on the total
crime picture. Sutherland pointed out that besides the traditional crimes such as assault, robbery,
dacoity, murder, rape, kidnapping and other acts involving violence, there are certain anti -social
activities which the persons of upper strata carry on in course of their occupation or business.
These activities for a long time were accepted as a part of usual business tactics necessary for a
shrewd professional man for his success in profession or business. Thus, any complaint against
such tactics often went unheeded and unpunished.1

It must, however, be stated that Sutherland was preceded by other writers who focused attention
on the dangers to society from the upper socio-economic group who exploited the accepted
economic system to the detriment of common masses. Albert Morris refers to a paper entitled
'Criminal Capitalists' which was read by Edwin C. Hill before the International Congress on the
Prevention And Repression of Crime at London in 1872. In this paper the learned writer
underlined the growing incidence of crime as an organized business and its evil effects on
society. In 1934, Morris drew attention to the necessity of a change in emphasis regarding crime.
He asserted that anti -social activities of persons 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. Sutherland through his pioneering work emphasized that these 'upper world' crimes which

1
http://indianresearchjournals.com/pdf/IJSSIR/2012/September/16.pdf

4
are committed by the persons of upper socio-economic groups in course of their occupation
violating the trust, should be termed "White Collar Crime" so as to be distinguished from
traditional crime which he called, "Blue Collar Crime".

Sutherland further pointed out that white collar crimes differ from the crimes com mitted by
criminal syndicates. This distinction could be based on the extent of presumed respectability. For
instance, if a person who belongs to a respectable class of society and possesses some degree of
good reputation, sells shoddy goods, he is committing a white collar crime, but if a group of
persons unknown to their victims, sells the same type of shoddy goods, that would not be a white
collar crime.

Sutherland carefully examined the depredations of nearly 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. But people knew very little about the trickery of these big business
criminals and even if they knew, they were apathetic towards the problem because of the fact
that 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."

5
OBJECTIVE

 To understand concept of white collar crimes.

 To know the classification, causes and its recent trends in India.
.

RESEARCH METHODOLOGY

The researcher has followed the doctrinal method for research purposes. The present study is a
descriptive and analytical study based on secondary sources. Secondary sources include books,
literature, newspaper articles, journals, web pages, etc.

Books, case laws and other reference as guided by Faculty of Criminology and Penology have
been primarily helpful in giving this project a firm structure. Websites, dictionaries and articles
have also been referred.

6
DEFINITION OF WHITE COLLAR CRIME

The concept of "white collar crime"2 found its place in criminology for the first time in 1941
when Sutherland published his research paper on white collar criminality in the American
Sociological Review.' He defined white collar crime as a "crime committed by persons of
respectability and high social status in course of their occupation". A white-collar criminal
belongs to upper socio-economic class who violates the criminal law while conducting his
professional qualities. For example, Misrepresentation through fraudulent advertisements,
infringement of patents, copyrights and trade -marks etc., are frequently resorted to by
manufacturers, industrialists and other persons of repute in course of their occupation with a
view to earning huge profits. Other illustrations of white collar criminality include publication of
fabricated balance sheets and profit and loss account of business, passing of goods, concealment
of defects in the commodity for sale etc.

Southerland further pointed out that a white collar crime is more harmful to society than ordinary
crimes because the financial loss to society from white collar crimes is far greater than the
financial loss from burglaries, robberies, larcenies etc. The most dismal aspect of white collar
crimes is that there is no effective programme for the enforcement of criminal law against them
and the influential involved in these offences are able to resist enforcement of law against
persons themselves. 3

White collar crimes by their very nature are such that the injury or damage White collar caused
as a result of them is so widely diffused in the large body of society that their gravity in regard to
individual victim is almost negligible. It is probably for this reason that till late these crimes did
not attract much attention as they do not carry with them any loss of social status of the offender
even if he is caught or detected. There is yet another reason for white collar criminals escaping
prosecution. In cases of misrepresentation, concealment or fraud etc., the caveat-emptor, which
signifies that courts usually place reliance on the principle of the purchaser must enter into a deal
with open eyes and guard himself against ordinary dishonesty of the vendor. As a result of this
attitude of the courts there was enormous increase in white collar crime during the period of
depression in 1930’s in United States. Perhaps it is for this reason that American President,
2
http://shodhganga.inflibnet.ac.in/bitstream/10603/54474/9/09_chapter%202.pdf
3
http://indianresearchjournals.com/pdf/IJSSIR/2012/September/16.pdf

7
Roosevelt in 1933 insisted on withdrawal of the doctrine of caveat-emptor from adjudication of
cases involving white collar crime.

Sir Walter Reckless, an eminent American criminologist suggests that white collar crime
represents the offences of businessmen who are in a position to determine the policies and
activities of business. ‘Some authorities suggest that white collar crimes are committed by
persons of status not for need but for greed.’

It must be emphatically stated that white collar criminality thrives because of public insensibility
is that firstly such public apathy to it. The reason for this criminals operate within the strict letter
of the law and exploit the credibility of the legal battles involved are dragged out for years in
their victims; and secondly, the result the gravity of the offence is completely lost in the courts,
with oblivion. That apart, the impact of white collar crime is so much diffused in the community
that the individual victims are only marginally affected by it, and, therefore they conveniently
forget all about it.

There is yet another important point in context of white collar crime. At times, the members of
the community themselves contribute to the commission of various white collar crimes willingly
or unwillingly. For instance, illegal gratification to public servants to get the work done quickly,
black-marketing in times of scarcity, evasive price violations, rent-ceiling violations etc. are
some of the common examples where 'victims' of the crime are themselves to be blamed for
involvement in white collar criminality. In fact, such crimes cannot be committed unless there is
a demand for illegal favor from consumers and they are actively involved in deal.

8
CLASSIFICATION OF WHITE COLLAR CRIMES

Theoretically, various white collar crimes may broadly be classified into four major categories as
follows:

1. Ad hoc Crimes: They are also known as personal crimes because this category of white
collar crimes, the offender pursues his own individual objective having no face-to-face
contact with the victim. Hacking on computers, credit-card frauds, tax evasion etc. are
common forms of ad hoc white collar crimes.
2. White collar crimes involving breach of trust or breach of faith bestowed by an individual
or institution on the perpetrator. Insider trading, financial embezzlements, misuse of
funds, fictitious pay rolls etc. are common illustrations of this type of white collar crimes.
3. Individuals occupying high positions or status who commit crime incidental to, and in
furtherance of their organizational operations constitute this category of white collar
crime. People occupying high positions commit such crime, not because it is their central
purpose, but because they incidentally find an opportunity during the course of their
employment to earn quick-money or gain undue advantages by using their power or
influence. The recent examples of such crime are 2G Spectrum Scam, Coalgate Scam,
Commonwealth Games Scandal, Mumbai Adarsh Defence Society Scam, Bihar Fodder
Scam etc. Medical bill claims, fake educational institutions, issuance Fraudulent of fake
mark-sheets/certificates etc. are also covered under this category of white collar crimes.
4. White collar crime may also committed as a part of business itself. Violation of
trademarks or copyright, Patent Law or Competition Law etc. come under this category
of white collar crime. The violation of Domain Name and other corporate crimes are also
white collar crimes of this type.

9
WHITE COLLAR CRIMES IN INDIA

India also does not have a specific statutory definition or provisions referring to white collar
crimes. The 47th (forty-seventh) report of the Law Commission on ‘The Trial and Punishment of
Social and Economic Offences4’ defines ‘white collar crime’ for the purpose of the report as “a
crime committed in the course of one’s occupation by a member of the upper class of the
society.” The Supreme Court of India, in Ram Narain Poply v. CBI5, has observed that the white-
collar crimes are nothing but cases of private gain at the cost of the public, and lead to economic
disaster. Socioeconomic crimes and white collar crimes are reportedly the intersecting circles.

White-collar crime is pervasive in almost all the professions and occu-pations in our society.
The problem is quite acute, both in terms of variety and the extent of white-collar criminality.
The report of Santhanam Committee in its findings gave a vivid picture of white-collar crimes
committed by persons of respectability such as businessmen, industrialist, contractors and
suppliers as also the corrupt public officials

Some of the common categories of white collar crimes in India include the violation of the
foreign exchange laws, import and export related laws, banking and accounting frauds, offences
under the Prevention of Corruption Act, 1988, tax-evasion, adulteration of food, edibles and
drugs, etc.6

The complexity of tax-laws in India has provided sufficient scope for the tax-payers to evade
taxes. It is to be noted that tax-evasion is illegal, but tax-avoidance not. Tax-evasion implies non-
payment of tax due to be paid, the tax-avoidance signifies arranging the spread over of ones
income in such a way that it does not incur tax-liability legally and lawfully. In the profession of
medicine, most common instances of white-collar criminality are illegal abortions, false medical
certificates and unnecessary prolonged treatment in many cases. The usual legal and professional

4
The Law Commission was set up by the Government of India in 1972.
5
Ram Narain Poply v. CBI, 2003 Indlaw SC 51
6
https://www.linkedin.com/pulse/20140813191900-273389505-criminology-white-collar-crimes-in-india

10
violations committed by law-yers are : advising organized criminals, aiding in performing false
claims, engaging professional witness, fabricating false evidence etc. In the engineer-ing
profession, understand dealing with contractors and suppliers, passing of sub-standard works and
materials and maintenance of bogus records of work. Charged labours are some of the common
examples of white-collar crime.

Corruption is also a well known white-collar crime. It is not limited to the concept of bribes of
illegal gratification taken by public servants. In its wider sense, corruption includes all forms of
dishonest gains in cash, kind or position by persons in government and those associated with
public and political affairs. The two government departments which have been traditionally
notorious for corruptions in the country are those of police and public works.

There are some of the remedial measures for combating white-collar criminality, which are,
creating public awareness against these crimes through the media of press, and other audio-visual
aids and legal literacy programmes. Special Tribunals should be constituted with power to award
sentence of im-prisons up to 5 years for white-collar crimes. Convictions should result in heavy
fines rather than arrest and detention of white-collar criminals. And public vigilance seems to be
corner-stone of anti-white-collar crime strategy. Unless people strongly detest such crimes, it
will not be possible to contain this growing menace.

In India there is need for strengthening of morals particularly in the higher strata and among the
public services. It is further necessary to evolve sound group norms and services ethics based on
the concepts of absolute honesty and integrity for the sake of national welfare. This is possible
through character building at grass-root level and inculcating feeling of real concern for the
motherland among youngsters so that they are prepared for an upright living when they enter real
life.

11
CAUSES OF THE WHITE COLLAR CRIMES

Greed: People of high strata who are financially stable but do the crimes out of greed. For this
purpose, the perpetrator would adopt illegal methods to have an economic gain.

Technology: Another reason can be technology. The emergence of new technologies, political
pressure or growing business, has led to many more ideas which resulted in crimes. Lawyers are
reluctant to bring these cases up because it is very hard to track.

Competition: White collar crimes occur because of the desire to beat the competition to reach
ahead than others. Tio win, crimes like bribery and frauds are committed.

Legislation: Due to the rise in crimes of white collar criminals, there are not enough laws to deal
with these kinds of crimes. In most of the cases, white collar criminals are not even prosecuted.
The implementation of Information Technology Act 2008 is fragile due to lack of trained
workers. It is tough to find white collar criminals because the crimes which are committed are
done in private places and hence there is no eye witness.7

RECENT TRENDS OF WHITE COLLAR CRIMES IN INDIA

Basically so many white collar crime done in india in which officials took priviledge of their
power and status for their advantages. White collar crimes in india started from its freedom and
1948 the jeep scandal8 took place. These are the following scandal.

1. In scam known as Harshad Mehta scam9, this scam done in 1992 basically he was brave
stock broker, he knew the loopholes of banking system as well as how to exploit that loopholes,
but he used his intellect for the wrong pupose. As the after effects of this scam, around a sum of
Rs 4000 crore was mulcted. The effect of this scam also take place as after the incident Narsimha
Rao was accused of bribery, and Many people were bankrupted and committed suicide.

7
http://blog.ipleaders.in/analysis-white-collar-crimes-india/
8
http://www.mudraa.com/trading/95881/0/summary-of-all-scams-in-india-since-1947.html
9
https://www.quora.com/What-was-the-Harshad-Mehta-scam

12
2. In another unfamous 940 crores Bihar Fodder Scam case (1996) in which the chief minister,
Lalu Prasad Yadav along with 45 other public officers and servants was charge sheeted by CBI
in june 1997 and convicted for 5 year RI by the special court on 30th oct 2013 is an eye-opener
for those who indulge in white collar criminality abusing their power and status. However, he
has been granted bail by the Supreme Court on 18 dec. 2013 but has lost his parliamentary
membership consequent to his conviction.

3. In Telgi scam which is known as stamp paper scam and took place in 2002. Abdul Karim
Telgi had mastered the art of forgery in printing duplicate stamp papers and sold them to banks
and other institutions. The tentacles of the fake stamp and stamp paper case had penetrated 12
states and was estimated at a whooping Rs. 20000 crore plus. The Telgi clearly had a lot of
support from government departments that were responsible for the production and sale of high
security stamps.

4. In another scam known as 2G spectrum scam10, In the year 2008, the Telecom Ministry
under Mr. A. Raja issued 122 Licenses of the 2 G Spectrum to 85 companies including many
new Telecom Companies with little or no experience in the telecom sector, at a price set in the
year 2001. Compared to the year 2001 and the year 2008 the demands for Mobile Phones and the
related services have increased by more than 20 times. And such improper allocations of the 2G
–Spectrum Technology has caused heavy loss to the Government of India. This scam is about
1.76 lakh crore rupees. The TIME magazine lists it as the 2nd Worst Abuse of Power.

5. In another scam known as Coal Scam 11 , this scam is in regards to Indian Government’s
allocation of nation’s coal deposit to PSU’s and private companies. The scam happened under
Man mohan Singh government and came out in 2012. The basic premise of this scam was that
wrongful allocation of Coal deposits by Government without resorting to competitive bidding,

10
http://www.infoqueenbee.com/2011/02/brief-summary-of-status-of-2-g-spectrum.html
11
http://trak.in/2010/top-10-corruption-scams-scandals-india/

13
which would have made huge amounts to the Government (to tune of 1.86 Lakh crore).
However, the coal deposits were allocated arbitrarily.

6. Wakf board land scam12 took place in March of 2012, Anwar Maniapddy, the chairman of
Karnataka State Minorities Commission submitted a sensational report which alleged 27,000
acres of land, which was controlled by Karnataka Wakf Board had been allocated illegally or
misappropriated. The value of land which was misappropriated was in tune of 1.5 to 2 lakh crore
rupees.

The land managed by Wakf board, a Muslim charitable trust, is typically donated to under-
privileged and poor people of Muslim community. However, the report alleged that nearly 50
percent of the land owned by Wakf board was misappropriated by Politicians and Board
members in conjunction with real estate mafia at fraction of actual land cost. The investigations
for this are currently ongoing.

7. Another feather in the cap of Indian scandal list is Commonwealth Games 13 loot. Yes,
literally a loot! Even before the long awaited sporting bonanza could see the day of light, the
grand event was soaked in the allegations of corruption.

It is estimated that out of Rs. 70000 crore spent on the Games, only half the said amount was
spent on Indian sportspersons. The Central Vigilance Commission, involved in probing the
alleged corruption in various Commonwealth Games-related projects, has found discrepancies in
tenders – like payment to non-existent parties, will-ful delays in execution of contracts, over-
inflated price and bungling in purchase of equipment through tendering – and misappropriation
of funds.

12
http://trak.in/2010/top-10-corruption-scams-scandals-india/
13
http://www.essssay.com/2012/01/commonwealth-game-scam-overall-view.html

14
8. The Vyapam scam is an admission & recruitment scam involving politicians, senior officials
and businessmen in the Indian state of Madhya Pradesh. The scam involved a collusion of
undeserving candidates, who bribed politicians and MPPEB officials through middlemen, to get
high ranks in these entrance tests.

9. Another scam took place in 2013 The Saradha Group’s chit fund scam14 in West Bengal
came into the limelight early this year. A recent investigation regarding the scam summed up to
Rs 2,460 crore and about 80% of the money still unpaid to the depositors. These report revealed
that the Saradha Group chairman, Sudipta Sen has been arrested and he is solely responsible for
indulging other companies with the help of several branches set up in West Bengal, Odisha,
Assam, Jharkhand and other states in order to get deposits from the public as well. In the report,
it is also stated that the four companies of Saradha group used to retrieve money by attracting
many people by promising them a landed property or a foreign tour, either of the two, in return
of their deposits. They used three schemes namely monthly income deposits, fixed deposits and
recurring deposits. A report by the West Bengal police along with Enforcement Directorate (ED)
for the years 2008-12showed that an amount of Rs 2459.59 crores was in possession by the
company which used such schemes to attract innocent investors and public.

10. In the case of Nimmagadda Prasad V. CBI15, the appellant alongwith Y.S. Jag Mohan Reddy,
enriched himself for more than 40,000 crores of rupees by the influence of Jagan Mohan’s father
Dr. Y.S. Rajasekharan Reddy who was then C.M. of Andhra Pradesh. The Chief Minister, Late
Dr. Reddy extended many undue favours to the appellant by abusing his official position and
thereby allotting 18878 acres of land to the appellant and in return, he paid illegal gratifications
amounting to 854.5 crore rupees to Y.S. Jagan Mohan Reddy and his group of companies. Illegal
gratifications were paid in the guise of investments/share application money to give them
corporate colour in order to escape criminal charges.

14
http://www.scandalsinindia.co.in/news/saradha-group-west-bengal-chit-fund-scam.htm
15
(2013) 7 SCC 466

15
The appellant’s prayer for bail was dismissed by the supreme court in view of the fact that he
was involved in a grave economic offence of alienating prime lands to selected private
companies/individuals under the garb of development using deceptive means resulting in wrong
ownership and control of material resources detrimental to the common good

11. When the issue of white collar crime is discussing then the satyam scam16 came in to mind
which is also known as country's biggest-ever corporate accounting scandal. This case is about
corporate governance and fraudulent auditing practices allegedly in connivance with auditors and
chartered accountants. The company misrepresented its accounts both to its board, stock
exchanges, regulators, investors and all other stakeholders. Fraud in this scam was around 7,136
crore rupees. After that A special CBI court on 9th april 2015 sentenced B Ramalinga Raju, his
two brothers and seven others to seven years in prison in the Satyam fraud case. The court also
imposed a fine of Rs 5 crore on Ramalinga Raju, the Satyam Computer Services Ltd's founder
and former chairman, and his brother B Rama Raju and Rs 20-25 lakh each on the remaining
accused. This was the biggest scam in our country.

16
http://www.huffingtonpost.in/devangshu-datta/ramalinga-raju-and-the-incredible-story-of-indias-greatest-
whit/

16
CONCLUSION

Finally, it must be stated that a developing country like India where population is fast escalating,
economic offences are increasing by leaps and bound besides the traditional crimes. These are
mostly associated with middle and upper class of society and have added new chapter to criminal
jurisprudence. To a great extent they are an outcome of industrial and commercial development
and progress of science and new technology. With the growing materialism all around the world
acquisition of more and more wealth has become the final end of human, activity, consequently,
moral values have either changed or thrown, to winds and fraud, adulteration, misappropriation,
misrepresentation, corruption, evasion of tax etc. have become the techniques of trade,
commerce and profession. It is for the criminal law administrators to contain the tendency by
stringent legislative measures. It is rather disappointing to note that though white collar crimes
such as black market activities, evasive price violations, rent-ceiling violations, rationing-law
violations, illegal financial maneuvers etc. by the businessmen are widespread in society, no
effective program for repressing them so far been launched by the law enforcement agencies.
White collar crime increases day by day because of lust of money, and it will increase till the
new stringent law enacted to prohibit or regulate these crimes.

17
REFERENCE

Books

 N. V. Paranjape, Criminology and Penology with Victimology, 16th Edition 2014, Central
Law Publications, Allahabad
 Rajendra Kumar Sharma, Criminology and Penology, Atlantic Publishers
 Ram Ahuja, Criminology, 2001 Edition, Rawat Publications

Websites

 https://www.linkedin.com/pulse/20140813191900-273389505-criminology-white-collar-
crimes-in-india
 http://blog.ipleaders.in/analysis-white-collar-crimes-india/
 http://www.legalservicesindia.com/article/article/white-collar-crime-and-its-changing-
dimensions-in-india-1378-1.html

18