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Friday, September 3, 2010

Criminology - White Collar Crime v. Traditional Crime


The term "white-collar crime", strictly speaking, has no legal significance. However, it was coined and popularized by Edwin H. Sutherland, an American sociologist, in his classic paper "White Collar Criminality" some sixty five years ago. In the paper he defined this crime as “one committed by a person of respectability and high social status in the course of his occupation”. By such definition Sutherland hoped to point out weaknesses in the typical crime theory by bringing into sharp focus the sociological differences that existed between traditional crimes such as murder, rape and theft where the crimes were defined without reference to the social status or occupation of the offender, and other crimes such as embezzlement, fraud, antitrust violations, price-fixing by cartels, misuse of public and corporate funds, income tax evasion, abuse of political and legal processes and widespread violations of administrative regulations, all of which were nearly always, according to his studies, committed by those with power, high social status and occupation, i.e. the respectable citizen. Sutherland noted that those who administered justice spared the well-off and influential by postulating that many of such offences were victimless or the victims did not see themselves as victims of crime; that offenders were not really criminals or that the offences were of a non-violent nature or that a mere implication of a person of high status in an illegal act was sufficient punishment as such person would lose his status or his professional licence or privilege. Imposition of a jail sentence was rare. He also saw in most cases typical concealment of offences within the organisational routine leading to difficulties in detecting the offences by the victims and the police. Some of the blame, he conceded, no doubt, lay in the state of the law which had until the 20th century rendered corporations immune from criminal liability.
Sutherland, therefore, in challenging the paradigm of traditional
criminality which blamed crime on the underprivileged and the lower class
who were considered dangerous elements of society, required that the
general theory of crime explain white-collar crime so that the foundation for
fairness and equal justice for all could result.
Sutherland's definition, though, had a weakness as it was predicated
on the status of the offender and not the characteristics of the offence. A
rival school of sociologists clamoured for a new definition that could
emphasize this latter aspect of the offence. This was necessary so that
white-collar crime would be better understood in all its ramifications and
attempts made to control it. In 1970 Edelhertz , a sociologist, offered a
redefinition of white-collar crime by not identifying it with any social class.
His definition gained favour with the US Justice Department and reshaped
thinking on the subject. Edelhertz's definition emphasized on “illegal acts
committed by non-physical means and by concealment in order to obtain
money or property or to obtain business or personal advantage.”
Relevance and usefulness of this concept is very important as a tool to show the continual shift of crime to the white-collar type amongst the educated and privileged social classes on an even larger scale than before, especially in the light of technologically-savvy perpetrators amongst these classes. It draws attention to the unmitigated consequences of such crime on the public.
Today, white-collar crime is regarded much more as a broad umbrella that denotes 'business crime', 'commercial crime' or 'economic crime', all terms that have gained great currency and usage at both the national and international level. Nevertheless, whatever the descriptive terms that are used, the overriding concepts common to these offences are fraud, cheating, dishonesty and corruption committed by businessmen, conmen, political or public officials by both sophisticated and crass methods.
For convenience of discussion, white-collar crime described by its other names has been broadly divided into two categories by the sociologists Appelbaurn and Chambliss , namely:
(a) occupational crime
(b) corporate or organisational crime.

(a) Occupational crime is more of an 'ad hoc' nature and is committed by an offender in his occupation or taking advantage of his occupation to promote his private, selfish interests. In such a crime, the offender seldom has to face his victim and the typical offence would cover acts of insider trading, corruption, altering of accounts by accountants, overcharging by professional men, cheating on taxes, committing credit card frauds and abuse of trust by those who have custody over others' properties.

(b) Corporate or organisational crime is committed by corporate personnel to benefit their company rather than themselves and covers a plethora of illegal acts and wrongdoings such as price fixing, violating antitrust laws, producing shoddy or inferior goods, endangering the environment through pollution and non-observance of regulatory industry standards, engaging in false and misleading descriptions and the stating of false weights. This category of crime has been described by Edelhertz as the "most troublesome" of all categories. These types of crime are nearly always contested. Again, the bull market in the 1990s in the our country has added new categories of crime to the above with the currently ongoing disclosures of large scale deception practices by brokerage stock analysts and investment bankers.
Finally, there may be added a category of white-collar crime that stands all by itself, that is conducted as a business by a full-time conman or a group of conmen covering all types of scams and swindles.
The Scope of White Collar Crime
As it is important to distinguish between two distinct forms of white-collar offense. The first type of offense is, classically, fraud by any other name. Business frauds certainly differ in the details of how they are executed, in the sophistication of those who execute them and, candidly, in the difficulty that prosecutors have in unraveling them. But at their core, business frauds are no different in kind from any fraud occurring on the street. They are called white-collar offenses simply because of the socio-economic status of the actors and the means they have chosen for committing their criminal offenses - not because of anything unique or inherently different in the nature of their conduct. This sort of white-collar crime has been around for a long while. Fraudulent white-collar crime is no less serious today. This kind of blatant fraudulent white-collar crime is a drain on the economy and a significant concern. When it goes unpunished, respect for the rule of law is diminished.
The second type of white-collar offense is, however, quite different. It involves prosecutions for violations of rules and regulations that are part of a larger statutory structure. They involve violations of the regulations of the Companies Act, MRTP Act and various other statues. Three doctrinal developments define this second type of white-collar offense and differentiate it from the classic frauds First, this type of white-collar offenses involves the criminalization of conduct that, in most instances, is not inherently wrongful in the same way that fraud and bribery are. Rather there is a growth in the category of "public welfare offenses" - a category first created with modest penalties and now increasingly felonized. Second, and of special significance in weighing moral culpability, the statutes involve offenses where the mental element (or mens rea requirement) is substantially diminished, if not eliminated. For example, we now punish as strict liability offenses like dishonour of negotiable instruments- even if done utterly by accident. Third, this type of white-collar offense increasingly involves criminal prosecutions of managerial officers for, in effect, vicarious liability. As a result, for this category of white-collar offenses, the criminal law is increasingly being used interchangeably with civil remedies.
If all ingredients are same in traditional and white collar crimes, then why are two considered as different. Is there a disparity in enforcement and sentencing for white-collar crimes (of both types) and "street" or blue-collar crimes in the legal system of the country? In other words, do judges ignore the guidelines and reduce the sentences in white-collar offenses or are the guidelines sentences for white-collar crimes regularly imposed? The answer is that the courts do not appear to depart from the guidelines with any greater frequency in white-collar cases than in street-crime cases.
If we see the emergence of both traditional and white collar crimes then we find that both owe their emergence to common law principles and are adaptation of principles of theft, fraud etc to modern socio-economic institutions.
But if we focus on the differences in the two then they are namely :-
1. In blue collar crimes victim is immediately located and is himself aware that a wrong has been committed against him which is not so in case of white collar crimes. Victims often do not know that what resulted in sudden crash of market or why that bank or company closed down all of a sudden. Here the impact may be so indirect that the victim does not realizes the implications of a news and is unaware until some tells him that the relation in news and his loss.
2. Second difference is due to judging of Mens rea in both cases. In case of Blue collar crime It is seen that mens rea has to be there essentially whereas in case of white collar crime it has been that arguments of many sociologists that even if it is proved that there was no mens rea in case of any white collar crimes it has to be punished severely so as to give a signal to such criminals that society has become aware of such crimes and stern action would be taken to refrain the repetition of the same.
Going on such lines there have been certain steps in Indian legal reforms like making a mere dishonoring of any negotiable instrument punishable without looking in the mens rea aspect of the same.
3. In case of any blue collar crime, it can done due to need or for greed but it is seen in case of white collar crimes that as these are done mainly by people from high social status so these are essentially done for green and not for need.
4. if we look towards the financial losses occurring to the economy of the country and society then it is quite evident that society suffer in a much severe manner in case of white collar crime then all blue collar crimes taken together. The cost of one big white collar crime may cover the total cost of all blue collar crimes happening in the country in same time period. For example if we see the share scam of 1992 done by Harshad Mehta which was so big and its victims were so large in number that it become quite impossible to identify them all.
5. In case of white collar crime an aspect of constructive mens rea is taken up by sociologists to enable the judiciary to punish the white collar criminals where as in case of blue collar crimes both, judiciary and sociologists, look for the absolute mens rea to prove a person as guilty.
If we look for remedies then wee see that there are some obvious remedies in front of us, like:-
1. Penal laws should be amended in such a manner that such white collar crimes are included in IPC and suitable punishment is provided for the same.
2. Since these are the type of crime which mainly occurs due to unawareness of the public and initiates from the conduct of public itself, so, public should be made aware about the same and only then we can confirm non-occurrence of white collar crime otherwise all steps taken to curb same would be a futile activity.
3. Character building has to be done at grass root level. If we stop taking and giving bribes for our small causes then enlargement of this problem can be curbed by itself. Because we are the factors which gives encouragement to such acts because somewhere or other we are also indulged in such activities so we do not protest strongly against same. Also small profits make our mind deviated from the problem.
4. Judiciary should construe the definition of existing crimes in a liberal manner so as to include white collar crimes in existing definitions and since Judiciary has no restriction over it and also has the power to punish such acts easily so judges should also go for principles of equity and justice instead of always looking for codified laws to take the front.
If we want to conclude in nutshell the difference between White collar crimes and traditional crimes then we can say that although both are similar in their genesis but implications of white collar crimes are much higher then that of traditional crimes. Also Most of the traditional crimes are done by people of low social status while on other hand most of the white collar crimes are done by people from high social status. In case of white collar crime there is no clear cut definition which are present there in case of traditional crimes. Compensation to victims of white collar crimes is not possible as they are very large in number and also it is difficult to ascertain their losses in many cases whereas in case of blue collar crime victims, they are easily identifiable and can be compensated although not in all the cases. There is a dire need to make public aware of white collar crimes as public ignorance plays a major role in these case whereas blue collar crimes are known to most of the sections of public.

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