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Friday, September 3, 2010


White collar crime is the illegal activities of people and organizations whose acknowledged purpose is profit through legitimate business enterprise. It is the crime committed by persons of relatively high social or economic status in connection with their regular occupations. White-collar crimes fall broadly into two categories: those illegal actions undertaken by perpetrators to make money for themselves; and those illegal actions undertaken principally to further the aims of their company or other organization. White collar crime involves illegal business practices (embezzlement, price-fixing, bribery) with merchandise that is ordinarily seen as a legitimate business product.
In the late 1930s, criminologist Edwin Sutherland first coined the term "white collar crime" to describe the criminal activities of the rich and powerful. He argued that white-collar crime is:
• Crime, which involves a betrayal of trust implied in the holding of an office or other position of trust.
• Committed by persons of respectability and high social status in the course of their occupation.
• A greater threat to society than street crime because the former promotes cynicism and distrust of basic social institutions.
Sutherland coined the term "white-collar crime" in order to point out weaknesses in typical crime theory that considered social pathology as the primary explanation behind criminal behavior. White-collar crime casts doubt on the notion that poverty breads crime. Sutherland argued that members of society occupying positions of privilege and status were just as likely to commit crimes as those from the lower classes.
Sutherland's call to study white-collar crime marked a major shift in the focus of criminological inquiry. Prior to Sutherland research had been directed toward the lower classes, e.g., the works inspired by the "Chicago School" of sociology: McKay (1930); later Shaw and McKay (1942); and those of Robert Merton (1938).
Sutherland defined it as "a crime committed by a person of respectability and high social status in the course of his occupation."
As Sutherland saw it, the rich were engaged in a conspiracy to use their position for personal gain without regard to the law. Today, it is recognized that persons in all social classes can commit white collar crimes, but the notion of getting away with disregard for the law still exists in the justice system's tendency to treat these offences as civil rather than criminal matters.
• Victims often suffer the effects of white-collar crime without ever meeting the perpetrators. Goode calls this aspect of white collar crime "diffuse victimization"
• Croall (1992) examined the characteristics of "white collar crime" and contended that the low visibility of essential features often occurs under occupational cover.
• It is in essence an indirect form of theft. Perpetrators often rationalize that because it is indirect, it is victimless and therefore "acceptable".
• Defendants are at work at the scene while victims are present and unaware of offending. Box (1983) pointed out that many fraud victims are not aware of being duped.
• The low visibility is combined with complexities. Levi (1989) argued that even juries necessarily found fraud trial incomprehensible.
• The diffusion of responsibility and elimination of blame for actions are lost in large corporate structures.
• The diffuseness of white-collar crime may put us at greater risk for longer periods of time than other crimes such as ordinary bank robbery

The following types of white collar crime are recognized today:
• Corporate crime -- Usually occurs when a strongly competitive business environment fosters corporate irregularities (antitrust violations, price-fixing, false advertising)
• Government crime -- illegal and socially injurious cooperation between governments and corporate institutions (space shuttle disasters)
• Occupational crime -- Usually occurs when employees come across an opportunity to make extra money by bending or breaking the rules (theft, pilfering)
• Professional crime -- people or groups of people who systematically set out to look for opportunities to make money illegally (fraud, tax evasion, deceitful claims, phantom operations, false pretenses, forgery)
White-collar crimes affected the nation and the society, which was not very much concerned about, as people are not directly affected by the white collar crimes which included, internet hacking, defrauding of banks, printing of counterfeit notes. There is black money of thousands of crores in circulation and criminals are merely escaping with a fine of few thousand rupees for the offences running to several hundred crores. Only four per cent of the white criminals got convicted at the Supreme Court.
Business, Trade, Commerce and Industry
Sutherland emphasised the high degree of criminality among businessmen in contemporary society and their immunity from criminal sanctions generally in the following words:
“The most powerful group in medieval society secured relative immunity from punishment by ‘benefit of clerg’ and now the present most powerful group secures relative immunity by benefit of business.”
What Sutherland wrote about the American society is equally true of the conditions in India. The Santhanam Committee gave a graphic account of the misdeeds of businessmen and industrialists in the following words:
“Corruption can exist only if there is someone willing to corrupt and capable of corrupting. We regret to say that both this willingness and capacity to corrupt is found in a large measure in the industrial and commercial classes…….”
It is these people who indulge in evasion and avoidance of taxes, accumulate large amounts of unaccounted money by various methods such as obtaining licences, suppressing profits by manipulation of accounts to avoid taxes… and under-valuation of transactions in immovable property. It is they who have control over large funds and are in a position to spend considerable sums of money on entertainment.
Possession of large amounts of unaccounted money by various persons including those belonging to the industrial and commercial classes is a major impediment in the purification of public life. If anti-corruption activities are to be successful it must be recognised that it is as important to fight these unscrupulous agencies of corruption as to eliminate corruption in the public services. In fact they go together.
Commenting on the extremely dishonest behaviour of Indian traders, it has rightly been observed:
“Business communities in India of large and small merchants are basically a dishonest bunch of crooks…… While it is true that the object of businessmen is to make profit, there are degrees and degrees of making profit, and nowhere in the world do businessmen get rich so quickly as they do in India….”
Two instances of big-business criminality are provided by reports made by the commissions dealing with the notorious Dalmia-Jain and Mundhra cases. The Vivian Bose Commission, which inquired into the affairs of the Dalmia-Jain group of companies, the third biggest in the country, held them responsible in different degrees for fraud, mismanagement, manipulation of accounts, destruction of records, personal gain at the expense of the investing public, avoidance of taxes and a number of other irregularities and violations of trust.
Mr. M.C. Chagla, who probed into the working of the Mundhra concerns, had to make the following observations about the business tycoon: Mundhra is a flamboyant personality and a financial adventurer whose only ambition is to buid up an industrial empire by dubious means.” The reports of the Company Law Administration record about 124 prosecutions against him and companies owned by him, out of which 113 ended in conviction during this two-year period.
Hoarding, profiteering and black marketing of essential commodities by traders in India has become a chronic problem. Another white-collar crime which is quite prevalent among businessmen is violation of the Foreign exchange Act and Imports and Exports Act. According to Santhanam Committee Report, secret hoards of foreign exchange are built up abroad by Indian businessmen through under-invoicing of exports and over-invoicing of imports.
Food and Drug Adultration
This is easily the most atrocious crime committed by businessmen since it can cause irreparable damage to the health or even lives of innocent citizens. In India, the problem is so widespread that from 25 per cent to 70 per cent of most of the foodstuffs consumed in this country are adulterated or contaminated. The same is true of the production of spurious drugs in the country. According to the Pharmaceutical Inquiry Committee, Government of India, the spurious drugs trade flourishes in India to a colossal extent. This is due to the greed of the manufacturers, ignorance of the poor consumers who go in for cheap medicines from unauthorised dealers and the shortage of genuine goods.
Prosecutions under the Prevention of Food Adulteration Act fail quite frequently because of defective reports of the public analysts, or delay in the examination of samples or because he procedure prescribed by the Act for taking samples is not followed.
Violations of Taxation Laws
Some of the more important and frequent tax violations which occur in India are in the areas of income tax, wealth tax, estate duty and sales tax. The loss resulting from the violations to the State exchequer is tremendous. Apart from the financial implications of the problem, there are other dimensions of the evil such as the corrupting influence of the tainted money on governmental machinery and the consequent contempt. Disrespect and cynicism towards law in general.
Extent of the Problem
Probably the greatest menace caused by the failure to check tax evasion is the phenomenon of black money which has serious repercussions on the economy of the country.
The Wanchoo Committee appointed by the Government of India in 1970 to make recommendations to unearth black money and combat tax evasion identified the following direct effects of black money economy in the country:
1. There is loss of revenue to the State. This and the immobility of investable funds contribute to the dearth for resources of national development.
2. It results in inequitable taxation; the honest taxpayer suffers in the process.
3. Since the unaccounted money cannot be declared or invested through lawful channels, a good part of it is spent in lavish consumption and unproductive uses resulting in waste as well as in inflation.
4. The most disastrous aspect of the phenomenon of black money is that the general moral fibre of the society as a whole is adversely affected.
Corruption in Government and Politics
Corruption is one of the most talked abut subjects today in the country since it is believed to have penetrated into every sphere of government and political activity. Corruption of various forms has always existed not only in India but also in countries which are materially and politically more advanced.
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.
Corruption in Government
Various factors have been responsible for the widespread corruption among government servants. While some factors are the same as in the case of white collar crimes in general, there are some factors which have a special bearing on the problem of corruption among government and other public servants. The two world wars gave vast powers to government servants in matters relating to the grant of licences, permits and quotas.
Some other factors which make public servants corrupt are connected with the economic conditions of most of the government employees. In India, though the government services have some special prestige, the salaries given to the employees, by and large, are quite low. This factor in combination with some other factors like inflation contributes a great deal towards corruption. The two government departments which have been traditionally notorious for corruption in the country are those of police and public works.
Political Corruption
Corruption among ministers and other political personages is more dangerous than corruption in the governmental machinery in terms of the enormity of the stakes involved in public life. Corruption and indecency in political life informs all the sections of society since violations are committed by those very persons who are expected to set the norms of social and political conduct.
The more usual forms of political corruption in India are grafts, violation of election laws and the abuse of official and political machinery because of the liaison of political forces with big business. The well-known episodes known as Mundhra Sirajuddin Tul Mohan Ram in the part affairs involving central Cabinet ministers and members of Parliament are typical examples of political corruption.

Among the many professions where opportunities for committing white-collar crimes are abundant the professions which come readily to one’s mind are those of medicine and law.
The majority of the people belonging to the medical profession may not commit criminal or unethical acts in the course of their profession but still the number of those who violate the professional and legal norms is not significant. The most common instances are illegal abortions, false medical certificates and unnecessary prolonged treatment in many cases. Another widespread violation consists of prescribing medicines which one is not supposed to having regard to his training or the system of medicine permitted to be followed by him.
White-collar criminality among lawyers is believed to be fairly widespread. Though such criminality is found to exist in many countries, the situation in India is further aggravated by the fact that there are too many lawyers having regard to the work available to them with the result that all sorts of unscrupulous practices have crept into the profession. It is not surprising, therefore, that the image of a typical lawyer is far from being complimentary in India.
The usual legal and professional violations committed by the lawyers are: advising organized criminals, aiding in preferring false claims and fabricating false evidence.
The incidence of white-collar crime is fairly high among some other professionals also like advertisements, property valuers, consulting and other engineers and contractors undertaking construction and other kinds of work.
With the increasing use of newly developed technologies in the various spheres of business, commerce and industry, particularly the computers, the scope of white-collar crime is getting wider; new crimes are emerging and the commission of certain kinds of pre-existing crimes is being greatly facilitated.

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