White Collar Crime: Meaning & Cases

White shirts, black coats & ties are classic stereotypes representing the wealthy and elite. Similarly, the crimes committed by these kinds of people are also given a fancy name called white-collar crimes. Due to the non-violent nature of these crimes, their harm towards society cannot be determined. 

What exactly do you mean by white-collar crimes? Why are they committed? What are famous white-collar crimes cases, etc., will this article discuss? So, let’s get started.

What do you mean by White Collar Crime?

The word “white collar crime” was coined by the American criminologist & sociologist Edwin Hardin Sutherland during the 1930s. These crimes are committed to satisfying financial motive, and the perpetrators are generally wealthy, educated and from a high-class society. A few prime examples are money laundering, insurance fraud, tax evasion, identity theft etc.

White-collar crimes are on the rise in economically developing nations. Its nature although is non- violent, however, the perpetrators of these crimes can cause more harm to the society at large. 

Why associate colour with a crime?

Colour has been associated with several crimes depending upon which class of society has committed it or its nature, such as blue-collar crimes, green-collar crimes, white-collar crimes etc.

Blue-Collar crime is motivated by:

• fury

• vengeance

• Emotions

• Examples: shoplifting and burglary, assault and battery, rape and sexual assault etc.

White-collar crime is motivated by:

• Greed

• meticulously organized & accomplished

• Higher class of society 

• Examples: 

1. In Medical And Health: False medical certificates by the doctors, Sex determination tests 

2. In Legal Profession: Fabrication of forged documents, threatening the witnesses of the opposite party.

3. In Education: Merit-based admission replaced by donations, and collection of a huge amount of money in the name of government grants.

Green-collar crime is motivated by:

• Profits

• Industrial influence

• Examples: Deforestation, animal cruelty, pollution etc.

Let’s understand the differences in detail.

Difference between blue-collar and white-collar crimes

Difference between blue-collar and green-collar crimes

Difference between white-collar and ordinary crimes

Landmark White-collar Crime Cases in India

1. Harshad Mehta Securities Fraud (1988-1995)  

Harshad Mehta was a stockbroker who founded Grow More Research & Asset Management Limited, a security company, in 1990. Investors blindly followed him as he was well-known back then with the title “Sultan of Dalal Street” of the Stock market. Harshad Mehta was involved in a massive stock manipulation scheme financed by worthless bank receipts. He used techniques such as signing fake cheques, and misusing market loopholes & fabrication to raise the stock prices up to 40 times their original price. Thus, the Stock traders making good returns from this scam fraudulently gained unsecured loans from banks.

2. Satyam Scandal

This was the biggest-ever corporate accounting fraud by B. Ramalingam Raju, who was the founder and chairman of Satyam Computers Services Limited. He wrote a confession published in the Times of India in 2009, revealing this scam. In the letter, he accepted the fact that he tampered with his books of accounts by inflating assets and understating liabilities. We know that a company’s financial condition is judged from its books of accounts, and before making any investment, investors rely on this book so, falsifying it to defraud shareholders and investors is obviously a crime which Raju committed. In order to ensure that a similar scam never happens again, SEBI responded to this matter strongly.

3. Ketan Parekh Security Scam

Parekh engaged in circular trading and stock manipulation from 1999 to 2001. He borrowed money from financial institutions such as Global Trust Bank and Madhavpura Mercantile Co-operative Bank to utilize the amount for the manipulation of many stocks. They were found guilty of manipulating the share prices of ten companies called K-10. The scandal cost roughly ₹ 1,250 crore so. Consequently, SEBI banned Parekh and associated firms from trading in the market for 14 years. He although served only a year in prison yet he was not allowed to trade on the Indian stock market until 2017.

4. Saradha chit fund case

“21 din mein paisa double”

This phrase pretty much sums up this case. A renowned financial fraud by an elite group which was also an alleged political scandal was the Saradha Chit fund case. Saradha Group, a group of 200 private companies, ran Ponzi scheme, which collapsed, it was running collective investment schemes (money pooling schemes) incorrectly referred to as Chit Fund that resulted in major financial fraud. With the fake promise of a multiplied substantial sum in return in the form of cash or real estate and other assets, this group manipulated around ₹30,000 crores from more than 17 lakh depositors. SEBI banned Saradha Realty India and its managing director Sudipta Sen from the securities market until the group winded up all the Collective Investment Schemes (CIS) and made the refund.

5. Punjab National Bank Fraud

Nirav Modi was the 85th richest person in India whose name popped up in the Punjab National Bank Fraud case. Bank claimed that Modi and the businesses connected to him conspired with a few of the bank’s representatives to obtain guarantees or letters of undertaking from other foreign banks to help finance buyers’ credit for the purpose of buying & selling diamonds. Two bank employees fraudulently issued Letters of understanding to these firms without following the proper procedure. Then, based on these Letters, credit was extended to these firms

PNB claimed that the money purportedly raised for the purpose of buying and selling diamonds was not put to use. PNB released information to the stock exchange & ₹11,400 crores of fraud was discovered at PNB, making it one of the biggest scams in the Indian banking industry.

6. 2G Scam

2G Scam involved the fixed-price sale of licenses for the 2G spectrum. It was a political controversy in which politicians and private officials of the United Progressive Alliance coalition government in India (UPA) were allegedly involved in selling or allotting 122 2G spectrum licenses. Licenses were given to applicants who weren’t even qualified. It was a combination of three cases, one filed by the Enforcement Directorate and two cases registered by the CBI. CAG’s report revealed that 2G, or second generation licenses for mobile networks, were given at throwaway prices instead of carrying free and fair auctions. The then Telecom minister, A Raja, denied all charges stating that PM Manmohan Singh had consented to this decision and so he was arrested in 2011 on charges of cheating, forgery and conspiracy. In 2010, the CAG of India released a report on their crime. Also, the charge sheet was 80,000 pages long as the crime was very serious. 

7. CWG scam

Commonwealth Games is an international competition wherein the athletes from the Commonwealth Nations compete in several sports. It occurs once a year & it is run by the Commonwealth Games Federation. Suresh Kalmadi, the Games’ planning committee chairman, conducted this Commonwealth Games scam. He allegedly awarded the lucrative contract to the Swiss firm to install a TSR system for the Commonwealth Games at a very high cost, causing a loss of over ₹900 million to the exchequer as the Swiss Timings’ time equipment actually costs ₹95 crores. The Central Vigilance Commission got to know about the CMW scam, and the culprits were detained on charges of cheating, conspiracy, corruption, forging documents etc. Hence, this is also a serious white-collar crime.

Laws against white collar crimes in India

1. Companies Act, 1960

2. Income Tax Act, 1961

3. Indian Penal Code, 1860

4. Commodities Act, 1955

5. Prevention of Corruption Act, 1988

6. Negotiable Instrument Act, 1881

7. Prevention of money laundering Act, 2002

8. IT Act, 2005

9. Imports and Exports (Control) Act, 1950.

Conclusion

No proper definition has been specified for white-collar crimes, yet governments must not neglect such socio-economic crimes. White-collar crimes are serious crimes even if they are non-violent, which cause harm to the Indian economy and threaten the country’s economy through bank frauds, economic thefts, tax evasion etc. It not only affects the Indian economy but also impacts society negatively. # Punishment regarding White collar crime should be stricter as harsh punishment can prevent these crimes to a great extent. Also as most of the people are not yet aware about these crimes, the authorities must ensure public awareness on the same.