OVERLOOKING OF WHITE-COLLAR CRIMES

Estimated Reading Time: 7 minutes

INTRODUCTION

White-collar crimes are not rare occurrences in the business world. The term “White-collar crimes” was introduced by Sutherland. He defined it as a crime committed by a person of high social status and respectability in the course of his occupation. He argued that such offences are committed while holding a fiduciary position[1] This definition was criticised for being narrow & inadequate to meet present requirements.

As we are moving towards technologically advanced era, the scope of corporate crimes is also widening, similarly the position of an individual while committing such crimes is also diluting. There is no straight-jacketed definition of white-collar crimes, due to its evolving nature & application. These dynamics open a wide array of problems with regard to their detection, investigation & redressal, which in turn result in overlooking of these crimes.

REASONS WHY WHITE-COLLAR CRIMES ARE OVERLOOKED

Difficulty in detection: It is important to note that many white-collar crimes go undiscovered because they are not reported to law enforcement officials. It may be a case that the victim of a white-collar crime such as an intricate price-fixing scheme may not even be aware that he has been victimized, and thus there may be no complainant. To further complicate the case, some victims, such as those of a consumer fraud, credit fraud, online frauds may realize that they have been victimized but may feel that no action will be taken even if a complaint is filed. Such factors add to the general lack of reliable reporting statistics on the incidences of white-collar crime.

Officials also face difficulty in detecting such crimes, due to lack of technology. White-collar crimes are concealed within complex transactions, which are difficult to track & often goes untraced. Further, lack of cooperation between departments can complicate the situation even more.

Investigation problems: Lack of advanced technology, time-consuming techniques, cost ineffective procedures, red-tapism etc deter the investigation procedure. Numerous specialised skills are required to conduct an investigation, & limitation on human expertise further delays the process. Investigation requires great amount of time & human resource expenditure, which could not be accommodated in every situation. Jurisdiction issues among various regulatory departments can put halt on investigation & provide opportunity to offenders to abscond or temper with evidence. That is why, several white-collar crimes are often disregarded or ignored.

Economic & social costs: The economic & social costs are ultimately borne by society when the crime is committed & at the time of investigation & other procedures as well, cost is borne out of the pocket of taxpayers. The ultimate burden lies on the finances of taxpayers & still when the authorities fail to punish the offendor, no question is raised on their inability. Due to lack of stringent penalties, the amount laundered or embezzled could not be recovered eventually, which further hinder the process of investigating future crimes.

Lack of time & staff resources: Due to extensive intricacies in the case & media publicity, time is often insufficient for investigators. Government investigation agencies can be understaffed or the staff may not have required skill set for the investigation. This critical situation creates hindrance in timely & effective investigation requirement.

Loopholes in enforcements practices & regulatory policies: Many acts are not even punishable until the crime is committed. Excessivetime taken by criminal proceedings in court often allows the defending party to provide additional witnesses and evidence to back up the claims of the person accused of the crime. In certain instances, this may assist in acquitting the individual of all charges.

Prosecution complexities: When companies fall victim to white-collar criminals, a large portion of them will decide not to prosecute for several reasons.  First, given the complexity of many of the crimes, prosecution can be costly and may require longer, more sophisticated and complicated investigations and trials.  More recently it was found that the top reasons for lack of prosecution were lack of detection, lack of investigation, and lack of conviction.

Political connections: Both corporates & Political parties are powerful interest groups & hold the power to divert the attention from them by ways of corruption or threat. It has been noted that Public officials are often involved in these crimes they add more obstacles to the prosecution. It is due to their neglect or self-interest which provides opportunity to individuals or groups to commit such financial frauds or crimes. Corporates are major contributors in political donation campaigns, this adds to fact that they form a kind of source of unethical income for corrupt politicians. It is comparatively easier for politicians and public officials to concentrate on the crimes of the lower class, groups as they lack political clout.

Case Complexity: Numerous White-collar crimes need some type of expert with numbers, math or finance in order to fully understand what occurred. This causes doubt and issues with the prosecution. This is especially true if a professional in these matters is unreachable. These cases may require the understanding of hundreds or thousands of pages of financial documents, accounting methods and various additional types of evidence for lawyers and the judge to understand. It is more difficult to convict a person of a crime if the evidence is too complicated for adjudicating authority to fully grasp. Further, accused are generally upstanding persons in communities or members with good standing & honest backgrounds, this may cause doubt when attempting to convict. These cases are further complicated by strong yet unnecessary defenses with legal assistance by these fraudsters. Additionally, these crimes are committed in such a way that it becomes difficult to trace them & often no witnesses can be produced before courts for the same, which further complicates it.

Limited Liability: “Separate Legal Identity” is an essential concept of company law. Offenders often use it to their benefit. They commit frauds in the garb of Company & getaway with mere payment of penalty or fine. It is so because our legislations provide for limited liability of Company’s members, their personal asset cannot be used against the satisfaction of liability. Although the concept of “piercing of veil” is applied, but it is often difficult to identify the actual perpetrator among the various stakeholders.

Lack of Awareness: Corporates often avoid informing authorities about the fraud committed by its employees or officials because of negative media publicity which could tarnish their goodwill & cause loss of trust among its stakeholders. Secondly, consumers & investors without being fully aware of the working of company or its officials, trust them & later become victims of their ill-motives. They often belong to lower strata of society & have no or any means to seek redressal without incurring more loss, so they avoid informing authorities or pursuing legal action against fraudsters.

METHODS OF COMBATTING WHITE-COLLAR CRIMES

Internal Audit: Corporates must develop a monitoring system & regularly check on its employees (from bottom to top) & their working, this would ensure that they are not abusing their authority to not only harm the company but also its stakeholders. They should implement ethics code at their workplace to ensure a healthy environment.

Stricter punishments: Government need to implement stricter regulations & punishments to ensure no escape to offenders. It will create an environment of strict adherence & fear among the possible fraudsters to reconsider the consequences of their actions. Stricter punishment can prevent these crimes to a great extent.

Autonomy to Regulatory Authorities: The regulatory authorities like SEBI, RBI etc & investigative authorities like CBI & Enforcement department are highly influenced by political intervention, this needs to be addressed. Further, some autonomy & scope of collaboration with other authorities will help in quick investigation & trial of perpetrators.

Increasing use of technology: The increased use of technology by offenders is becoming a menace for Authorities, but it can be countered if they update their own technology. If technology can give rise to problems, it can also provide for solutions. This will help in quick & effective handling of cases.

Effective Anti-corruption Laws & their enforcement: It is the Political will & committed leadership that can be considered as the best solutions to prevent politicians & public officials from participating in such crimes, but an effective enforcement of anti-corruption & anti-fraud laws will also help in achieving those goals.

Public Awareness: At last, public awareness is essential to ward off the evils of white-collar crimes. All the efforts of government & other organizations will go to vain if society is not aware of their responsibilities. Public awareness can be done through conducting various education programs through television, radios, newspaper or social media.

CONCLUSION

White-collar crimes are bane to economy & have become a global problem. The scope of white-collar crime is constantly changing, which poses a unique challenge to the law enforcement community. Hence, elimination of these crimes is not an easy task. But it does not mean that they can be overlooked. They pose great threat to economy & are capable of making a country financially weak, to combat these happenings not only government or its agencies but also us need to be aware. Indeed, strong regulating policies & transparency in their working will surely combat white-collar crimes, but we as a society also have responsibility to avoid getting enticed by easy money-making or seemingly unrealistic offers. Public should pay attention to education programs conducted by authorities & welfare organisations. Further, they must report about fraudulent activities to the concerned authorities without any delay.


[1] Sutherland, Edwin H. (1940), The White-collar criminal, American Sociological Review, 5:1–12. DOI: 10.2307/2083937.

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