Why are “White-collar Crimes” growing with the growing economy? An Analysis.
By:
Vijay SARDANA FICA, MIMA
PGDM (IIM, Ahmedabad), LLB, M.Sc. (Food Tech) (CFTRI), B.Sc. (Dairy Tech)
PGD in Arbitration, Intl. Trade Laws & Alt. Dispute Resolution, IPR (WIPO), Justice (Harvard)
Advocate, Delhi High Court & NGT
Arbitrator, Indian Council of Arbitration
What motivated me to write this series?
In recent times, many friends and business people have approached me to share their business disputes and related issues. In most cases, it was a typical white-collar crime.
The only reason why they all were suffering was due to many reasons.
Some of them were:
Long term friendship or trust with the other party
Ignorance about the implications of the languages used in the agreements.
Casual attitude and not reading the contract carefully which is modified by the other party.
Not aware of how to draft a right and binding contract
Cut-paste attitude in drafting without understanding the implications.
Lack of performance parameters in the agreement
In many cases, extreme volatility in the market also forces people to escape from their commitments and commit a white-collar crime under one pretext or the other.
Manipulators used the fake test reports and supplied the products.
Products adulterated with certain external items to manipulate the test results of substandard products – like protein content, etc.
There are many other creative methods of crime in the securities and commodities market.
And many more ways to commit white-collar crime.
Origin of the term - "White-collar crime"
In criminology literature, blue-collar crime is any crime committed by an individual from a lower social class instead of white-collar crime which is associated with the crime committed by someone of a higher-level social class. While blue-collar crime has no official legal classification, it holds to a general net group of crimes. These crimes are primarily small scale, for immediate beneficial gain to the individual or group involved in them. This can also include personal related crimes that can be driven by immediate reaction, such as during fights or confrontations. These crimes include but are not limited to personal fight, narcotic production or distribution, sexual assault, theft, burglary, assault, or murder, etc.
White-collar crime is "a crime committed by a person of respectability and high social status in the course of their occupation".
Reportedly coined in 1939 the term white-collar crime is now synonymous with the full range of frauds committed by business and government professionals. These crimes are characterized by deceit, concealment, or violation of trust and are not dependent on the application or threat of physical force or violence. The motivation behind these crimes is financial—to obtain or avoid losing money, property, or services or to secure a personal or business advantage.
In many court cases or cases in the tribunals, the author has noticed many creative ways of doing frauds. These will be discussed in future articles.
The purpose of this blog is to make you aware of the types of white-collar crimes so that you can protect yourself and your organization as well. To know the update, follow this blog and the author on various social media platforms.
Who are the criminals in white-collar crime?
The term "white-collar crime" refers to financially motivated, nonviolent crime committed by individuals, businesses, and government professionals.
The term white-collar crime is now synonymous with the full range of frauds committed by business executives and government professionals. These crimes are characterized by deceit, concealment, or violation of trust. These crimes are not dependent on the application or threat of physical force or violence.
What is the motive behind the white-collar crime?
The motivation behind these crimes is generally financial — to obtain or avoid losing money, property, or services or to secure a personal or business advantage.
Who are the victims of these white-collar crimes?
These are not victimless crimes, a single scam can destroy a company, devastate families by wiping out their life savings, or cost investors billions of dollars (or even all three).
Today’s fraud schemes are more sophisticated than ever, and the many investigating agencies have dedicated themselves to using their skills to track down the culprits and stop scams before they start.
Types of White-Collar Crimes
In investigating agencies white-collar crime work integrates the analysis of intelligence with its investigations of criminal activities such as:
Bank fraud
Corporate fraud
Election law violations
Embezzlement
Financial institution fraud
Fraud against the government
Health care fraud
Insurance Fraud
Mass marketing fraud
Money laundering
Mortgage fraud
Public corruption
Securities and commodities fraud
Taxes related fraud
Typical white-collar crimes in the commercial world
Some of the common white-collar crimes in the commercial world are:
Adulteration
Bribery
Copyright infringement
Cybercrime
Embezzlement
Fake products
Forgery
Fraud
Identity theft
Insider trading
Intellectual property theft
Labour racketeering
Misleading claims
Money laundering
Ponzi schemes
Stock market frauds
Unfair Trade Practices
Wage theft
Reasons for the growth of white-collar crimes
Easy access to sensitive information
The greed of people in position and power
Growing competition and growing pressure on performance
Lack of capability among enforcement agencies
Lack of deterrence like very negligible penalties and punishments
Lack of education and training on prevention
Lack of proper laws to prevent such crimes.
Peer groups and industry associations not objecting to unfair business practices indirectly encouraging an unethical culture in business.
Return from crime is higher than proposed punishments.
Slow Court procedures indirectly provide financial incentive to undertake crime.
Use of sophisticated technologies as a powerful tool for various crimes.
White-collar crime overlaps with corporate crime.
Role of investigation agencies
The investigating agencies generally focus on complex investigations—often with a nexus to organized crime activities—that are international, national, or regional in scope and where the investigating agencies can bring to bear unique expertise or capabilities that increase the likelihood of successful investigations.
The investigating agencies special agents work closely with other law enforcement and regulatory agencies such as the Income Tax departments, Corporate Affairs, Securities Exchanges, Commodity Exchanges, Customs Revenue Service, Narcotics Department, Immigration Departments, Postal & Telecommunication departments, Crimes Detection & Law Enforcement Networks within and outside the country, among others, targeting sophisticated, multi-layered fraud cases that harm the economy.
What should you do?
If you are part of the commercial world, there can be many ways you can be cheated or trapped.
In many cases, the author has personally witnessed the following:
Additional cost for rectification
Competitors may exploit the opportunity to hurt the brand
Disruption in project execution
Disruption in supplies
Increased liabilities with the bankers and financial institutions
Internal disputes within the company
Land-up with sub-standard products and services
Litigation between the parties
Litigations from your buyers due to breach of contract
Loss of business relations
Loss of reputation in the market
Loss of time and business opportunity
Many key management people leave the company.
Non-compliance with Regulatory commitments
Non-payment for the supplies
Production loss
Serious Corporate Governance issues
Unwanted Investigations
And there can be many more implications.
What next?
The best way to minimize these white-collar crimes is to create mass awareness and build safeguards and preventive approaches.
In future articles, I will share some interesting live cases and the learning from them. Hope you will join the discussion.
It is simple, please follow the blog and the author on social media platforms so that you do not miss out on the interesting analysis.
If you are the victim of any such situation, feel free to contact me to share your experience, all information will be kept confidential.
Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Vijay ji nobody want to study and also get awareness about why white collar crimes are increasing. Your blog article is need of time. Everybody in business should read this. Thanks
ReplyDeleteThank you so much. Please feel free to share in your groups and colleagues.
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