White Collar Crime: A Historical Perspective on Corruption, Economic Offenses, and the Challenges of Legal Enforcement
Lord Acton writes to Bishop Creighton in a series of letters concerning the moral problem of writing history about the Inquisition. Acton believes that the same moral standards should be applied to all men, political and religious leaders included, especially since, in his famous phrase, “power tends to corrupt and absolute power corrupts absolutely”. The term, “White Collar Crime” was first defined in 1939 by Edwin Sutherland. He described it as “a crime committed by a person of respectability and high social status in the course of their occupation.” The concept of “White Collar Crime” is not modern, it derives its essence way back from the 15th Century in England which puts a major setback to the social and economic development of a nation. The segment of Criminal Law directly sets out its linkage with economics and makes crime committed by professionals a great matter of concern for the lawmakers and further development hitherto. As per the essentials of National Development in economics, corruption of the individuals, within a territory, is a huge register in the growth of a nation. A policy of a sovereign never per se amounts to failure, it subjects to authorities situated between the makers and the general citizen. What to say when the people who are expected to work for the betterment of the common people engage themselves in corrupt practices? In the landmark case of Morissette v. United States[1], Justice Robert H. Jackson wrote for a unanimous court, holding that acts which are bad in themselves (i.e., malum in se) require mens rea. Therefore, contemplating white-collar crimes as acts that are bad in themselves necessitates mens rea as an element of the offense. The involvement leads to a major disruption in socio-economic welfare which serves as a base for the welfare of the society. “White Collar Crime” is not anything different but a degradation of morals. The Supreme Court in Chidambaram v. Directorate of Enforcement[2] had said, “The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of the moment upon passions being aroused. An economic offense is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even-handed manner without fear of criticism from the quarters that view white-collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest.”
The Limelite in India was first derived by Harshad Mehta[3] in 1988 which revealed several flaws of the Indian Government regarding the absence and loopholes in laws relating Stock and Capital exchange market, he made the most of the lacking laws, by misappropriating the stock prices of several companies. The Supreme Court of India held him guilty of the biggest scam in India, at that time, worth 4999 Crores, against the biggest stock exchange i.e. Bombay Stock Exchange (BSE). The incident leading to the empowerment of SEBI which was earlier like an “eagle captured in the cage”, with limited powers, can be said close to none. The conspiracy of fraud by Nirav Modi and Mehul Choksi[4] cannot be kept out of the scene. It would be unfair to take only two names in the matter, the Punjab National Bank also played a key role in strengthening the scam and helping them to run with that huge amount of taxpayer’s money. As of Mehta’s case(supra), the flaws regarding the grant of the loan were addressed by the Reserve Bank of India post the incident and the Central Bank issued certain guidelines to be followed in issuing loans. However, the scenario regarding the scam due to a lack of bank rules and laws did not get its operation in the Nirav Modi case(supra). Vijay Mallya[5] is the first name to be imagined whenever we think something regarding sandals occurred with banks or, to be honest deceit done with the help of the banks. The man took heavy loans from different banks with proper security and didn’t return the same, being aware of these facts the banks continued to grant him loans and finally he was declared insolvent and left the country and took the shield of the UK Government. Attempts of extradition of him completely failed as being a citizen of that country he was protected by the European Convention on Human Rights as the country governed by the Rule of Law guards him under the shadow of fair trial without any political influence. Finally, the Supreme Court convicted him for contempt of court and sentenced him to four months of imprisonment as well as levied him a fine of 2000. Though the Indian Government extracted the money defrauded, by escheating and auctioning his assets, it is very true more than that. But the question is why the government didn’t take enough steps to prevent this type of misconduct again as the same was repeated by Nirav Modi and Mehul Choksi again later.
The crime done is not only limited to elite businessmen but extends its scope to politicians and bankers. The maximum number of cases that emerge relating to “White Collar Crimes” has been directly or indirectly linked to people’s representatives which is more dangerous of a thing as they are in the most comfortable position to hinder their voters’ trust and engulf into malpractices and hide the same with an ease, insofar they are in pretty comfortable position to abuse the due process of law by manipulating the proper investigation by political influence. The Supreme Court recently observed, that the consent of the state government was a prerequisite for any investigation by the CBI and called the body a toothless tiger. The CBI did a great job in investigating and clinching the biggest scandal in India worth 70000 INR wherein the Indian Athletes received only half of the total amount estimated or allocated to be spent on them. Further, the authorities forced the players to relocate from their assigned flats to shabby areas. The scam commenced under the governance of the Indian National Congress and was a huge disappointment for the whole nation and made everyone angry as well as sympathetic at the same time towards their government. The list is never-ending, regarding politicians and public representatives, the fodder scam, the housing loan scam, and many more. Recently, the Supreme Court taking call for Electoral Bounds has been a vital step by the Apex Court to address mischief being carried out by political parties regarding funds. Prasant Bhusan has said about electoral bounds, “Electoral Bonds used as bribe by companies for Contract.”
The enactment of the Public Money Laundering Act, 2002, was a late but quite aggressive and compatible step to punish any sort of mischief done with public money. The formation of the Enforcement Directorate for investigating frauds relating to the general people’s money was a huge step in the making of a corruption-free environment. However, the concept is being questioned, because of the way the department is being used by the present majority government.
Information of Author
Name: Raees Sohail
Year: 4th year
College: Vivekananda Institute of Professional
Studies (VIPS)
Information of Co-Author
Name: Sukoon Jha
Year: 3rd year
College: Calcutta University
[1] 342 U.S. 246 (1952)
[2] 2019 (9) SCC 24
[3] Harshad s. Mehta & Ors. vs the state of Maharashtra; appeal (Crl.) 319-320 of 1996.
[4] Punjab National Bank v. M/s Stellar Diamonds (OA no.119/2018).
[5] State Bank of India vs Dr. Vijay Mallya on 11 July, 2022