Beware of Bubbles:

White Collar Crime in India

Objective

• To understand white collar crime in detail.• Analyze the causes, affects and impacts.• Make people aware about the white collar

crimes.• As it can burst out and leave the India with

heavy tangible and intangible losses.

Research Methodology

• Traditional doctrinal research method• Information sought from available literature • Used books, journals, research articles for

preparation

Introduction

• White Collar Crime - Yes, it is also a crime• “White collar crime represents the offences of

businessmen who are in position to determine the policies and activities of business” - Sir Walter Reckless

• In Globalization era the world along with India is resulting in Corporate Scandals and other Crimes using the brain and knowledge ..

• White collar crime costs more costly then other crimes added together.

Some Famous Examples:

• Harshad Mehta securities scam - 5,000 crore (US$910 million)

• India- South Africa Match Fixing Scandal• Stamp paper scam - 20,000 crore• Hasan Ali black money controversy• 2G spectrum scam 176,000 crore (US$32.03

billion)• Commonwealth Games scam - 70,000 crore

(US$12.74 billion)

Types of White Collar Crimes:

• Food and drug adulteration• Tax evasion• Illegal and corrupt practices of public servant • Illegal practice to earn black money • Hoarding and black marketing of essential goods• Political Corruption • Bank Fraud• Forgery

Contd..

• Cellular Phone Fraud• Computer Fraud• Counterfeiting• Credit Card Fraud• Currency Schemes• Environmental Schemes• Extortion• Health Care Fraud• Insider Trading

Contd..

• Insurance Fraud• Investment Schemes• Kickback• Larceny/Theft• Money Laundering• Racketeering• Securities Fraud• Telemarketing Fraud

Causes of White Collar Crime

• Knowing how to beat the system• Investment Strategy• Elite Networks and Relationships• Narcissistic and Sociopathic Traits• Denial and Rationalizations• Addiction

A Twelve Step Process to white collar crime

• Position• Power to use for financial benefit

• Powerful people abuse the power• Other get caught up thinking its

an opportunity.

• Others drawn into it by superiors• Distrust of those involved start to arise.

•Person recognizes his ability of exploiting •Bullying activities to protect illegal activities.

•Take bigger and bigger risks•Ethical doubts about the behavior

•Person loses the control over situation•Exposer to crimes by others..

WHITE COLLAR CRIMES IN INDIA.

• THE YEAR 2011 TRULY BELONGED TO FACELESS WHITE COLLAR CRIMINALS.

• THE NUMBERS OF SUCH CRIMINALS ARRESTED BY THE CRIME BRANCH THIS YEAR SAW A MASSIVE INCREASE.

• 20 ORGANISED WHITE COLLAR RACKETS BUSTED IN 2010.

• THE LIST INCLUDE PERPETRATORS OF LOTTERY FRAUDS,FAKE RECRUITMENT RACKETEERS,ATM FRAUDSTERS,TRAVEL AGENTS.

Legal Profession

• Crimes committed by people who are given responsibility to ensure justice.

• They make extensive study to try out different ways to tax evasion for rich as well as for themselves.

• Main professionals like Lawyers, C.A, C.S are experts in this.

Medical Profession

• Issuance of false certificates, carrying out illegal abortions ,selling out adulterated drugs etc.

• Misleading and fake advertisements • They often escape punishment, since they

cannot be said to have violated the letter of law

EDUCATIONAL SECTOR

• Private institutions least bothered about providing education, instead interested in making business.

• Number of Rackets appear.• Maharashtra: Rs 1000 cr education scam• Seen people giving entrance exams for

others.

Engineering Sector

• Underhand dealing with contractors, suppliers, passing of sub-standard works and maintenance of bogus reports of the labour works

• Financially earn more for their low grade works from the contractors, than they can earn for the genuine work

• Playing dangerously with lives of common people.

Corporate Sector

• Major role by business tycoons and politicians • Illegal contracts, conspiracies, unfair labour

practices, selling of adulterated foods and drugs, bribing of public officials.

• Satyam scam case

International Business

• Peddling of drugs and narcotic substances• Counterfeiting of currency• Financial scams • Import and export rules and regulations are

violated to earn more profit • This all effects the national security also.

Common Man

• Major white collar crimes are common among individuals.

• Tax evasion is very common• Engineer, doctor, advocate, a business tycoon, a

celebrity, simple small industry trader all have learnt the trick of evading taxes.

• Main problem of Tax Department is to acquire the real information about the income of all this professionals

Statistics No Types of Fraud Global 2011(%) India(%)

1 Management Conflict of Interest

21 19

2 Internal Financial Fraud

19 23

3 Corruptions and Bribery

19 31

4 Vendor Procurement

20 22

5 Physical Theft of assets

25 23

6 Information Theft

23 27

Source: International Journal of Social Science & Interdisciplinary Research, Vol.1 Issue 9, September 2012, ISSN 2277 3630

Major Factors Contributing to WCC

• Cost of White Collar Crime - Globally organizations suffered 2.1% revenue loss due to fraud.

• For India % is more higher 2.4%• Overall companies conduct financial audits but

no audits to detect frauds..• As per govt. reports the loss due to white

collar crime in India equals 50 % of total GDP

The Insiders Role in White Collar Criminal Activities

• Insiders conduct 60% of the fraud globally.• In India 59% of the frauds are conducted

globally.• Frauds conducted by senior employees cause

more damage to company.• It lead to financial as well as reputation loss

Level of Corruption and Bribe in India

• Many scams have effected the India’s Reputation Internationally.

• 78% of the Indian organizations are vulnerable to corruptions

• India against corruption movement by Anna Hazare has forced the Government to issue a strong Jan Lokpal Bill

Conclusion

• India in race of becoming the next superpower• Awareness of these crimes from grass root

levels.• Society should also take steps as in paying the

taxes responsibly• Political parties should clean up the mess.• Make India Scams and Corruption Free.

Prevention is Better Than Cure

Thank You…