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Corporate Crimes And Its Role In Economics Depression

Corporate crimes are crimes also known as white-collar crimes and White-collar crimes are those crimes, which allied with an individual of high communal position. Also, distinct from that of traditional crimes and occur due to dishonorable business practices motivated by pecuniary gains.

It is, in fact, the offender's prominent position, which provides an opportunity for such types of crimes by committing a breach of trust endowed upon them. In the wake of development, there has been a loss in the economy due to loopholes in the system resulting in corporate crimes.

This causes a major loss to our economy, as the financial loss cost is several times greater than that of all the crimes taken together. Corruption and bribery are a major problem in our country being a significant component. The legal framework in India is not so comprehensive to deal with these issues. Besides, delayed justice, which administered by our judiciary, is also one of the reasons for the rise in corporate crimes.

The research is based on the doctrinal method of research in which we positively depended on the existent fact and conception of different intellectuals; accordingly, we can affirm that the research is utterly dependent on the existing facts.

The law of crimes has always been one of the most attractive branches of jurisprudence since the early years of human civilization. The law of crime has been as old as civilization itself. Certain professions are offering worthwhile opportunities for criminal acts and unethical practices, which barely attract public attention. There have been crooks and unethical persons in business, various professions, and even in public life. They tend to become unscrupulous because of their neglect at school, home, and other social institutions where people get training for citizenship and character building.[1]

These deviants have scant regard for honesty and other ethical values. Therefore, they carry on their illegal activities with impunity without the fear of loss of prestige or status. The crimes of this nature are 'white-collar crimes' and they are essentially an outcome of the competitive economy of the 1950s. The industrial revolution ushered an era of plenty but simultaneously gave birth to many new problems.

In the wake of industrialization, a newer form of criminality was born which has now assumed menacing proportions. Unlike traditional crimes, this newer form of criminality is associated with the upper and middle-class people and committed by them in the course of their occupations. This adversely affects the health and material welfare of the community as a whole and is also threatening the entire economic fabric of the state.1'White collar crimes' can describe a wide variety of crimes, but they all typically involve crime committed through deceit and motivated by financial gain.[2]

The desire for profit drives most white-collar crimes, and individuals or groups who wield considerable power perpetrate the crimes. Unlike organized crimes, however well-respected members of society who enjoy high social status commit white-collar crime. It is precisely the offender's prominent status that provides the opportunity for the crime.

Definitions: Corporate crime, also called organizational crime, type of white-collar crime committed by individuals within their legitimate occupations, for the benefit of their employing organization. Such individuals generally do not think of themselves as criminals, nor do they consider their activities criminal. Related to corporate crime is professional white-collar crime, which is a crime, committed by those who identify with crime and make crime their sole livelihood.[3]

Corporate crimes imply violations submitted either by a businessperson, corporation, enterprises, or company or by people that might be related to an enterprise or different business element. Corporate crimes are the demonstration of its workforce and need not be approved or endorsed by its authorities.

It is adequate if the authorities were practicing standard powers in the interest of the enterprise or corporation. In this manner, to a generous degree, the crimes of the enterprises or corporations are interwoven with the demonstrations of its authorities. Such criminal acts are intelligent in the character of the people who deal with the company. Thus, it would appear to be sensible to use corporate crime to impeach a corporate authority's reliability if the authority is associated with the crime.[4]

This definition stands the test of time as these crimes can be categorized into two sub-sects. In the first sub-sect, the employees or the company commits the wrong and in the second, the company faces the wrong against itself. Both of these categories lead to corporate crimes.[5]

In numerous circumstances, the face of the criminal is separate from the company but over the past decades, it is visible that the corporate veil has hidden quite a few faces behind it and saved them from being punished. Corporate conduct has been regulated by corporate laws for long. It is time that the liability of a company for criminal wrongs to be addressed.[6]

The common laws make a corporation liable for the actions of its agents when employees/ agents act within the scope of their employment and create a profit for the corporation with that act.[7]

The corporate surroundings of any company today, effects and includes many aspects. Every aspect here, certainly affected when these surroundings are violated. Several people get affected by the acts of the company both directly and indirectly. The first parties that are affected are the consumers or stakeholders who are its main beneficiaries and are at maximum risk. Then comes the Employees of the Corporate; who are in twin roles; one role is of the victim and on the other side it is the main protagonist of crime.[8]

Then the State; who receives the economic returns from it and also faces a dual loss when corporate is guilty of a crime in the shape of employment and revenue loss and the loss faced by the society.[9]

Causes Of White-Collar Crime

The general perception is that white-collar crimes are committed because of greed or economic instability. But these crimes are also committed because of situational pressure or the inherent characteristic of getting more than others. However, there are various reasons for white-collar crimes.[10] Not really a crime: Some offenders convince themselves that the actions performed by them are not crimes as the acts involved do not resemble street crimes.[11]

Not realizable: Some people justify themselves in committing crimes as they feel that the government regulations do not understand the practical problems of competing in the free enterprise system.

Lack of awareness: One of the primary reasons for white-collar crime is the lack of awareness of people. The nature of the crime is different from the traditional crimes and people rarely understand it though they are the worst victims of crime.

Necessity: Necessity is another factor in committing crimes. People commit white-collar crimes in order to satisfy their ego or support their family.

Greed: People of high strata are financially stable. However, still they commit crimes out of greed. For this purpose, they adopt all sorts of illegal methods to have an economic gain.
Technology: Another reason behind the commission of white-collar crimes can be technology. The emergence of new technologies, political pressure, or growing business, has led to many more ideas which have resulted in the commission of crimes.

Indian Scenario
In India, there has been a prevalence of white-collar crimes over a period of time. They are spreading like a rapid-fire in every sphere of society. Though corruption, one of the species of white-collar crimes, has been the most talked-about issue in all spheres- social, economic, and political, not many stringent steps/actions have been taken to curb this menace.[12] The Indian Penal Code 1860.[13] is the earliest comprehensive and codified criminal law of India.

It specifically, deals with many offenses which are closely linked to crimes such as bribery and corruption,[14] counterfeiting of coins and government stamps,[15]of offenses relating to weights and measures,[16] offenses relating to adulteration of foodstuffs and drugs,[17] misappropriation of public property and criminal breach of trust,[18]cheating,[19] forgery and offenses relating to documents[20] and counterfeiting of currency.[21]

Like any other country, India is equally in the grip of white-collar criminality. The reason for the enormous increase in white-collar crime in recent decades is to be found in the fast-developing economy and industrial growth of this developing country. The Santhanam Committee Report in its findings gave a lucid picture of white-collar crimes committed by persons belonging to higher social strata. It includes businesspersons, industrialists, contractors, suppliers, as well as corrupt public officials.

The Reports of the Vivien Bose Commission of Inquiry which looked into the affairs of the Dalmia Jain group of companies(1963) highlighted that how industrialists indulge themselves in white-collar crimes such as forgery, fraud, falsification of accounts, tampering with records for personal gains and tax evasion, etc.[22] Similar observations were made by Mr. Justice M.C Chagla while dealing with the case of business tycoon Mundhra who wanted to build up an industrial empire by dubious means. There were as many as 124 prosecutions against the business magnate and companies owned or controlled by him between 1958 to 1960 and as many as 113 of them resulted in conviction.[23]

The 2010-2011 corruption and fraud cases in India – 2G Spectrum scam, Adarsh Society scam, CWG fraud, various land scams etc. – have negatively impacted India's reputation internationally. The infringements are of various kinds, with bribery and corruption making up 83% of cases. A large part of the frauds also relates to cybercrime (71%) and diversion of assets (65%). The sectors most affected are financial services (33%) and information and entertainment (17%), according to the survey.[24]

The Satyam Scam: In perhaps one of Corporate India's worst unfolding chapters, Mr. B. Ramalinga Raju, Founder-Chairman of the $2-billion Satyam Computer Services dramatically stepped down after admitting of faking financial figures of the company to the tune of Rs 7,136 crore, including Rs 5,040 crore of non-existent cash and bank balances.

The startling disclosure by Mr. Raju, considered one of the poster boys of Indian IT, jolted the corporate world, investor community, Government and a large pool of young professionals, pushing the fourth largest Indian IT company into a crisis, exposing it to acquisitions and leaving the future of 53,000 employees in balance. Mr Raju in his revelation to the BSE admitted that the balance sheet for September 30, 2008, comprised faked and exaggerated figures of revenue, profit, interest and debt. The list includes Rs 5,040 crore of fictional cash and bank balances, non-existent accrued interest, discreet liability of Rs 1,230 crore on account of funds raised by Mr Raju and overstated debtors position of Rs 490 crore (as against Rs 2,651 crore).What started as a marginal gap between actual operating profit and the one reflected in the books continued to grow over the years.[25]

It has attained unmanageable proportions as the size of the company's operations grew over the years, Mr Raju explained.[26]

The PNB bank case: Nirav Modi and Mehul Choksi, in connivance of several senior as well as junior officials, defrauded PNB of several thousand crore of rupees. These PNB officials fraudulently issued LoUs and LoCs on behalf of several companies belonging to the duo for availing buyers' credit from overseas branches of Indian banks. None of the transactions were routed through the CBS (Core Banking Solution) system, thus avoiding early detection of fraudulent activity, which was going on since 2011.

In the scam now pegged to be around Rs 13,700 crore, over Rs 450 crore was diverted to around six beneficiaries companies based in Hong Kong and Sharjah (UAE) in just one month – July 2014. The amount of money, issued as loans through the LoUs (Letters of Undertaking) or LoCs (Letters of Credit) by Punjab National Bank, was later routed to the shell companies linked to Nirav Modi and Mehul Choksi in Hong Kong and Sharjah. These companies include Sunshine Gems (Hong Kong), Sino Traders (Hong Kong), Tri Colour Gems (Sharjah), Diagem (Sharjah), and Auragem (Hong Kong).

The ED has already issued Letter Rogatory (LR) -

a request sent to a foreign court for judicial assistance - to 13 countries (mostly regulated by the United Nations), including Hong Kong and UAE, to seek their cooperation in the investigation. Both Nirav Modi and Mehul Choksi are on the run since January 5. Through these LRs, the ED has sought the details of companies associated with the duo, their local addresses, and the beneficiary's involved.[27]

Recent Steps Taken By Government

The Union Cabinet decided to bring into effect the Fugitive Economic Offenders Bill as an ordinance, after the Bill could not be tabled in the Budget Session of Parliament owing to a situation that seems irresolvable (logjam). The ordinance will lay down measures to empower Indian authorities to attach and confiscate the proceeds of crimes associated with economic offenders and their properties.

The ordinance has been approved in order to address the deficiency in present laws. It is expected that the special forum, to be created for expeditious confiscation of the proceeds of a crime, in India or abroad, will coerce the fugitive to return to submit to the jurisdiction of courts. The ordinance will cover those whose alleged proceeds from a crime are over Rs 1 billion. Any person who does not appear before a special court or does not respond to summonses will be declared an economic offender. All the offender's assets will be confiscated, not only those from the proceeds of the alleged crime.

According to the ordinance, a special court will have powers to declare a person an economic offender. An administrator will be appointed to manage and dispose of the confiscated assets, including helping banks recover any defrauded amount. The offender will not be able to file any civil claim in any Indian court to recover his or her assets.27

Currently, confiscation can be done through multiple laws, but is a complicated process. The laws under which such offenders are tried are the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, the Recovery of Debts Due to Banks and Financial Institutions Act, and the Insolvency and Bankruptcy Code.

Judicial Interpretation

The Prohibition of Corruption Act, 1986 and the Code of Criminal Procedure, 1973, both provide special impunity by Section 19 and Section 197, respectively. The sanction contemplated in Section 197[28] of the Code concerns a public servant who:
is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty.

To restrict the unnecessary harassment of public servant, these sections provide that no court shall take cognizance without prior sanction for prosecution from the appropriate authority.

Dealing with corruption related matters, where often sanction for prosecution of a public servant is either refused or delayed by the government; Supreme Court, observed in the Vineet Narain v. Union of India,[29] that the corruption cases against public servant were often delayed due to refusal or delayed sanction by the competent authority despite the investigation agency having disclosed a prima facie against the public servant. The Court held that sanction to prosecute not being a quasi-judicial function, the competent authority must give sanction if it is satisfied that material placed before it is sufficient for prosecution of the public servant.

The Supreme Court reiterated this approach in Subramanium Swamy v. Dr. Manmohan Singh,[30] and reaffirmed that the 3 months time limit imposed on the grant of governmental sanction under section 19[31] of Prevention of Corruption Act, 1988 for the prosecution of public servant for corruption must be strictly adhered to.

In the case of Jaylalitha v. Union of India,[32] the Supreme Court admitted that corruption is rampant among the public servants. Court further stated that corruption corrodes the moral fabric of the society and is harmful to the national economy. Corruption by persons occupying high posts in government, by misusing their powers can cause considerable damage to the national economy, national interest and image of the country.

In Ram Narayan Poply v. C.B.I.,[33] the Apex Court expressed concern for adverse effect of white collar crimes and held that economic offenders should not be allowed to ruin the economy of the country and they should be sternly dealt with.

The Supreme Court in State of Gujarat vs. Mohanlal Jitamalji Porwal and Anr.[34] has differentiated between the general crimes and white collar crimes. In the above-mentioned judgement, Justice Thakker had stated that murder can be committed in the heat of moment but these economic offences are committed with a cool calculation and planned strategy to gain personal profits.

In case of Nimmagadda Prasad v. C.B.I,[35] the appellant along with Jagan Mohan Reddy, enriched himself for more than 40,000 crores of rupees by the influence of Jagan Mohan's father Dr. Y.S. Rajasekharan Reddy who was the then Chief Minister of Andhra Pradesh. The Chief Minister, Late Dr. Reddy extended many undue favours to the appellant by abusing his official position and thereby allotting 18879 acres of land to the appellant and in return, he paid illegal gratifications amounting to 854.5 crores rupees to Y.S. Jagan Mohan Reddy and his group of companies.

Illegal gratifications were paid in the guise of investments/share application money to give them corporate colour in order to escape criminal charges. The appellant's prayer for bail was dismissed by the Supreme Court in the view of the fact that he was involved in a grave economic offence of alienating prime lands to selected private companies/individuals under the garb of development using deceptive means resulting in wrong ownership and control of material resources detrimental to common good. The Court notes that the appellant was a person of means and as such, he could influence witnesses, therefore, it would not be proper to release him on bail.

Types of Corporate Fraud

  1. Fraudulent Financial Statements
  2. Employee Fraud
  3. Vendor Fraud
  4. Customer Fraud
  5. Investment Scams
  6. Bankruptcy Fraud
  7. Misappropriation of Assets
  8. Corruption
Financial Fraud includes, Manipulation, falsification, alteration of accounting records. Misrepresentation or intentional omission of amounts. Misapplication of accounting principles. Intentionally false, misleading or omitted disclosures.

Misappropriation of Assets includes, Theft of tangible assets by internal or external parties. Sales of proprietary information and improper payments.

Corruption includes Making or receiving improper payments. Offering bribes to public or private officials.'
  • Taking bribes or other payments.
  • Aiding and abetting fraud by others.

Famous cases on Corporate Frauds:

East Indian Company: The East India Company was a Crown chartered trading company. It was owned privately but had a mandate to benefit the British State commercially and politically. First and foremost, the EIC[36] was an agent of the Crown.

It was first Multinational Corporation in the world that pursued investment opportunities as well as territorial power. EIC employees based in India sought commercial profits for themselves, the Crown, and East India House, while they acquired Indian Territory aggressively on behalf of the Empire. In late 1700s[37] and Warren Hastings, (India's Governor General), brought up on impeachment charges laden with corruption issues. Though the trail failed to convict anybody.

To achieve all of these ends, the EIC's corporate conduct was inconsistent. Sometimes, the Company complied with ethical practice in safety and financial matters. At other times it readily engaged in economic theft and bribes, or breached civil liberties and human rights. The concept of corporate social responsibility was secondary to its interests. The company was subsequently wound up under East India Company.[38]

Mundhra Scam- First Scam of Independent India

Haridas Mundhra, an industrialist and stock speculator sold fictitious shares to Life Insurance Corporation (LIC) and thereby defrauding LIC by 125 crores. Mr. Jawahar Lal Nehru, (the then Prime Minister), set up a one-man commission headed by Justice Chagla to Investigate. Justice Chagla concluded the matter and Haridas was found guilty and was sentenced to imprisonment of 22 years and T.T. Krishnamachari, the then Finance Minister, resigned from his position.

Harshad Mehta Scam Case:[39] The Harshad Mehta Scam shocked the entire economy of India. He fooled many investors by taking advantage of the loopholes of the system.

Scandal details

  1. Harshad Mehta obtained fake Bank receipts from small Banks.
  2. The said Bank Receipts were further passed on to other banks as security to obtain cash
  3. This money was used to drive up the prices of stocks in the stock market.
  4. Bubble of stock market manipulation and fake bank receipts busted.
  5. Drastically impacted the stock market, economy and progress of the country.
  6. Banking system was swindled was swindled of a whopping of Rs. 5000 crores.
  7. Even, the chairman of one of the bank committed suicide.

This scam can be called as one of the biggest white collar crime as the case was mainly regarding the manipulation of accounts and providing misleading information.
Sahara vs. SEBI:[40] It was a case of issuing misleading information and clause in prospectus of company.
  1. Here the question raised that whether the private placement of shares can be treated as offer?
  2. In this cases, Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) floated an issue of option of fully convertible
    debenture (OFCD's) to more than million investors and termed their issued debenture as private placement, with a defense that the company did not intend to get their OFCD's listed because the security which have been issued is a Hybrid Security.
  3. During this period, the company had total collection of over Rs. 17,656 crore. This amount was collected from 30 million of investors.
  4. The Hon'ble Supreme Court on 31st august, 2012 in one of the most anticipated judgment of recent times has directed the Sahara Group and its two group companies SIRECL and SHICL to refund around Rs. 17,400 crore to their investors within 3 months.
  5.  Supreme Court also ruled that SEBI has myriad powers to invest listed and unlisted companies functioning regarding the issue of securities in order to secure the interest of investors. This was the landmark judgment in the field of Indian corporate Law.

2G Spectrum Scan Cases:

2G scam was basically a telecommunication and a political scandal. In this scandal many Politicians and government were involved. The scam was about the allocation of unified access service license. The former telecom minister A Raja has evaded norms at every level and carried out the dubious 2G scam in the year 2008.

There have been a lot of scam or we can say economic scandals lean our nation to such a greater loss of economic, few other examples of such are Coal Scam, Bofors scandal etc. were also famous in this regards.[41]

Regulatory Legislations

Some Anti-Fraud regulations, legislations, or guidance regarding corporate fraud is as follows:'
  • Indian Contract Act[42] (Section-17): Fraud means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto of his agent, or to induce him to enter into the contract[43]:
    1. the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
    2. the active concealment of a fact by one having knowledge or belief of the fact;
    3. a promise made without any intention of performing it;
    4. any other act fitted to deceive;
    5. any such act or omission as the law specially declares to be fraudulent.

      Explanation: Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.[44]
  • Indian Penal Code[45] (section-25): A person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise.[46]
  • Prevention of Corruption Act[47]
  • Prevention of Money Laundering Act[48]
  • The Companies Act[49]
  • Clause 49 of Listing Agreement
  • Securities and Exchange Board of India Act[50]
  • CARO Act[51]
  • Essential Commodities Act[52] (Section-6)
  • Information Technologies Act[53] (Section 43-44)

Prevention of Corruption Act, 1988:

The issue of corruption is very dangerous to nation. The Sanathan Committee Report[54], 1964 defines the problem of corruption as a complex problem having its roots and ramification in the society itself as a whole. This Act consolidated the provision of IPC, CrPC and Criminal Act, 1952. This act has provided the definition of 'Public Duty', 'Public Authority' and 'Public Servant'. These definition are sufficient to determine the criminal liability of Public Officer.

Prevention of Money Laundering Act, 2002:

In India, money laundering is being practiced in large scale from past few decades. Due to which the socio-economic crimes being increasing rapidly. The process of conversion of black money into white money or the process of conversion of tainted money into untainted money is called money Laundering. Thus, the main purpose and the objective of this act is to prevent Money Laundering.

The concept of Money Laundering is an International concept and menace and for the same reason, United Nations adopted a political declaration in June 1998 and asked its members to enact the national legislations for the prevention of Money Laundering.[55]

Companies Act, 2013: The Companies Act, 2013 is the legislation which Focuses on issues related to Corporate Fraud. Fraud in relation to company or corporate body is defined under section 447 of this Act.
  1. Section 212- Investigation into the affairs of the Company by Serious Fraud Investigation Office[56].
  2. Section 447- Punishment for Fraud[57]
  3. Section 448- Punishment for False Statement.[58]
  4. Section 449- Punishment for False Evidence.[59]
  5. Section 450- Punishment where no specific Penalty or Punishment is provided.[60]
  6. Section 451- Punishment in case of Repeated Defaults.[61]

The Organization of the Crime

The question how corporate crimes are organized is classic to criminology, as organizations provide opportunities for mobilizing the specialist knowledge necessary to commit crime; for guarding secrets; disguising illegality, and generating, hiding, and spending illegal profit - all opportunities that individuals lack. Organizations can also use their resources to delay or obstruct enforcement; through litigation against enforcement authorities; the destruction of evidence about who was responsible (including shredding of documents) order laying detection by raid procedures, or use political contacts to prevent the force of the law applying to them.

Organizations can thus be perceived not only as the cause or cure, but also as the weapon for corporate crime:[62] not as the environment for misconduct, but its purposive instrument. Organizational scholars know relatively little about the implementation of organizational crime within firms and its coordination, and have called for more empirical research in this area.[63]

Through case studies of corporate bribery in international businesses and corporate tax fraud, Lord et al. reveal how the legitimacy and anonymity of corporations provides cover for illicit practices, and how third-party professionals facilitate these. The misuses of organizational structures, an organization perspective can also provide understandings of the social organization of corporate crimes; the interaction and communication between participants, for example, and strategies to conceal illegal acts.[64]

The involvement in criminal acts add a specific challenge to the communication between organizational members; not only must they share information to coordinate activities, as in all areas of organizational life, they must also keep the activity secret to avoid detection. This provides a classic dilemma between security and efficiency.

The Madoff fraud case

It is particularly illustrative, as Madoff's social and professional status and reputation functioned as a cover for his criminal enterprise, and the management and physical structure of his firm: with a 'secret' department on a different ?oor, and a stand-alone computer to serve the Ponzi scheme, made it possible to execute his deceit and organizational communication in accounting fraud uses archival email data of the Enron Corporation (2015) to show that participants in Enron's corruption projects initially communicate less than participants in non-corrupt practices.
Their secretive behavior diminishes over time, which can be attributed to increased trust between participants.

Thus, an interest in corporate crime draws the attention of an organization scientists from the large, public, and formal organizations, often studied in organization sciences to the less visible, covert, secret, and underground aspects of organizational.

As corporate crimes are often embedded within the firm's social and professional environment, organizations often collaborate to commit and conceal the crime.[65] The corporate crime literature has primarily focused on the relations between individual motives and actions, and organizational characteristics and behaviours; the vertical relationships between organizations and their members, often with a focus on hierarchy and decision making processes. Less attention has been paid to how businesses collaborate to commit crimes, and how they commit crimes collectively rather than individually.

Organizational theory adds the perspective of (social) networks; a perspective that can be highly valid for the explanation of inter-organizational illegal activities, such as cartels[66] and the crimes committed in value chains involving various related actors, such as food fraud.

The role of social and organizational networks and business associations in facilitating connections between elite members and deviant organizations, as well as in disseminating deviant norms and illegal practices, is a relevant point of overlap between corporate crime and organization studies.[67]

This includes the interpersonal relationships between the deviant (and law-abiding) members of the corporate elites, as they interact in informal social circles that may become fertile ground for criminal activities. As social networks can provide environments for the diffusion of deviant norms and practices, such studies have specific societal relevance. This is not only the case for the networks of the corporate elites, but also networks in everyday business, where line managers and sales persons are tasked with the realization of corporate performance targets in difficult markets, and extensive social pressure is sometimes exercised.

Solutions to the Problem of Corporate Crime[68]

The reform options that should be implemented needed to be:'
  1. Strengthen legislation
  2. Provide more enforcement
  3. Introduce penalties and sentences that encourage compliance.
'Because corporate crime usually involves money being abused and capital markets crime, it is viewed as less harmful than violent crime and other such crimes.

Thus, to deter corporate misconduct effectively, the fine (the expected cost) should be set, at a minimum, at an amount equal to the expected profit or loss resulting from the misconduct (the expected benefit).[69] A fine set at an amount less than the expected benefit would not deter the corporate offender; it would reduce the gains from engaging in the misconduct rather than eliminating them, thereby still making it profitable for the corporation to engage in the misconduct.[70]

Sometimes as a result of a cost benefit analysis it is worth it for a company to engage in misconduct as even when handed down a penalty the benefit still outweighs the penalty. However punishments involving jail sentences have an overarching deterrent effect on the entire population and specific deterrent on the individual. Also, those skills that were used to commit the original offence become less useful with years of not being used. While the illegitimate skills of burglars may be developed while they are incarcerated, those of crooked accountants will simply become increasingly out of date as they languish in prison.[71]

The backlog in courthouses also adds to the problem of trying corporate crimes. All of the problems in the criminal justice system are evident when trying corporate crimes.

A number of high-profile cases in England and Australia have collapsed partway through, calling into question the efficacy of the criminal law as a response to corporate criminality.[72]

Penalties can be increased by creating quasi-criminal offences or expanding on those that currently exist. This would give proper emphasis on the true nature of the offences. That they are criminal in nature and deserve to be punished as such. However, this allows elevates the standard of proof to beyond a reasonable doubt. To adequately deal with the problems of delay for corporate crimes there should be a separate court system set up.

Meanwhile, some of the difficulties involved in the criminalization strategy. She proposes that judges should receive greater education and social context training on the real harms caused by capital markets misconduct and on appropriate sanctions in the criminal law context, and that specialized criminal courts for corporate and white collar crime should be created.[73][74]
The view that corporate crime is less severe than violent crimes needs to be re-examined.

Along with that is the need for re-identifying corporate crime for what it actually is. Labelling misconduct as 'criminal' attaches to the offence a greater stigma than labelling it as a 'regulatory' offence. It sends a symbolic message to the wrongdoer, other potential wrongdoers, and society at large that the misconduct is most egregious.[75] Laws and rules are often more effective when they are preventative rather than punitive.

As noted by Professor Sparrow[76]: The National Performance Review's prescription for reform of the Internal Revenue Service states, as an underlying assumption, that compliance efforts should be 'moved upstream,' because prevention is cheaper per case and imposes less burden on taxpayers; whereas enforcement is more expensive per case and more intrusive.[77]
If the government were able to get citizens to comply with the law and rules initially then they would not have to worry about the costs and resources expended on litigation after a breach or abuse has been found.[78]

In my opinion, corporate crimes are the most happening crimes in the public. Loop holes in the corporate crime towards the judicial approach to be more effective impact on the Society. Corporate crime refers to the violations committed by the Corporation or the individual following up for benefit the organization held at risk and punishable in law. Corporate crimes to be condemned in the legal framework still progressively successful and there is a requirement for the amendment.

It unexpectedly influences the capital markets. In current situation, the corporate crime turned into a risk to the public. In any event, for the demonstration of the worker for the benefit of the company, the idea of vicarious obligation in predictable, the crime ought to be rejected in genuine offense both the representative and furthermore the organization. In such conditions, the offender may take advantage of that.

Legislation is innately lacking for dealing with the difficulties that cross numerous infringes and include various loopholes and an assortment of laws. The fast development of global economic/ corporate crime and the intricacy of its examination need a global attention. At present, the measures adopted to counter these crimes are prevalently at national level, yet these measures vary starting with one nation then onto the next. It is very essential for the nations to participate at the international level and need to make an organisation and to keep on building up the legal framework, which will help them viably counter global economic/ corporate crime.

Government of India has taken many steps to prevent this type of Crime in India. There are certain mechanisms by the Government of India by which the frauds can be prevented under the Companies Act, 2013.[79]

Section 211[80] empowers the Central Government to establish an office called Serious Fraud Investigation Office (SFIO) to investigate fraud relating to Companies (section 212).[81] Further, Central Government can also order investigation into the affairs of a company and on the receipt of the report of the registrar or the inspector.

Corporate crime is referred to as the conduct of a corporation or employees acting on behalf of a corporation that is prescribed or punishable in law. Thus corporate crimes are committed for corporate gain or to bring harm to any other person or body corporate. Such crimes are committed in a quiet environment. However, criminal behavior in corporate crimes does differ from the traditional crimes committed by individuals.

Corporate crimes are socially injurious or blameworthy acts which cause financial, physical or environmental harm or harm caused to the workers and the general public. It is believed that corporate criminal behaviour is also a result of learning process from with the working of the corporations. This behaviour is also attributed to major social and moral change. In a pursuit to meet targets or goals there could be adoption of unlawful means.

Further, there is neutralization theory where in the given circumstances conduct tried to be justified. Lack of adequate control could also promote criminal behaviour. In addition there are factors like cost benefit considerations, socio-economic developments, organizational structure and criminology market which are attributed to corporate criminal behaviour.

In the corporate control, there is criminality of the corporation itself and the liability of the responsible persons. Law needs to be more clearly defined regarding the corporation crimes.

[1] Dr. Sanjay I. Soanki, A Critical Study on White-Collar Crimes in India
[2] International journal of legal development and allied issues. Vol. 4 issue 3, may2018
[3] Encyclopaedia Britannica, Frank E. Hagan
[4] Corporate Crime Law and Legal Definition, by USLEGAL.COM
[5] John Braithwaite, Regulatory Capitalism, Edward Elgar Publishing (2008)
[6] ibid
[7] John Braithwaite, Regulatory Capitalism, Edward Elgar Publishing (2008)
[8] David Charny, NSCR, 104 Harv. L. Rev. 373, (1990).
[9] David Charny, NSCR, 104 Harv. L. Rev. 373, (1990).
[10] A. Ahuja, Analysis of white collar crimes in India,, (Visited on 08 April, 2019)
[11] International journal of legal development and allied issues, Vol. 4 issue 3, may2018
[12] G. Nagarajan & Dr. J. Khaja Sheriff, White Collar Crimes in India, International Journal of Social Science &
Interdisciplinary Research
[13] An Act No.45 of 1860
[14] Indian Penal Code, 1860- Section 168, 169, 171B, 171C, 171E, 171H
[15] Indian Penal Code, section 230 – 263
[16] Indian Penal Code, section 264 – 267
[17] Indian Penal Code, section 272 – 276
[18] Indian Penal Code, section 403 – 409
[19] Indian Penal Code, section 415 – 420
[20] Indian Penal Code, section 463 – 489
[21] Indian Penal Code, section 489A – 489D
[22] N.V.Paranjape, Criminology & Penology with Victimology,147(Central Law Publications, 16th edition, 2015)
[23] 4th Annual Report:Working of Indian Companies Act, 1956, Government of India (1960)
[24] International journal of legal development and allied issues, Vol. 4 issue 3, may2018
[25] ibid
[26] White Collar Crimes With Special Emphasis On Corporate And Cyber Crimes
[27] Available at (Visited on 2020-04-18).
[28] The Prohibition of Corruption Act, 1986
[29]Vineet Narain v. Union of India, (1998)1 SCC 226
[30] Subramanium Swamy v. Dr. Manmohan Singh, AIR 2012 SC 1185
[31] Prevention of Corruption Act, 1988
[32] Jaylalitha v. Union of India, (1999) 5 SCC 138.
[33] Ram Narayan Poply v. C.B.I, AIR 2003 SC 2748
[34] State of Gujarat vs. Mohanlal Jitamalji Porwal and Anr, AIR 1987 SC 1321
[35] Nimmagadda Prasad v. C.B.I, AIR 2013 SC 2821
[36] East India company, 1 December 1600
[37] Edmund Burke had Robert Clive, (the founder of the empire)
[38] East India Company Stock Redemption Act,1874
[39] Harshad Shantilal Mehta vs. Custodian & Ors 1998, ECR 1 SC, JT 1998 (4) SC 323.
[40] Sahara vs. SEBI ,(2012) 10 SCC 603
[41] Survey on Fraud in India,2012
[42] Indian Contract Act, 1872
[43] Indian Contract Act, 1872, section 17
[44] Indian Contract Act, 1872, section 17
[45] Indian Penal Code, 1860
[46] Indian Penal Code, 1860, section 25
[47] Prevention of Corruption Act, 1988
[48] Prevention of Money Laundering Act, 2002
[49] The Companies Act, 2013
[50] Securities and Exchange Board of India Act, 1992
[51] CARO Act, 2003
[52] Essential Commodities Act, 1955
[53] Information Technologies Act ,2002
[54] Sanathan Committee Report, CVC(Central Vigilance Commission) Report of the Committee on Prevention of Corruption, 1964
[55] Sangeet Kedia's Economic and Commercial Law, Pooja Law Publishing Co., June 2018
[56] The Companies Act (12 of 2013)
[57] Ibid
[58] Ibid
[59] ibid
[60] ibid
[61] ibid
[62] Wheeler and Rothman, 1982; Punch 2000, 2003
[63] Brass et al. 1998, Greve et al. 2010; Palmer and Maher 2006
[64] Baker and Faulkner 1993; Van De Bunt 2010
[65] Bertrand et al. 2014; Lord and Levi 2017; Jaspers2017
[66] Baker and Faulkner 1993
[67] Baker and Faulkner 1993; Reeves-Latour and Morselli 2017
[68] Vanisha H. Sukdeo, Corporate Crime: The Need to Increase Enforcement and Compliance, Canadian Law and Economics Association (CLEA) Annual Conference Faculty of Law, University of Toronto, October 2-3, 2009
[69] Vanisha H. Sukdeo, Corporate Crime: The Need to Increase Enforcement and Compliance, Canadian Law and Economics Association (CLEA) Annual Conference Faculty of Law, University of Toronto, October 2-3, 2009, p9-11
[70] P. Puri, Mandatory Minimum Sentences: Law and Policy (2001) 39, L.J. p.611 – 653
[71] Crimes of Privilege: Readings in White-Collar Crime, Oxford University Press, 2001, p368
[72] Murray Segal, Responding to misconduct in the corporate world 26,Advocates' Soc. J. No. 1, p.12-16
[73] Mary Condon, Rethinking Enforcement and Litigation in Securities Regulation (2006), 32 Queen's L.J. p.44
[74] Vanisha H. Sukdeo, Corporate Crime: The Need to Increase Enforcement and Compliance, Canadian Law and Economics Association (CLEA) Annual Conference Faculty of Law, University of Toronto, October 2-3, 2009, p9-11
[75] Mary Condon, Rethinking Enforcement and Litigation in Securities Regulation (2006), 32 Queen's L.J. p.44
[76] Vanisha H. Sukdeo, Corporate Crime: The Need to Increase Enforcement and Compliance, Canadian Law and Economics Association (CLEA) Annual Conference Faculty of Law, University of Toronto, October 2-3, 2009, p9-11
[77] M. Sparrow, The Regulatory Craft: Controlling Risks, Solving Problems and Managing Compliance, Brookings Institution Press, 2000 p.183
[78] Vanisha H. Sukdeo, Corporate Crime: The Need to Increase Enforcement and Compliance, Canadian Law and Economics Association (CLEA) Annual Conference Faculty of Law, University of Toronto, October 2-3, 2009, p9-11
[79] Companies act, 2013 (act no. 18 of 2013)
[80] Companies act, 2013 section 211
[81] Companies act, 2013 section 212

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