Know the world of white-collar crime in India. Uncover important case laws, explore real case studies, and gain insights into renowned corporate legal proceedings. Whether you're curious about legal complexities or famous corporate cases, this guide provides a simplified overview.
The idea that business executives always wear white shirts and ties gave rise to the term “white-collar crime.” White-collar crime is when a person or group of people break the law while engaging in a legal business venture or occupation. Second, it takes a lot of people’s cooperation and participation to carry out a white collar crime.
The Top 7 White-collar Crime Cases in India
The top seven white-collar crime cases in India are listed below.
1. Harshad Mehta Securities Fraud (1988-1995)
Stockbroker Harshad Mehta founded Grow More Research & Asset Management Limited, a security company, in 1990. Investors blindly followed Mehta’s lead because he was a well-known name in the stock market and was known as the “Sultan of Dalal Street.”
He created a fictitious market by borrowing sizable sums from the bank and buying the scrips at exorbitant prices. He took advantage of his position to manipulate certain scrips’ stock prices for his own benefit. This led to an unnatural infusion of cash into the stock markets, which abnormally increased the price of these shares. Despite being immoral, Harshad Mehta’s action was legal.
2. Satyam Scandal: biggest-ever corporate accounting fraud
A confession letter written by B. Ramalingam Raju, founder and chairman of Satyam Computers Services Limited, and published in Times of India on January 7, 2009, revealed this scam. In the letter, he admitted to tampering with his books of accounts by inflating assets and understating liabilities.
The company’s financial situation is reflected in the books of accounts. Before making an investment, investors can rely on them as a crucial tool. Accounts books were falsified in order to defraud shareholders and investors.
The total cost of the fraud was around 14,000 crore, and it is thought to have played a significant role in the 2009 recession.
In response to this scandal, SEBI responded forcefully, finding Ramalinga Raju and nine significant associates guilty of insider trading as well as engaging in dishonest and unfair business practices. In addition to prohibiting the accused from entering the security markets in any way for a period of 14 years, SEBI ordered the accused to pay approximately 3000 crores within 45 days. In order to ensure that a similar scam never occurred again, SEBI was able to respond strongly.
3. Ketan Parekh Security Scam
From 1999 to 2001, Parekh engaged in circular trading and stock manipulation. He borrowed money from financial institutions like Global Trust Bank and Madhavpura Mercantile Co-operative Bank and used it to manipulate many K-10 stocks. The scandal cost roughly ₹ 1,250 crore. Despite serving only one year in prison, he will not be permitted to trade on the Indian stock market until 2017.
Although he has been accused of performing from behind the scenes his name still echoes down the street. Parekh and his associates were allegedly involved in insider trading and circular trading through front companies, according to an Intelligence Bureau Report.
4. Saradha chit fund case
The collapse of the Ponzi scheme run by Saradha Group, a group of 200 private companies that were allegedly running collective investment schemes popularly and incorrectly referred to as Chit Fund, resulted in significant financial fraud as well as an alleged political scandal. With the promise of a multiplied substantial sum in return in the form of cash or real estate and other assets, this group amassed around ₹30,000 crores from more than 17 lakh depositors.
It was claimed that at least 10 Saradha group entities had defrauded the public by participating in money-pooling schemes. SEBI banned Saradha Realty India and its managing director Sudipta Sen from the securities market until the group wound up all the Collective Investment Schemes (CIS) and made the refund, as the same amounts to CIS Violation, despite ongoing public protest against the group’s alleged fraudulent activities.
5. Punjab National Bank Fraud
The 85th richest person in India is the diamantaire and eminent jewelry designer Nirav Modi.
Bank claimed that Modi and the businesses connected to him conspired with the bank’s representatives to obtain guarantees or letters of undertaking from other foreign banks to help finance buyers’ credit.
According to PNB’s preliminary investigation, two bank employees fraudulently issued Lous to the aforementioned firms without following the proper procedure. Then, based on these Los, credit was extended to the aforementioned firms via the SWIFT messaging system.
PNB claimed that the money purportedly raised for the purpose of buying and selling diamonds was not put to use.
PNB released information to the stock exchange regarding the identification of unauthorized and fraudulent transactions. A ₹11,400 crores fraud was discovered at PNB, making it one of the biggest in the Indian banking industry.
6. 2G Scam
This scheme involves the fixed-price sale of licenses for the 2G spectrum. A Raja also took this action because using an auction resulted in less profit. He granted licenses to applicants who weren’t qualified. In addition to lying, these applicants provided false information, and missing information, and concealed them. As a result, ₹ 1.76 lakh crore were lost as a result.
On November 16, 2010, the Comptroller and Auditor General of India released a report on their crime. Also, the charge sheet was 80,000 pages long because the crime was so heinous. Additionally, the CAG report noted that these significant stakes were sold to both Indian and foreign companies at a high premium.
Then, they completed the task in a very short amount of time. Finally, they assert that the value earned by these ineligible applicants and the real value of the spectrum were exactly the same.
7. CWG scam
Athletes from the Commonwealth of Nations compete in a variety of sports at the Commonwealth Games, which is an international competition. It occurs once a year. It is run by the Commonwealth Games Federation. The Commonwealth Games scam was carried out by Suresh Kalmadi. He oversaw the Games’ planning committee as its chairman. As a result, he awarded the Swiss Timings the ₹141 crores contract. Furthermore, Swiss Timings’ time equipment cost ₹95 crores.
Additionally, the sports officials were required to live in subpar accommodations by the chairman. The Central Vigilance Commission learned about the CMW scam at this time. Along with providing fewer facilities for athletes, this scam resulted in the theft of ₹ 70,000. They were detained on charges of cheating, conspiracy, corruption, and forging documents with the intent to cheat. In India, this is unquestionably a serious white-collar crime.
Why Associate Colour with a Crime?
Associating colours with crimes can be attributed to a combination of cultural, societal, and psychological factors. colours often carry symbolic meanings deeply rooted in cultural contexts, leading to specific associations. Media representation further shapes these perceptions, as movies and news often utilize colour schemes for dramatic effect. Historical contexts and societal norms may link certain colours to particular crimes, reinforcing these associations over time.
Additionally, the psychological impact of colours, evoking emotions and reactions, plays a role in their connection to criminal activities. Legal and regulatory practices, cultural symbolism, and human perception biases contribute to the complex web of associations between colours and crimes. It is crucial to recognise that these associations are often cultural constructs, and understanding them provides insight into the intricate interplay between perception, culture, and the portrayal of crimes in society.
Difference between Blue-Collar and White-Collar Crimes:
| Criteria | Blue-Collar Crimes | White-Collar Crimes |
| Nature of Offense | Typically involves physical force or threat. | Non-violent, financial or economic crimes committed by individuals in professional or business settings. |
| Perpetrator’s Background | Often associated with individuals from working-class backgrounds. | Typically associated with individuals in higher socio-economic classes, often professionals or executives. |
| Motivation | Economic necessity, personal disputes, or survival. | Financial gain, fraud, or abuse of trust in professional roles. |
| Examples | Theft, assault, burglary, vandalism. | Embezzlement, insider trading, fraud, bribery. |
| Penalties | Penalties may include imprisonment, fines, or community service. | Penalties may involve fines, restitution, and imprisonment, depending on the severity. |
Difference between Blue-Collar and Green-Collar Crimes:
| Criteria | Blue-Collar Crimes | Green-Collar Crimes |
| Nature of Offense | Typically involves physical force or threat. | Crimes against the environment or wildlife, are often non-violent but harmful. |
| Focus Area | Primarily on traditional industries like manufacturing or construction. | Focuses on environmental violations, wildlife poaching, illegal logging, etc. |
| Impact | Direct impact on individuals or property. | Indirect impact on the environment and ecosystems. |
| Examples | Theft, assault, vandalism. | Pollution, illegal fishing, wildlife trafficking. |
| Penalties | Traditional legal penalties such as imprisonment or fines. | Fines, restoration projects, or environmental conservation measures. |
Difference between White-Collar and Ordinary Crimes:
| Criteria | White-Collar Crimes | Ordinary Crimes |
| Nature of Offense | Non-violent financial or economic crimes. | Range from non-violent theft to violent crimes like assault or murder. |
| Setting | Committed in professional or business settings. | May occur in various settings, including public spaces or private residences. |
| Motivation | Often motivated by financial gain, fraud, or abuse of trust. | Motivations can be diverse, including personal disputes, revenge, or desperation. |
| Examples | Embezzlement, insider trading, fraud. | Robbery, burglary, assault, murder. |
| Legal Consequences | Penalties may include fines, restitution, or imprisonment. | Penalties range from fines to imprisonment, depending on the severity of the offence. |
Conclusion
The topmost white collar crimes held in India are as follows- Harshad Mehta Securities Fraud (1988-1995), Satyam Scandal: biggest-ever corporate accounting fraud, Ketan Parekh Security Scam, Saradha chit fund case, Punjab National Bank Fraud, 2G Scam, CWG scam. Vakilsearch provides knowledge and assistance regarding the top white-collar crimes in the nation.
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