Economic offences are those offences which have very large impacts on the economy of a country. They involve very large sums of money or have a disruptive effect on the economy. There are different forms that such crimes can take: corporate scams involving corporations and companies, money laundering or the conversion of black money into legitimate money, tax evasion, counterfeiting of currency, bank and credit card frauds and so on. The common factor in each of these however is that the ultimate victims are the general public and the country and economy at large.
Experience around us shows a large growth in such offences. Yet they are very difficult to perceive and detect, despite their true magnitude. To give instances of the extent of money involved in these crimes, the famous Enron Scandal in the USA in 2001 involved a lawsuit for about $25 billion and the share prices of the company fell from $90 to $1 almost overnight. The Ketan Parekh Scam in India around the same time, involving the UTI Bank required a bail out of Rupees 3300 by the government. The Harshad Mehta Scam involving 17 public sector companies also involved gigantic sums of money.
Economic offenders are often persons holding positions of authority. They command the respect of the society by the profession that they are engaged in. They are often tagged as ‘white-collar criminals’. The most common examples of such crimes are those committed by persons who have breached some fiduciary duty that they owe to the organization where they work or to the society at large.
A distinguishing factor in such crimes is that the persons committing them are not considered by the society to be ‘real criminals’ such as those involved in violent and physical crimes such as murder or assault.
White-collar offenders are usually from the elite and form part of the ruling class. They influence policy decisions including the ones which decide what sort of punishments must be accorded to persons in their league who commit offences. As a result, they are invariably dealt with by administrative and civil proceedings and very rarely, mild criminal statutes. The penalties are lower when compared to street crimes. The difference in punishment is not proportionate to any difference there might be in the seriousness of the two kinds of crime.
This difference can be largely attributed to societal perception. The quantum of money involved in such crimes is enormous. But to begin with, there is no single victim in any of these crimes, leading to the apparently appropriate title ‘victimless crime’. But the society as a whole is the victim. Very high expertise is required for such an offence to be committed and therefore the common public does not even understand the exact nature of the crime. This is especially so, if the money has been appropriated by the violation of procedural requirements of the law. The nature of these crimes also allows them to go undetected for very long periods of time. Most importantly the media attention given to these crimes is also minimal because it lacks sensationalism that is present in street crimes, with regular victims. Academically too, these crimes have received far less attention.
The law has not been sufficient to address these offences in an effective and efficient manner. Since these crimes involve high expertise, the law countering them needs to be very specific and targeted. It cannot be loose and general, which would provide loopholes to the criminals concerned. The investigation cannot be conducted by persons without sufficient knowledge and expertise to understand and thereafter detect such crimes. The high stature that these offenders have in society, allows them far superior legal representation and resources than available to the prosecutors. The punishments imposed on them are very miniscule considering the gravity of the offences, making the risk involved in committing the offences much more lucrative.
Another important consideration is that because such crimes are committed by the persons with high stature in society, they have political and social clout. As a result the laws are rarely framed with the intention to be unduly punitive. The clout is also exercised at the stage of implementation.
It is time to change the way society perceives such crimes. People need to realize the extent to which these crimes affect the society. These crimes are not mere irregularities of law but serious crimes with very far-reaching consequences, which affect society at large. Different people are affected differently by such crimes, but in some way every person is affected. There is no reason why such crimes must be exempt from the kind of retribution that is reserved for violent crimes such as murder. Economic offences are real crimes and must be treated as such.
Experience around us shows a large growth in such offences. Yet they are very difficult to perceive and detect, despite their true magnitude. To give instances of the extent of money involved in these crimes, the famous Enron Scandal in the USA in 2001 involved a lawsuit for about $25 billion and the share prices of the company fell from $90 to $1 almost overnight. The Ketan Parekh Scam in India around the same time, involving the UTI Bank required a bail out of Rupees 3300 by the government. The Harshad Mehta Scam involving 17 public sector companies also involved gigantic sums of money.
Economic offenders are often persons holding positions of authority. They command the respect of the society by the profession that they are engaged in. They are often tagged as ‘white-collar criminals’. The most common examples of such crimes are those committed by persons who have breached some fiduciary duty that they owe to the organization where they work or to the society at large.
A distinguishing factor in such crimes is that the persons committing them are not considered by the society to be ‘real criminals’ such as those involved in violent and physical crimes such as murder or assault.
White-collar offenders are usually from the elite and form part of the ruling class. They influence policy decisions including the ones which decide what sort of punishments must be accorded to persons in their league who commit offences. As a result, they are invariably dealt with by administrative and civil proceedings and very rarely, mild criminal statutes. The penalties are lower when compared to street crimes. The difference in punishment is not proportionate to any difference there might be in the seriousness of the two kinds of crime.
This difference can be largely attributed to societal perception. The quantum of money involved in such crimes is enormous. But to begin with, there is no single victim in any of these crimes, leading to the apparently appropriate title ‘victimless crime’. But the society as a whole is the victim. Very high expertise is required for such an offence to be committed and therefore the common public does not even understand the exact nature of the crime. This is especially so, if the money has been appropriated by the violation of procedural requirements of the law. The nature of these crimes also allows them to go undetected for very long periods of time. Most importantly the media attention given to these crimes is also minimal because it lacks sensationalism that is present in street crimes, with regular victims. Academically too, these crimes have received far less attention.
The law has not been sufficient to address these offences in an effective and efficient manner. Since these crimes involve high expertise, the law countering them needs to be very specific and targeted. It cannot be loose and general, which would provide loopholes to the criminals concerned. The investigation cannot be conducted by persons without sufficient knowledge and expertise to understand and thereafter detect such crimes. The high stature that these offenders have in society, allows them far superior legal representation and resources than available to the prosecutors. The punishments imposed on them are very miniscule considering the gravity of the offences, making the risk involved in committing the offences much more lucrative.
Another important consideration is that because such crimes are committed by the persons with high stature in society, they have political and social clout. As a result the laws are rarely framed with the intention to be unduly punitive. The clout is also exercised at the stage of implementation.
It is time to change the way society perceives such crimes. People need to realize the extent to which these crimes affect the society. These crimes are not mere irregularities of law but serious crimes with very far-reaching consequences, which affect society at large. Different people are affected differently by such crimes, but in some way every person is affected. There is no reason why such crimes must be exempt from the kind of retribution that is reserved for violent crimes such as murder. Economic offences are real crimes and must be treated as such.
Geetanjali Shankar Member, SACJ, 2007-08
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