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Bank Fraud
Fraud is committing a crime with the intent to cheat and achieve an unfair advantage. Bank fraud is when someone defrauds a bank. Fraudulent businesses commit it by making false statements. It also entails the manipulation of negotiable instruments such as cheque bouncing, shares, and bank deposits, among other items. Since there is a trustworthy relationship between banks and the general population, bank fraud affects the general public. It’s the most famous white collar crime, as well as a corporate crime. It is harmful to both the public and the government of the country.
Fraud is a crime committed with the intent of deceiving others and obtaining unfair advantages. Bank frauds are a form of financial scam. It comes about as a result of a sequence of events. This affects both the public and the country’s Government. Despite having a stringent regulatory system, the financial services industry has emerged as the most vulnerable to fraud. Misuse of technology in the banking sector involves overpayments to suppliers or a self-bank account, sharing of potentially sensitive information, and misusing the company’s technology tools for unauthorised purposes, such as conflicting with the company’s business relationships.
Furthermore, delivering services on mobile and social media channels with a restricted understanding of security standards presents a major risk to both consumers and financial institutions. Given the shortcomings in India’s law enforcement system for investigating and prosecuting fraudsters, as well as the ever-increasing social pressure to get rich quick, fraud is always a threat to businesses. Because of myriad scams that have come to light over the last two years, foreign investors and domestic entrepreneurs have lost trust in the country.
Bribery
Bribery is yet another form of white collar crime that is quite common. Bribery refers to the practise of paying a high-ranking official money or goods in exchange for a favour. Bribery is described as when one person gives money to another who is in a position of authority. It is done in order to induce him to do something or to deter him from doing something. It is the most popular source of income for the majority of our country’s public officials.
Cybercrime
In India, cybercrime is the leading cause of this form of crime. It is the most recent issue that has emerged in the cyber world. Cybercrime is a form of crime that involves computer networks. With the rapid development in technology, there has also been a rapid rise in technology-related violence. Cybercrime includes individuals who are educated about information technology. It is often committed against the victim, either directly or indirectly, in order to damage his reputation or inflict physical or mental harm to him by the use of the internet, networks, and other technological sources.
Cybercrime poses a threat to national security as well as personal safety and financial stability. Cybercrime has the potential to cost the country a huge amount of money. Not only can it lead to financial losses, but it can also jeopardise a person’s privacy. Confidential information can lead to issues with privacy. It is committed against the victim, either directly or indirectly, in order to damage his physical or mental image by the use of the internet and other technological tools. Cybercrime is considered a threat to a country’s security and a person’s financial well-being. The Information Technology Act of 2000 is India’s only legislation dealing with cybercrime.
Money Laundering
Money laundering is a crime in which criminals seek to hide the source of funds. Since the money is typically obtained illegally, criminals try to hide the original owner and source of the money. Money laundering is the activity of passing off illegal funds as legitimate funds. Section 3 of the 2002 Money Laundering Act defines what encompasses money laundering. They complete tasks in such a way that even investigating authorities are unable to track the money’s true roots. This is how people who invest their black money in the stock market are able to turn it into legal wealth. Usually, criminals use banking networks to deposit black money and transfer it from one banking institution to another in order to layer the money and hide its source, then pay to buy something in order to integrate black money into the financial system.
Tax Evasion
Tax evasion is the intentional concealment of one’s true taxable income and original status from the authorities. This income concealment is performed in order to reduce the government’s tax liability. To put it another way, it means hiding money gained by fraudulent means in order to minimise one’s tax burden and demonstrate low income to the tax authorities. Tax evasion has a detrimental effect on social principles because it demoralises honest tax payers, causing them to indulge in tax evasion themselves. It also puts economic control in the hands of a few undeserving individuals.
Identity Theft
These days, identity fraud is one of the most prevalent forms of crime. It is now very easy to gain access to anyone’s personal information due to technological advances. Identity theft is a crime in which a criminal obtains unauthorised information such as a person’s identity, address, or phone number and uses it to gain financial gain. In basic terms, identity theft is when someone else’s identity is used to commit fraud or obtain money by fraudulent means.
Hawala Trading
Hawala is a form of exchanging funds without actually transferring the funds. Hawala is an alternative payment mechanism that exists outside of traditional banking networks. Since the system is heavily based on trust and the book balance of hawala agents, transactions between hawala agents without promissory notes are possible. Hawala is an alternative method of transferring funds that originated in South Asia in the 8th century and is now widely used, especially in the Islamic community. Money transfers to HAWALA are done via a network of hawala dealers or hawala dealers, as opposed to the conventional method of cross-border transactions through bank transfers.
Ponzi scheme
A Ponzi scheme is a fraudulent investment scheme that promises investors big returns with little risk. The Ponzi scheme generates returns for early investors by attracting new investors. This is similar to a pyramid scheme in that both rely on funds from new investors to pay for the earlier backers. Ponzi scheme firms are all about getting new clients to invest in their schemes. The schemes are structured to ensure that older investors continue to benefit from a steady stream of new investments. When the flow runs out, the strategy falls apart.
Insider Trading
Insider trading is characterized as a malpractice in which a company’s individuals, who because of their jobs, have exposure to the otherwise non-public information that can be crucial to making investment decisions. Insider trading is a fraudulent activity in which other stakeholders incur substantial losses as a result of the lack of valuable non-public insider knowledge..
Counterfeiting
Counterfeiting is a crime defined under section 28 of the Indian Penal Code, 1860, where something genuine is imitated in order to steal, destroy, or replace someone else’s original work. It makes it easier to benefit from illegal transactions and to trick anyone who thinks the depiction is true and the imitated work is much more valuable. Fake logos and brand names can be found on counterfeit goods, and dangerous chemicals have been discovered in some of them, resulting in the death of the user.
Extortion
Extortion is characterised as an act in which one party induces another to pay money, property, or services in return for money, property, or services. Since an individual may take advantage of his official right to use his higher position in the company to compel another person to offer money or move assets in return for services, it is a white-collar crime.
Recent Examples in India
The recent examples in India are:
1. ICICI Bank:
In the wake of inquiries by the Reserve Bank of India, the Securities and Exchange Board of India, and the Central Bureau of Investigation into allegations of fraud against Chanda Kochhar, the bank’s former CEO, for breaching the Code of Ethics and regulatory provisions relating to conflict of interest, ICICI Bank initiated an internal investigation. B. N. Srikrishna, a retired Supreme Court Justice, was appointed to chair an internal inquiry panel into the matter by ICICI Bank. A law firm and a forensic audit firm aided Justice Srikrishna.
According to reports from another whistle-blower, ICICI Bank conducted yet another internal inquiry in July 2018 to look into allegations of irregularities in 31 loan accounts. The bank retained a law firm to look into the allegations that the bank inflated earnings by $1.3 billion over the course of eight years by delaying provisioning of the 31 non-performing assets accounts.
2. Punjab National Bank (“PNB“):
A USD 2 billion fraud involving diamantaire Nirav Modi and Mehul Choksi was brought to the Bank’s attention. After forex banks filed complaints with the Central Bureau of Investigation, the fraudulent activities of Nirav Modi and the Brady House Branch of PNB were exposed. PNB officials from Brady House Branch allegedly fraudulently issued undertakings to forex banks from which Nirav Modi had taken credit, according to an internal inquiry. PNB’s audits, enforcement, vigilance mechanisms, and internal control have also been challenged as a result of this. PNB has engaged a consulting firm to perform a forensic audit of Nirav Modi’s five company firms. The investigation found that 54 PNB staff were involved in the scam, ranging from clerks to senior managers. PNB has suspended 21 officials as a result of the survey. The internal report was issued to the police and other investigating agencies and is now being used as evidence..
3. Cognizant Technologies Solutions:
Officials of Cognizant Technologies Solutions are being prosecuted by Lifshitz & Miller for alleged securities law breaches and violations of the International Corrupt Practices Act relating to illegal payments in Indian facilities. The corporation revealed the breaches in a regulatory filing with the Securities Exchange Commission (“SEC”) and the US Department of Justice in order to ensure voluntary disclosures in order to prevent or reduce fines.
Harshad Mehta Securities Fraud (1988-1995)
Harshad Mehta was a stockbroker who formed Grow More Research & Asset Management Limited, a security company, in 1990. Investors blindly followed Mehta’s footsteps because he was a well-known name in the stock market and was nicknamed the “Sultan of Dalal Lane.” He secured a large bank loan and purchased the scrips at inflated rates, thus establishing a false market. He took advantage of his power and manipulated the stock prices of some companies for personal benefit. This resulted in an abnormal increase in the price of these securities due to the unnatural pumping of capital into the financial markets. Harshad Mehta’s conduct, though unethical, was not illegal. The issue arose when Mehta misappropriated the bank’s funds in order to invest in the stock market. Money laundering is the term used to describe the misappropriation of funds. He made a fortune of about 5000 crores. Sucheta Dalal, a well-known journalist at the time, revealed the fraud. The market lost 0.1 million in a single day as a result of this unabated sale. This was the largest stock market crash in India’s history. SEBI has made a range of amendments to its rules and regulations in order to discourage such transactions.
Satyam Scandal: biggest-ever corporate accounting fraud
The scam was revealed on January 7, 2009, when B. Ramalingam Raju (Founder and Chairman of Satyam Computers Services Limited) released a confession letter in the Times of India. In the letter, he admitted to falsifying his financial statements by overstating assets and understating liabilities. The financial status of the company was represented in the books of accounts. They serve as a valuable resource for investors who are considering making a financial investment. Account books were tampered with in order to defraud investors and shareholders. The entire scam cost approximately 14,000 crores and is widely regarded as a major contributor to the 2009 recession. SEBI retaliated strongly in this scandal, charging Ramalinga Raju and nine major associates with insider trading and engaging in illegal and unfair trade practises. The accused were ordered to pay approximately 3000 crores within 45 days, as well as be banned from accessing the stock markets in any capacity for the next 14 years by SEBI. SEBI was able to retaliate aggressively, ensuring that such a scam will never happen again.
Ketan Parekh Security Scam
From 1999 to 2001, Parekh was active in stock manipulation and circular trading. He took out loans from banks including Global Trust Bank and Madhavpura Mercantile Co-operative Bank and used them to exploit a number of K-10 stocks. The total amount involved in the fiasco was around Rs. 1,250 crore. He was only in jail for a year, but he was banned from investing in the Indian stock market until 2017.
His reputation, however, continues to reverberate down the street, as he has been accused of working from behind the scenes. According to an Intelligence Bureau investigation, Parekh and his associates used front entities to participate in circular and insider trading.
2G Scam
The sale of 2G spectrum licences at a fixed price is the focus of this scam. And A Raja did so because auctioning yielded less profit. He issued licences to those who were otherwise disqualified. These applicants not only lied, but they also presented false documentation, submitted incomplete information, and concealed it. As a result, a loss of 1.76 lakh crore rupees was incurred. On November 16, 2010, the Comptroller and Auditor General of India released a report on their crime. Furthermore, the crime was so horrific that the charge sheet was 80,000 pages long. Furthermore, the CAG report reported that these major stakes were sold at a high premium to both Indian and foreign companies. They also did so in a very limited amount of time. Finally, they assert that the true value of the spectrum and the value received by these ineligible applicants are equivalent.
CWG scam
The Commonwealth Games is an international sporting event in which athletes from Commonwealth nations participate in a number of sports. It just occurs once a year. It is organised by the Commonwealth Games Federation. The Commonwealth Games scam was committed by Suresh Kalmadi. He was the Chairman of the Games’ Organizing Committee. As a result, he awarded Swiss Timings a contract worth 141 crore rupees. Swiss Timings’ timing equipment cost a total of 95 crore rupees. Furthermore, the chairman wanted the athletes to live in rooms that were in poor condition. This is when the CMW fraud was uncovered by the Central Vigilance Commission. This fraud resulted in the theft of 70,000 rupees, in addition to the decreased facilities for athletes. They were charged with theft, conspiracy, corruption, and forgery for the intent of cheating and were arrested.
AgustaWestland Scam
In the AgustaWestland VVIP chopper scam, former Air Chief Marshal S P Tyagi and Christian Michel were leading players. They purchased 12 AgustaWestland helicopters by paying middlemen and politicians. Finmeccanica, an Italian defence manufacturing company, designed these helicopters at a cost of 3600 crore rupees. These special helicopters will be used by the President of India, other important citizens, and the Prime Minister of India. Surprisingly, Italy revealed one of India’s most extreme white-collar crimes. Furthermore, in 2014, the Congress government cancelled the agreement. S P Tyagi was detained by the CBI in 2016 after he proposed lowering the operational limit from 6000 metres to 4500 metres. In addition, CBI stated in the report that the IAF had opposed to the changes. When Tyagi became the president, however, he strongly advised it. Finally, Christian Michel, the middleman employed by Agusta Westland, as well as Guido Haschke and Carlos Gerosa, were arrested.
Conclusion
White-collar offences are a distinct class of criminal offence. The phrases “white collar crime” and “economic crime” are often used interchangeably; however, both terms must be used to differentiate between various forms of crime. White collar crimes can only cause financial harm to victims, but they may also have serious consequences for the corporate system. White collars Crimes such as various financial scams, bribery, money laundering, and tax evasion, among others, are serious concerns and have a major effect on the corporate system.
