Scam report: A revelation on how white collar crimes happen and why

White collar crimes evoke shock and awe among the public but are often perceived as a lot less severe than even garden-variety violent crimes, perhaps because the perpetrators are often the educated and elite of the society. This is despite their impact having devastating effects and affecting a large part of society, economy and institutions. Sibichen K Mathew, employed as a taxman in the central government, examines aspects of such crimes in his book, You Just Got Cheated.

The lenient public perception is often the reason why these criminals are not brought to book as swiftly as the magnitude of crime would dictate. Mathew notes that not only the scholars, policymakers and enforcement agencies but also the general public viewed white collar criminals leniently and ‘respectfully’ by classifying and sympathising with them as first-time offenders, accidental offenders or as victims of circumstances.

“Such soft approach to WCC as compared to street crimes or other violent crimes is evident not only in various regulations related to WCC but also in the efficiency and seriousness of investigation agencies and in the pace of trial in courts,” he writes.

A reader would have heard of most of the domestic or even international cases Mathew brings up but the modus operandi of each one along with other associated facts makes the book a veritable compendium on the topic. Put together, these crimes would also evoke a sense of paranoia in the reader, a fear that a scam is lurking in every corner.

In this increasingly connected and digitised world, white collar crimes are waiting to happen and claim victims. These crimes encompass the entire spectrum of our lives, including investment frauds, corporate crimes, environmental crimes, occupational deviances, power abuses, health frauds, consumer abuses, crime in education, crime in the name of religion and cybercrimes.

Some of the familiar scams in India that readers would identify as they are currently being investigated by enforcement agencies include chit fund scams like Rose Valley, bank frauds perpetrated by Mehul Choksy, Nirav Modi and Vijay Mallya, recruitment scam Vyapam in Madhya Pradesh and even the decades-old Bhopal gas tragedy.

“Although the coverage is extensive, it cannot be said to be exhaustive as there may be several other specific sectors which may not come under these broad categories, but which obviously fulfil the criteria to label them as WCC. For example, there are many instances of frauds in the area of sports and entertainment, in non-profit sector, etc,” Mathew writes after having spent the better part of the book detailing such crimes.

As rich in details as the book is, it makes for cumbersome reading. Half way through, the reader would want to know about what makes criminals out of the very people considered as ideal members of the society, till the scam comes to light. A reader would also wonder if there was any way to preempt these crimes given the collusion of high and mighty through bribery or whether the general public has no recourse but to lose their life’s savings, or even worse.

These answers come in the last three chapters of the book. So, why do the victims of these crimes find it hard to get justice? “Take for example, a chit fund scam or a Ponzi scheme. There would be thousands of victims spread out in various geographic locations and the affected persons will not be knowing each other. Even when some of the victims join together or an NGO takes initiative to assist them in fighting for the relief and redressal, such initiative fails in gathering all the victims under the same umbrella,” Mathew concludes.

As for the motivation of the perpetrators, Mathew cites various research on the subject to conclude that while in some cases money could be a motivation, it is often the hubris that comes with power and opportunity at disposal that leads to otherwise materially prosperous individuals to resort to cheating.

A case in point is Rajat Gupta, who was already extremely financially affluent but played a crucial role in aiding Rajaratnam in insider trading. “In a study conducted on insider trading, the scholars concluded that money or benefit is not the sole motive in WCCs. They underscored the relevance of psychological motives (like hubris) or sociological motives (like organizational culture of such actions),” the book says.

There is no clear-cut answer to preventing such crimes but society can start by not treating such criminals with the sympathy it tends to provide. Among other measures, the regulatory bodies and enforcement agencies would also have to reorient their attitudes and policies. Lastly, global multilateral bodies can also formulate more comprehensive framework for cooperation to track criminal elements as these crimes often have footprints across the globe.

You Just Got Cheated: Understanding White-Collar Crime
Sibichen K Mathew
Sage Publications
Pp 400, Rs 595