Top White Collar Crime Cases In India

What is White Collar Crime?

The term- white-collar crime- comes from an outdated assumption that business executives wear white shirts and ties. when a person or group of persons violate the law in the course of a legitimate business enterprise or occupation is termed as a White-collar crime. Secondly, the execution of a White-collar crime involves the co-operation and participation of many people.

Below are some of the top 5 white-collar crime cases in India.

1. Harshad Mehta Securities Fraud (1988-1995)  

Harshad Mehta was a stockbroker, and he established his security firm in 1990, “ Grow More Research & Asset Management Limited”. He was a reputed name in the stock market, and is considered the ‘Sultan of Dalal Street’, investors blindly followed Mehta’s footsteps. He took a loan of huge amounts from the bank and purchased the scrips at high prices, thereby creating a false market. He misused his status and manipulated the stock prices of certain scrips for his gain. This resulted in the unnatural pumping of money in the stock markets causing an abnormal rise in the price of these shares. This act of Harshad Mehta though being immoral was not illegal. The problem arose when Mehta obtained capital to invest in the stock market by misappropriating the bank’s money. This misappropriation of money falls in the purview of money laundering. He earned approximately ₹ 5000 crores.[3] The then renowned journalist Sucheta Dalal exposed this scam. This unabated selling caused the market to lose ₹ 0.1 million in a day. This was the biggest ever crash which the Indian stock market had ever experienced. To curtail such transactions various changes were brought in SEBI rules and regulations.

2. Satyam Scandal: biggest-ever corporate accounting fraud

This scam came into light on 7^th January, 20009 by way of a confession letter written by B. Ramalingam Raju (Founder and chairman of Satyam Computers Services Limited) published in Times of India. The letter confessed to manipulating his books of account by overstating the assets and understating liabilities.

The books of accounts are the reflection of the company’s financial standing. They act as an important tool on which investors can rely on before investing their money. Accounts books were manipulated to cheat investors and shareholders.

The whole scam cost approximately ₹14,000 crore and is considered to be an important factor which contributed to the recession of 2009.

In this scandal, SEBI hit back strongly, holding Ramalinga Raju and nine major associates and guilty of insider trading, indulging in fraudulent and unfair trade practices. SEBI directed the accused to pay approximately ₹3000 crores within 45 days and also debarred them from accessing the security markets in any way for 14 years. SEBI managed to lash back strongly to ensure such a scam never happened again.

3. Ketan Parekh Security Scam

Parekh was involved in circular trading and stock manipulation from 1999-2001. He borrowed from banks like Global Trust Bank and Madhavpura Mercantile Co-operative bank and manipulated a host of stocks known as K-10 stocks. The scandal amount was approximately ₹ 1,250 Crore. He has spent only one year in jail, but he has been debarred from trading in the Indian Stock market till 2017.

Although his name continues to haunt the street as he has been accused of playing from backstage. An Intelligence Bureau Report alleged Parekh and his associates to be engaged in circular and insider trading through front entities.

4. Saradha chit fund case

Saradha Group financial scandal was a major financial scam and alleged political scandal caused by the collapse of Ponzi scheme run by Saradha Group, a consortium of 200 private companies that were believed to be running collective investment schemes popularly and wrongly referred to as Chit Fund. This group collected around ₹200 to ₹300 billion from over 1.7 million depositors, promising a multiplied hefty sum in return in the form of cash or real estate and other assets.

At least 10 Saradha group entities were alleged for committing fraud through public money-pooling activities. Amidst continuing public protest against the group’s alleged fraudulent activities, SEBI barred Saradha Realty India and its managing director Sudipta Sen from the securities market till it winds up all the Collective Investment Schemes (CIS) and makes the refund, as the same amounts to CIS Violation.

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The central government through the income tax department and Enforcement Directorate launched a multi-agency probe to investigate the Saradha Scam and similar Ponzi scheme. Later, in May 2014 Supreme Court of India, alleging possible international money laundering, severe regulatory failures, and alleged political nexus, referred this case to CBI, India’s federal investigation agency. Many prominent personalities were arrested for their involvement in the scam including two Members of Parliament- Kunal Ghosh, Srinjoy Bose, former West Bengal director general of police- Rajat Majumdar, a top football club official Debabrata Sarkar, Sports and Transport minister in the Trinamool Congress government Madan Mitra.

This scam is often compared to the Sanchayita investment scam, a multi-crore rupees scam that occurred in West Bengal in the 1970s, complaints related to the same have led to the formation of Prize Chits and Money Circulation Schemes (Banning) Act, 1968.

5. Punjab National Bank Fraud

Nirav Modi is a diamantaire, elite jewelry designer and India’s 85^th richest person.

Bank said that Modi and the companies linked to him colluded with its officials to get guarantees or Letter of Undertaking to help fund buyer’s credit from other overseas banks.[13]

PNB’s preliminary investigation showed that two officials of the bank had fraudulently issued Lou’s to the said firms without following the due procedure. These Los were then transmitted across the SWIFT messaging system, based on which the credit was offered to the said firms.

PNB alleged that the funds ostensibly so raised for the purchase and sale of diamonds were not used for the purpose.

PNB issued to the stock exchange, about the detection of fraudulent and unauthorized transactions. PNB has incurred $1.8 billion in fraud, one of the largest to be detected in the Indian Banking Sector.

6. 2G Scam

This scam involves the sale of the 2G spectrum licenses using a fixed price. And, A Raja did so as the option of auction led to less profit. He gave licenses to those applicants that were ineligible for it. These applicants not only lied but also gave false documents, submitted incomplete details, and hidden them as well. As a result, this led to a loss of 1.76 lakh crore rupees.

Further, the Comptroller and Auditor General of India gave the report of their crime on 16th November 2010. Also, it was such a heinous crime that the charge sheet was 80,000 pages long. In addition to it, the CAG report mentioned that these important stakes to Indian as well as foreign companies at a large amount of premium. Next, they did so in a very short period of time. Finally, they also claim that the real value of the spectrum and the value earned by these ineligible applicants were totally the same.

7. CWG scam

Commonwealth Games is an international event where the athletes from the commonwealth of nations play multiple sports. It takes place once a year. Commonwealth games federation conducts it. Suresh Kalmadi did the Commonwealth Games scam. He was the Chairman of the organizing committee of the Games.  As a result, he gave the contract of 141 crore rupees to the Swiss Timings. And these timing equipment by Swiss Timings were costly by 95 crore rupees.

Furthermore, the chairman asked the sportspersons to live in rooms which were not in a very good condition. This is when the Central Vigilance commission found out about the CMW scam. In addition to the decreased facilities to the sportspersons, the pilferage of 70,000 rupees took place due to this scam. They were arrested for their crime under the charges of cheating, conspiracy, corruption, and forgery for purpose of cheating. This is totally a major white-collar crime in India.

8. AgustaWestland Scam

Former Air Chief Marshal S P Tyagi and Christian Michel were major ones involved in the AgustaWestland  VVIP chopper scam. They paid the middlemen as well as politicians to buy 12 AgustaWestland helicopters. Italian defense manufacturing giant Finmeccanica built these helicopters and the cost of it was 3600 crore rupees. And President of India, other important persons as well as the prime minister of India were going to use these special helicopters. And, surprisingly, Italy uncovered one of the top white-collar crimes in India.

Further, the Congress government canceled the deal in the year 2014. CBI arrested S P Tyagi in the year 2016 because he suggested the decrease in the operational ceiling from 6000 meters to 4500 meters. And, CBI also mentioned in the report that the IAF opposed these changes. But when the Tyagi became the chief, he highly recommended it. Finally, they also arrested Christian Michel is the middleman hired by Agusta Westland along with Guido Haschke and Carlos Gerosa.

9. National Herald Case

One of the white-collar crimes that fall under the corruption category and is an ongoing case. Subramanian Swamy is an Indian economist and politician who filed a case in the Delhi court against Sonia Gandhi and Rahul Gandhi. He did so because of the reason that the Associated Journals Limited (ALJ) borrowed the loan of 90.25 crores from the Indian National Congress. In addition to it, this loan was interest-free.

Furthermore, a company named Young Indian was started in 2010. And, it had a capital of 50 lakh rupees. Not only the capital of 50 lakh rupees is surprising but also the point that this company acquired the shares of ALJ. The worth of these shares was 5000 crore rupees. Finally, in the year 2019 Enforcement Directorate permanently attached the properties of Gandhis. These properties were worth 64 crore rupees. Thus, it is indeed one of the white-collar crimes in India involving a huge amount of money.

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