Defining white collar crimes

THE term white collar crime is applied as an umbrella term to both organisational and occupational crime. This expression was first introduced into the criminology vernacular by Criminologist and Sociologist, Edwin H Sutherland when he defined white collar crime as one committed by a person of respectability and high social standing in the course of their occupation.

One line of thought associates white collar crimes with senior executives in business organisations or in public sector institutions, but it would be most appropriate to use the term to describe any specific form of crime associated with occupation regardless of whether one belongs to the low, middle or upper strata of society. White collar crime knows no boundary or class, for example, fraud can be committed by any employee in an organisation. Occupational roles can be abused in similar ways, regardless of one’s status.

Stories have been told or read of junior employees such as sales personnel defrauding customers, senior company executives selling inside information and engineers having under-dealings with suppliers, contractors as well as passing of substandard works. All these are forms of white collar crime that can be committed by anyone up and down the occupational hierarchy.

The most common forms of white collar crimes in business today range from tax evasion, financial fraud, corruption, bribery and procurement related fraud. This calls for adequate focus on internal and management controls by business organisations. Technological developments have not helped matters due to their continued production of new opportunities for white collar crimes, some of them even on a global scale, to an extent that millions of dollars can be moved within seconds.

Fraud and corruption continue to pose big problems worldwide, and Zimbabwe is not an exception. Although these vices are perpetrated against companies, they affect the key areas of contemporary life. Financial scandals such as bank and pension frauds as well as tax and public sector frauds reduce Government resources that should have been channelled towards poverty alleviation, provision of sound health and education services and infrastructure development, among others.

White collar crimes are complex in nature because they involve collusion and diffusion of responsibilities and thus there is no accountability and at the end of the day blame game suffices. This complexity means that white collar crimes are difficult to detect, obtain sufficient evidence which can be proved beyond reasonable doubt and difficult to prosecute as well. One important thing to also note about white collar crimes is that they can be either individual or organisational or both. Individual in the sense that they are committed by persons on an individual or ad hoc basis for personal gain in a non-business context and organisational in that it is the business entity that perpetrates the crime in the furtherance of business operations.

Companies that do not have proper white collar crime preventive and investigative measures endure heavy loses, as they are ill prepared to deal with the scourge. Since most of the white collar crimes are committed by internal employees and related parties, it would be ideal for companies to make background screening of newly recruited or soon to be recruited employees. There is also need to have third party due diligence and other fraud preventive measures in place. Some companies have gone to the extent of having policies specifically for dealing with white collar crimes. These policies are in the form of documents signed or approved by senior management and they seek to give direction to organisations on how to prevent, detect and or handle cases of white collar crimes, which in most cases is fraud. The policy also regulates powers of individuals in organisations.

Suffice to say that, in most instances, white collar crimes perpetrated by senior employees cause more damage to organisations than those committed by junior employees. Where a senior employee is involved, besides the financial figure being very high, reputation of the organisation is also at stake. There is no single investor who would want to invest their hard earned money in a company that has higher risk of loses through white collar crimes.

As I have said earlier that white collar crimes are difficult to prevent, detect and prosecute, it however, does not necessarily mean that companies should just fold hands and wait for fate to prevent employees from putting the business at risk. There are quite a number of measures that, when applied, would make some business sense.

Firstly the most important thing is for companies to have employees who have a high moral standing within their ranks. Not only should companies ensure that their employees have a remarkable record of honesty and integrity, but they should also make sure that their employees possess the credentials that they say they have.

In addition, companies should also maintain some measure of strictness on segregation of duties. It would be good, for example, to ensure that those whose duty is to approve any expenditure or tenders should not also be the ones that action them.

A good anonymous tip-off line could be ‘‘just what the doctor has ordered’’. The whistle-blowers’ concept may also be taken into consideration with well-defined structures and management.

Use of powerful computer software may also assist in curbing the scourge of white collar crime due to their ability to flag anomalies as they occur within the system. This, coupled with the internal audit function which brings in immense knowledge of the operations within an organisation, may be the best way (of course after the whistle-blowers concept) to identify fraudulent activities in organisations.

Employees also need to be properly trained in order for them to fully understand what white collar crimes are, how they are prevented, reported as well as the consequences that one may have to face in the event of deviancy. In a number of organisations, for instance, even senior management do not understand what fraud is and what essential elements constitute it.

Over and above all these measures, it is also of paramount importance to inculcate a culture of ethical behaviour throughout the company. There is a school of thought that says criminal behaviour is learnt from those that we interact with on a daily basis. It also follows that if the senior managers do not act ethically, junior employees and even outsiders are also tempted to follow suit and before the sun rises, the organisation will be sailing on unfavourable waters.

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