White-Collar Crime

Time to wipe the slate clean?

The concept in Criminal Law, “accused is presumed to be innocent until proven guilty beyond reasonable doubt”, known as the concept of “Presumption of Innocence”, seems to be the bastion of fairness, the standard of criminal culpability against which the accused is judged to be given a fair trial. The question has often arisen, whether the same standard should be applicable to the executives of corporations who are at the helm of affairs, not only in the corporate world but in the arena of politics and governance holding public office with immense power and influence.

The intention here is not to be opaquely Rousseau in concept but to draw the attention towards the trust that is placed in position of such authoritative powers and the legitimate benevolent expectations associated with it, naïve it may be in practice. The history of the world is marred with incidence where we have seen in the words of Lord John Emerich Edward Dalberg Acton in motion; “Power tends to corrupt and absolute power corrupts absolutely.”

This famous saying is for want of people’s response to such actions on the part of the powerful. In the words of Martin Luther King, Jr, “The ultimate tragedy is not the oppression and cruelty by the bad people but the silence over that by the good people”.

The State can also pursue financial damages from corporations and banks that commit white-collar crime on an institution-wide level. One of the most well-known white-collar criminals is Bernard Madoff, who was convicted in 2009 of a massive fraud that cost investors $65 billion. Corporate white-collar crime usually involves a large-scale fraud perpetrated throughout the institution. For instance, Credit Suisse pleaded guilty in 2014 to helping U.S. citizens avoid paying taxes by hiding income from the Internal Revenue Service. The bank agreed to pay penalties of $2.6 billion. Also in 2014, Bank of America acknowledged it sold billions in mortgage-backed securities (MBS) tied to properties with inflated values. These loans, which did not have proper collateral, were among the types of financial misdeeds that led to the financial crash of 2008. Bank of America agreed to pay $16.65 billion in damages and admitted to its wrongdoing.

Many white-collar crimes are especially difficult to prosecute, because perpetrators use sophisticated means to conceal their activities through a series of complex transaction. Faced with the situation, many white collar criminals get away with punishment under the criminal law requiring strict proof of their guilt.

Professor Edwin Sutherland, a sociologist who coined the term “White-Collar Crime”, while disagreeing with certain basic substantive and procedural principles of criminal law, in his landmark book “White-Collar Crime” published in 1949, dismissed the traditional mens rea (criminal intent) requirement and the presumption of innocence.  He suggested that the rule of criminal intent and presumption of innocence are not required in all prosecution in criminal courts and the number of exceptions authorised by statutes is increasing. Sutherland and others, who assume the guilt of much of the business world, believe that the ordinary protections of the law also need not apply to persons involved in business.

Conscious of the on-going struggle to perish white collar crimes and eradicate consequent corruption in society, large number of countries persuaded the United Nations to cater to the need, which finally resulted in the U.N. Convention Against Corruption 2003, to which large number of countries, including Pakistan, are signatory to the U.N. Convention Against Corruption 2003. State parties shall consider assisting each other in investigations of and proceedings in civil and administrative matters relating to corruption; as well as affording to one another the widest measure of mutual legal assistance in investigations, prosecutions, and judicial proceedings in relation to the offences covered by the Convention.

In Pakistan too, realisation came about the prosecution and punishment of white collar criminals, with the promulgation of National Accountability Bureau (NAB) Ordinance, 1999, Anti-Corruption laws and previously Ehtisab Act, 1997, which primarily catered to the white collar crimes, where the presumption of innocence has been done away with and the onus of proof placed on the accused.

Increase in industrialisation and manufacturing of almost all products through modern, technical, sophisticated process, increase in international trade, E-commerce and E-banking resulted in wide range of white collar criminals in the business world, going unpunished, for want of compatible training in investigation and prosecution agencies, left many white-collar crimes without prosecution and punishment.

Pakistan also has to consider seriously doing away with the age-old concept of criminal law “presumption of innocence” in the light of the development taking place in the legal systems in various countries and the recognition given by the courts to hold the influential and powerful accountable.