Zafar Iqbal Kalanaurii
Legal system of a country primarily aims at to give justice to all its citizens without any discrimination. But this discrimination is in every legal system is true to exist. These are the loop holes in the system, which required to be looked into.
In the society, where we live is no exception, an offence committed by a person of low social rank is penalized stringently under the hard rules of law but the same offence is committed by a person of high social rank, situation changes. In practice, law or I would say system appears to be more soften towards the offender.
As the society emerged and developed, the new challenges arose in every field collaterally in the world of crimes. A crime which is known as “White-Collar crime” also emerged in this course. This term was first coined by the sociologist Edwin Sutherland who was the chief proponent of this social concept of crime.
Within the field of criminology white-collar crime has been defined by Edwin Sutherland1 as:
“A crime committed by a person of respectability and high social status in the course of his occupation” (1949)
The most common white-collar offenses include: antitrust violations, bankruptcy fraud, bribery, computer and internet fraud, counterfeiting, credit card fraud, economic espionage and trade secret theft, embezzlement, environmental law violations, financial institution fraud, government fraud, healthcare fraud, insider trading, insurance fraud, intellectual property theft/piracy, kickbacks, mail fraud, money laundering, securities fraud, tax evasion, phone and telemarketing fraud, and public corruption.
Many white-collar crimes are especially difficult to prosecute because the perpetrators use sophisticated means to conceal their activities through a series of complex transactions.
1 https://www.britannica.com/biography/Edwin-Sutherland
Whistle-blowers are particularly helpful, because they report internal wrongdoing that may be invisible outside the company.
While rates of violent crime continue to fall across the globe, the white collar crime – complex criminal schemes involving fraud and theft – is on the rise. Sophisticated criminals risk slipping through the prosecutorial net unless they are matched with specialized and talented investigators and prosecutors. The Programs of the International Institute of White Collar Crime, through professional training and technical assistance, aims to equip law enforcement investigators, prosecutors, defenders and judges with the knowledge and tools necessary to successfully prosecute white collar crime and emerging criminal schemes.
The white collar crime deal with criminal acts by public servants, persons in authority or even by persons involved in commercial organizations. White-collar crime therefore overlaps with corporate crime because the opportunity for fraud, bribery, insider trading, embezzlement, computer crime and forgery is more available to white-collar employees. White-collar crimes have a drastic effect over the economy and financial state of a country. A broad range of white collar crimes are perpetrated each day in Pakistan, the variety of these crimes being limited only by the imagination of those who commit them. Examples include tax evasion, insider trading, insurance fraud, bribery, embezzlement, and money laundering. Some offenses are committed on a small scale, like when individuals filing for liquidation bankruptcy fail to disclose personal assets on their petition. Other times, a single fraud can affect the lives of hundreds or thousands of people, such as investment frauds committed by securities brokers.
White collar crime refers to those offenses that are designed to produce financial gain using some form of deception. This type of crime is usually committed by people in the business world who, as a result of their job position, are able to gain access to large amounts of other people’s money. White collar crime does not involve violent, drug-related, or overtly illegal activities. In fact, perpetrators are typically involved in otherwise lawful businesses and may hold respectable positions in the community prior to the discovery of their fraudulent schemes.
Most white collar crime is investigated and prosecuted by different investigating authorities. There is a common conception among the general public that defendants convicted of white collar crimes will be treated with leniency. One of the unique aspects of white collar crime is that suspects will often become aware of the fact that they are being investigated days, weeks, or even months prior to their arrest. While this can cause suspects to experience fear and apprehension about the future, it also provides an opportunity not available to those who are arrested without warning. By retaining a criminal defense attorney at the first indication of trouble, individuals may be able to considerably reduce their exposure to criminal liability and perhaps avoid charges all together. A defense attorney will not directly impede the investigative efforts of law enforcement. However, individuals who are represented by counsel are far less likely to unknowingly waive constitutional legal protections, or relent to the demands of investigators when there is no need to do so. And while plea bargaining typically occurs following an arrest, a skilled criminal defense lawyer will act proactively, engaging the prosecuting attorneys early in the process. Many cases are successfully resolved through negotiation before formal court proceedings begin. In an ordinary criminal trial, several witnesses and police officers are called to testify, some physical exhibits are introduced into evidence, and the entire trial is finished in a day or two. By contrast, cases alleging white collar crimes may take weeks to try before the court j. The number of exhibits
alone can be overwhelming, with potentially thousands of documents, emails, and other items of evidence that must be accepted by the judge. Fortunately for defendants, the size and complexities of these trials can sometimes be a strategic advantage.
The burden of proving a case belongs to the government/prosecution. So while government prosecutors are inundating the jury with the volumes of financial records necessary to prove their case, the defendant can present his or her argument in a concise, simple manner. After all, it only takes a single flaw in the government’s case to obtain an acquittal. If the defendant can identify a flaw, and elucidate it succinctly, jury members will be grateful to the defendant for making their job easier. Poking a single hole in a complex case can be a winning trial strategy for white collar offenses, but it requires the ingenuity and finesse of an accomplished defense lawyer.
The National Accountability Bureau Ordinance (NABO)2 under Section 5 describes a “public office holder’ as an individual holding, or have held, an office or post in the service of Pakistan or in connection with the affairs of the Federation, or of a Province, or of a local council constituted under any Federal or Provincial law, management of corporations, banks, financial institutions, firms, concerns, undertakings or in other institutions or organizations established, controlled or administered by or under the Federal Government or a Provincial Government. The Classification of White collar crime are given in the NABO.3
A recent Supreme Court (SC) judgment says public property is a “public trust in the hands of public functionaries”. Banks hold large amounts of the public’s money (and public funds), defining bankers as government functionaries subject to accountability by NAB. If such an individual dishonestly or fraudulently misappropriates or otherwise converts for his own use, or for any other person, any property entrusted under his control, or wilfully allows any other person to do so to gain any benefit or favor for himself or any other person, or wilfully fails to exercise his authority to prevent the grant, or rendition of any undue benefit or favour which he could have prevented by exercising his authority, constitutes criminal “breach of trust” under Section 405 of the Pakistan Penal Code (PPC), 1860 (Act XLV of 1860).4
2
https://www.google.co.in/search?source=hp&ei=pa8RW6EEOTD6QSSm4LwBA&q=national+accountability+ ordinance+pakistan&oq=national+accountability+ordinance+pakis&gs_l=psyab.1.0.0j0i22i30k1l5.1007.24282. 0.26931.41.18.1.22.22.0.288.3935.2-15.15.0….0…1c.1.64.psy-ab..3.38.4071…0i131k1.0.oUTQK1gvAKY
3 http://www.zklawassociates.com/wp-content/uploads/2012/03/Classifications-of-White.pdf
4 405. Criminal breach of trust
Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust”.
Illustrations
- A, being executor to the will of a deceased person, dishonestly disobeys the law which directs him to divide the effects according to the will, and appropriates them to his own use. A has committed criminal breach of trust.
- A is a warehouse-keeper. Z, going on a journey, entrusts his furniture to A, under a contract that it shall be returned on payment of a stipulated sum for warehouse-room. A dishonestly sells the goods. A has committed criminal breach of trust.
- A, residing in Dhaka, is agent for Z, residing at 140[Chittagong]. There is an express or implied contract between A and Z, that all sums remitted by Z to A shall be invested by A, according to Z’s direction. Z remits a lakh of taka to A, with directions to A to invest the same in Company’s paper. A dishonestly disobeys the directions and employs the money in his own business. A has committed criminal breach of trust.
In every political regime influential people take undue financial benefits. Nationalized Commercial Banks (NCBs) and even private banks are forced or coerced into bending the rules to waive off bad loans, collaterals and securities are over-invoiced and money- laundering is ignored, such “imprudent” banking giving losses to the Bank and the shareholders. Misdemeanours include exaggerated invoices, over-pricing, fraud in pre- procurement, exceeding budgets in new branch openings, awarding contracts through unfair practices, money raffle schemes and fake “reality” shows, bad loaning and imprudent re- scheduling, waiving off interest, padding exorbitant advertisement budgets, kickbacks on organized foreign junkets and air bridges, vastly inflated expenditures under “others”, etc. Normally quite strict, SBP’s Inspection can be waylaid by falsifying financial results in connivance with unscrupulous external auditors providing window- dressing audit. Consider the fraud in the Multi-National Corporations (MNCs) of billions of rupees over several years, not possible without senior management and audit firms being fully involved.
NABO’s various sections include wilful default cases where 30 days’ notice to defaulters by banks is followed by State Bank of Pakistan (SBP) giving seven days’ notice. No response requires reference to NAB. With SBP objecting that NAB’s intervention was hurting economic activity by discouraging entrepreneurs, the cases referred by banks fell drastically after 2002 in contrast to NAB’s first four years. NABO’s Other sections pertain to misuse of authority by bankers to gain undue benefit for themselves. On its own accord or on a complaint by a shareholder, or even private citizens, NAB can start an inquiry without reference to SBP. The problem is that bankers on deputation with NAB’s “Financial Crime Investigation Wing” (FCIW) dare not annoy their bosses, can they blow the whistle on their corrupt bosses with their careers at stake?
NAB’s extraordinary powers of accountability of the private sector include (1) obtaining list of bad loans and scrutiny thereof (2) ensuring SBP’s audit process reports criminal activity
(3) loans being re-scheduled and (4) losses through malafide intentions. SBP’s cautious approach on “bank fraud” inadvertently permits organized white collar criminal activity by bankers in collusion with their clients, some of it by incurring vastly inflated expenditures. Good corporate governance requiring Board Members “not to interfere with management”, Members are duped by the management by “creative” accounting.
Endemic in the 80s and 90s, financial scams came to almost a dead stop between 1999 and 2002, but started again in 2003, gaining momentum after 2008. NAB submitted 150 mega scams (being challenged as incomplete and evasive) dating back to 1985, mostly concerning our democratic rulers of today, to the Supreme Court (SC) on the SC’s instructions. Meant for his own survival, Musharraf’s black National Reconciliation Order (NRO) was subsequently declared illegal. Arousing the hopes and aspirations of the masses about the
- But if A, in the last illustration, not dishonestly but in good faith, believing that it will be more for Z’s advantage to hold shares in the Bank of Bengal, disobeys Z’s directions, and buys shares in the Bank of Bengal, for Z, instead of buying Company’s paper, here, though Z should suffer loss, and should be entitled to bring a civil action against A, on account of that loss, yet A, not having acted dishonestly, has not committed criminal breach of trust.
- A, a revenue-officer, is entrusted with public money and is either directed by law, or bound by a contract, express or implied, with the Government, to pay into a certain treasury all the public money which he holds. A dishonestly appropriates the money. A has committed criminal breach of trust.
- A, a carrier, is entrusted by Z with property to be carried by land or by water. A dishonestly misappropriates the property. A has committed criminal breach of trust.
crooked being held accountable, former Chief Justice (CJ) Iftikhar Chaudhry conducted legal filibuster delaying the implementation of his own ruling overturning the NRO, conveniently allowing its beneficiaries to increase their powers by purchasing influence and continue looting the nation. Sanctimoniously insisting our Armed Forces strictly adhere to the Constitution, our politicians themselves blatantly violate its tenets at will.
Out of Rs 265 billion recovered in 16 years, Rs 181 billion were recovered from loan defaulters (fully 93%) in the four years beginning 1999, many defaulters preferring “Plea bargain”, to return some of the money rather than go to jail. With SBP restraining NAB post- 2002, the statistics are quite damning. In the 12 years since, NAB has recovered only Rs 84 billion. After 2008, those accused by NAB circa 1999-2007 came to power, did anyone expect them to blow a police whistle on themselves? Many NAB officials, including a couple of former Chairmen NAB, became filthy rich blackmailing bank defaulters (and others accused), allowing them “Plea Bargain” to line their own pockets. Has NAB done anything to persecute these rascals for “living well beyond their means of known income”? The political ambitions of NRO’s architect Pervez Musharraf allowed machinations by some of his corrupt colleagues shamelessly staining their uniform by became willing part of the system they had ostensibly come to correct. A crook is a crook, his previous rank and status notwithstanding. What about the concerned bankers who facilitated such scams? The “Plea Bargain” concept is a stain on NAB’s credibility.
White collar-criminals are few but a disgrace to our excellent banking profession. Comparing two banks, a 20-30% variation in overheads like administration, advertising, travelling, audit fees, “others” (whatever that is), etc should not arouse concern but substantially more in expenditures (50-100% or even more) is a sure sign of malfeasance, e.g. repair and maintenance, entertainment, rent and allied charges, legal charges, communications, etc. Why should “auditor’s remuneration” be more than 50% of a bank far larger? SBP and NAB must also conduct accountability why the concerned audit firm camouflaged this white collar crime? Discovered covering up of ENRON’s “creative accounting” resulted in international audit giant ARTHUR ANDERSEN ceasing to exist today.5
Salutary examples must be made by the SBP, and if not SBP then NAB, to protect the public interest from white collar criminals in the financial services sector. Notwithstanding their influence and connections in society and government, the black sheep among the bankers and their associates-in-crime should be sent to jail.
Digital Forensics Research and Service Center was established on June 01, 2016 at the Garrison University. It was the first center of its kind in Pakistan. It objectives included to create awareness, prepare qualified workforce and assist in combating all sort of white collar crimes. In last two years of its operations it has trained around 500 non-technical professionals and have conducted various awareness building seminars.
It has following four teams:
- Digital Forensics: Responsible for creating awareness about cybercrimes, digital forensics related services and trainings and certifications.
- Cyber Security: Responsible for increasing end user awareness, expert trainings in penetration testing and vulnerability analysis and developing offensive security tools, offering various services to the customers and creation of Computer Emergency Response Team CERT.
5 http://www.nab.gov.pk/Reference/CourtCasesData.pdf
- White Collar Crime Investigations: Responsible for creating awareness about combating white collar crimes, designing hands on trainings on white collar crime investigations.
- Academics: Responsible for developing and upgrading
- BS Digital Forensics and Cyber Security
- MS Cyber Security (4 specializations)
- MBA in Economic Crime and Fraud Management
- CSI: Developing skill in graphology, Tire marks analysis and Shoe print analysis. Planning to add finger print analysis capabilities and blood splatter analysis.
- Journal: Responsible for publishing of International Journal for Electronic Crime Investigation. This journal is listed on national citation index and has its own ISSN and ESSN numbers.
Workshop on White Collar Crime Investigation:
The purpose of the workshop being held on the 2nd of June,2018 is to bring top judiciary members on place and create awareness about the recent developments in white collar crimes and how digital evidence is now required to solve these increasingly complexed crimes.
International Institute of White Collar Crimes Investigation:
This institute has been created to offer Certified White Collar Crime Investigator certification, regional and ultimately internationally. We have tested our course material by providing training to 35 investigators from NAB which came from all over the country. Other activities of institute are diversified ranging from publishing research papers to providing opinion on laws pertaining to white collar and cybercrimes and from conducting trainings to conducting and assisting corporate customers in fraud investigations and developing proactive anti-fraud systems.
While rates of violent crime continue to fall across the globe, the white collar crime – complex criminal schemes involving fraud and theft – is on the rise. Sophisticated criminals risk slipping through the prosecutorial net unless they are matched with specialized and talented investigators and prosecutors. Our White Collar Crime Program, through professional training and technical assistance, aims to equip law enforcement and prosecutors with the knowledge and tools necessary to successfully prosecute white collar crime and emerging criminal schemes.
It is designed to orient new organizations as to what must be done to successfully set up and operate an organization which investigates white-collar crime and to provide an inventory of strategies, tactics and techniques which will help both new and already established organizations to improve and enhance the comprehensiveness of their operations. the organization of this manual goes from the general to the specific. First it deals with the basic issue of what white-collar crime is, why it is a proper area for law enforcement efforts, and what its impact is on individuals, business, and the general community. As part of this program, white-collar crime elements, characteristics, offender motivations, relationships to other crime areas, and remedies are discussed at some length-for the light they shed on both the justifications for and proper methods of responding to these crimes and the abuses related to them. From there the program goes on to discuss the kinds of organizations and organizational activities which have been found to be required to effectively deal with white- collar crime, and factors such as the form of organizational units, interfaces of unit activity within agencies and externally, personnel selection, and the role of intelligence in a white-
collar crime enforcement effort. Having thus set the stage for action, the elements of white- collar crime are then analyzed for the purpose of showing how the investigator can identify and target the kinds of information and evidence he will need in order to construct his case. Othis is done it becomes relevant to go into detail as to how the investigator should proceed to obtain this information and evidence, for example by searches for documentation, finding and interviewing victims and witnesses, and interrogation of suspects. Also included in this program is a training and use of computers, both as a tool used by the white-collar criminal in committing his crimes and as an investigative resource for use by the investigator to unravel and prove a case.
The main part of the program concludes with a discussion of evaluation of white-collar crime efforts, not merely as a basis for judging success or failure but, more importantly, as an aid to setting goals and priorities, as a source of information for guiding and steering agency or unit operations and as a basis for resource allocation and budget justification. The use of information are provided for the purpose of providing more specific forms of expertise and assistance with respect to such matters as training investigators, readily identifying the sources of information needed in white-collar crime investigations, following financial trails, and directing the reader (by use of a selected glossary of white-collar crimes numerically keyed) to sources of further information on white-collar crime issues, victims, and specific offenses.
Career Options for White-Collar Criminal Investigators
White-collar crimes include fraud, embezzlement and identify theft, and the objective of a white-collar crime is to profit financially. The criminals who commit these crimes do not mug people or rob them at gunpoint, but may use deception or scams. Below are some career options for those interested in investigating or stopping these kinds of crimes.
- Private Detectives and Investigators
- Forensic Science Technicians
- Police, FIA, NAB and Detectives
- Insurance Investigators
- Fraud Examiners, Investigators and Analysts
- Postsecondary Criminal Justice Teachers
- Writers, Researchers and Authors
- Knowledge, Skills and Abilities
It is important to plan and conduct an honest self-assessment of your knowledge, skills and abilities. In particular, employers are looking for:
Knowledge
White-collar crime Organized crime Financial crime Bribery and corruption Money laundering Counterfeiting Fraudulent documents
Abilities
Attention to detail Ability to function in stressful situations
Alert to surroundings Understands associated risks Honesty
Sound judgment Integrity
Credit card fraud
Skills
Writing reports Testifying in court Conduct surveillance Evidence collection Conduct interviews Record examination Computer
Responsibility Fairness Compassion Leadership Accountability Adaptability
You will be introduced to the major current perspectives within the field of financial investigations, and the theoretical principles and applications of financial investigative techniques. These discussions will include information on accounting procedures, methods of tracing funds, banking and financial record–keeping, and interviewing as applied to detecting and resolving financial crime.
Examining those activities that are defined as white–collar crime, meaning that they involve intentional deception and are enabled by the occupational status and power of the offender. This type of criminal activity includes the offences of fraud, theft, money laundering, and they can occur in a variety of occupational settings including large corporations, publicly traded companies, or various levels of government. There are often elaborate attempts to avoid detection. Perpetrators are often investigated and prosecuted using similar white-collar crime investigative procedures and legal measures. In this respect, you will be introduced to the white-collar crime investigative process and to the global dimensions of this type of criminal activity.
Outline
White-Collar Crime and Investigation Program comprises twelve units as follows:
Unit 1: Defining White-Collar Crime Unit 2: Studying White–Collar Crime
Unit 3: The Impact of White–Collar Crime Unit 4: The Law of Fraud
Unit 5: Money Laundering
Unit 6: Policing White–Collar Crime Unit 7: The Fraud Investigation
Unit 8: The Forensic Accountant’s Investigation Unit 9: Contemporary Scams and Frauds
Unit 10: White–Collar Crimes: Case Studies
Unit 11: Forensic Accounting: Methods and Techniques
Unit 12: Challenges, Issues and Opportunities in Responding to White–Collar Crime
Career Information for White-Collar Criminal Investigators
Private Detectives and Investigators
A high school diploma is minimum education required to become a private detective or investigator, though those who focus financial or computer crimes may need to have a bachelor’s degree in accounting, computer science or other related field. Most of the people in this field also have prior experience working in law enforcement or the military. In most places, private detectives and investigators must be licensed; requirements. Private detectives and investigators are hired to investigate a variety of issues, and these may include white- collar financial issues or computer crimes.
Forensic Science Technicians
Forensic science technicians spend their careers investigating crimes. Forensic computer examiners are forensic science technicians who concentrate on investigating computer crimes, such as identity theft. These professionals may be involved in obtaining evidence that can be used to apprehend white-collar criminals. Forensic science technicians prepare for their career by earning a bachelor’s degree in forensic science, or a comparable major, and by completing on-the-job training.
Police, FIA, NAB and Detectives
Police, FIA, NAB and detectives do not necessary need to have a degree, although it may be an asset and is usually required to pursue a career with a federal law enforcement agency, such as the Federal Investigation Agency; local or state police departments may hire applicants who complete police academy training programs. Police and detectives help ensure laws are followed and that lawbreakers are identified and arrested. Some police, detectives and federal agents investigate specific types of white-collar crime exclusively, or they may investigate white-collar crimes such as fraud as part of their regular duties.
Insurance Investigators
Insurance investigators typically investigate suspicious claims for insurance companies or the government. They help identify insurance fraud, which means that they may investigate white-collar crime as part of their regular duties. Their duties can include monitoring claimants and interviewing witnesses. Those interested in this profession may be able to find entry-level work with a high school diploma, but a bachelor’s degree may increase job prospects and opportunities for advancement.
Fraud Examiners, Investigators and Analysts
Fraud examiners, investigators and analysts investigate this specific white-collar crime professionally. Their work involves reviewing financial information to identify evidence of fraud and interviewing those who may have knowledge of a crime or be involved in committing fraud. Most of the people who work in this field have a bachelor’s degree, and on-the-job training is also required. Since they have to review a lot of financial information, it helps if they have good math skills and are familiar with financial laws and regulations.
Postsecondary Criminal Justice Teachers
Postsecondary criminal justice teachers instruct students in topics related to criminal justice. This can include how to investigate crimes, including white-collar crimes. Postsecondary teachers often do research related to the subjects they teach, so those interested in white- collar crime and education can use their investigative skills in their research and write about their findings. Most postsecondary institutions require their teaching staff to have a doctoral degree, although it may be possible to start out in this field with a master’s degree.
Writers, Researchers and Authors
Writers, researchers and authors specialize in communicating through writing. It’s common for these professionals to need a bachelor’s degree, particularly if they want to be employed full time instead of working as a freelance writer or author. Some writers and authors spend their careers focusing on specific topics, and those who are interested in white-collar crime may write about investigations of such crimes. In some cases, they may investigate crimes that haven’t been solved and write about their findings.
Public-Sector Investigator
There are countless agencies employing investigators at the federal, provincial and local levels. Positions range from local police detective to special agent of the Federal Investigation Agency. Investigators at the provincial and local levels investigate criminal cases, and usually specialize in one type of crime, such as white-collar crime or financial crime. Special Agents at the federal level conduct investigations for criminal violations of federal laws and regulations.
Benefits of the Training Credential
The Institute credential provides Public-Sector Investigators with the knowledge required to conduct investigations of civil or criminal fraud, or of white-collar crime. Earning the credential gives you an understanding of why people commit fraud and ways to prevent it, the types of fraudulent financial transactions, and interviewing, records and transactions. Additionally, the credential ensures Public-Sector Investigators are familiar with the many legal ramifications of conducting fraud examinations. This knowledge set will place you as a leading expert in the fraud investigation field.
Public-Sector Investigators fall under many different titles, some of which include:
Investigators
FIA and Police investigator NAB investigator
Police detective
Crime scene investigator District attorney investigator Attorney general
Departments/Organisations
Security and Exchange Commission of Pakistan (SECP) State Bank of Pakistan
Stock Exchanges Home Ministry
Immigration, Customs, Income Tax & Sales Tax Department Department of Justice
Federal Investigation Agency (FIA) Prosecution Departments Intelligence Agencies
Drug Enforcement Agencies
i Zafar Iqbal Kalanauri, Mediator & Advocate Supreme Court of Pakistan, Adjunct Faculty of Law at SAHSOL, Lahore University of Management Sciences (LUMS), President International Institute of White Collar Crime (Garrison University) , SAF Centre, #3 3rd Floor, 8-Fane Road Lahore 54000, Pakistan. Cell: (92) 300- 4511823 & 314-4224411 e-mail: kalanauri@gmail.com