Why White Collar Crime Is Hard to Prove

In one line

White collar crime is hard to prove because the act itself is usually lawful, so the prosecution has to establish a state of mind out of documents, against a defendant who controls the documents and can afford to contest every one of them.

In the wording a student can write in an exam: the difficulty of proving white collar crime arises from eight sources: the absence of a complainant, the lawful appearance of the act, the mental element, the documentary nature of the evidence, the control of the evidence by the accused, diffusion of responsibility within an organisation, the inequality of resources at trial, and delay.

The eight reasons

One: nobody complains. The victim does not know, and the criminal process begins with a complaint. Detection therefore depends on an audit, an inspection, a regulator or a disclosure, and none of these is designed to find crime.

Two: the act looks lawful. A loan, a purchase order, a certificate, a valuation, a sale at a price, a payment to a consultant: each has an ordinary and lawful form. There is no equivalent of the broken lock.

Three: the mental element is the whole case. Since the act is lawful in appearance, the offence turns entirely on dishonesty or on knowledge, which must be proved beyond reasonable doubt against a defendant who says he made a commercial judgment that turned out badly. Proving that a decision was dishonest rather than merely wrong is the hardest task in Indian criminal law, and it explains most acquittals in this class.

Four: the evidence is documentary and technical. Books of account, board minutes, valuations, invoices, correspondence and electronic records, requiring expert interpretation, which the defence will meet with its own experts.

Five: the accused controls the evidence. The records are his, or his employer's. They can be constructed contemporaneously to support the lawful version, they can be lost, and they can be produced selectively. The offender knows the system he is defrauding better than any investigator does.

Six: responsibility is diffused. In an organisation a decision passes through several hands and no single person did the whole of it. Each says he acted on what he was given, and the structure that makes the offence possible is also what defeats the identification of an offender. Attributing a mental state to a company is a doctrinal problem in itself.

Seven: the resources are unequal. The accused instructs experienced counsel, forensic accountants and technical experts. The prosecution is conducted by a public prosecutor with a large list, on an investigation done by an officer with no specialist training. Every interlocutory point is contested and appealed.

Eight: delay. These cases take many years. Documents deteriorate, witnesses retire or die, memories fail, and officers are transferred. Delay is not neutral between the parties: it favours whichever side does not want a conclusion.