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White-collar crimes generally are of a commercial nature and occur in a business setup. The perpetrators of this crime are primarily motivated by financial gains, which define this form of crime. White-collar crimes are innumerable; however, the common ones include fraud, insider trading, embezzlement, computer crimes, copyright infringement, forgery, bribery, corruption, tax evasion, money laundering, and many other dishonest business schemes. Sutherland (1949) observes that “white-collar crimes are crimes committed by a person of respectability and high social status in the course of his occupation” (p.8). Since the offenders are professionals and people of high standing in society, they are intelligent, confident, affluent, and can conceal their criminal activities for relatively long from the law enforcers.
A Secret Crime
White-collar crimes do not get police attention and are less obvious because the perpetrators occupy executive offices; they, therefore, incorporate legitimate behavior with criminal pursuits. White-collar crimes are very complex because they involve sophisticated players and complex transactions (Shover & Wright, 2000, p.65). Perhaps, this crime finds a shield in the commerce culture of confidentiality. Confidential information is only in the hands of a few persons who may, in turn, use this privacy to fraud. White-collar crimes are distinct from blue-collar street crimes such as arson, burglary, theft assault, vandalism, and rape among others. Somehow, white-collar crimes receive little attention from the law enforcers as opposed to the high alertness for other crimes. The drive to engage in blue-collar crimes is attributed to psychological, associational, and structural factors. On the other hand, white-collar criminals are opportunists who take advantage of their position in society to fraud.
France’s Société Générale Bank scandal
Jerome Kerviel, a 31-year-old low-level securities trader is the mastermind behind the infamous Societe Generale Bank scandal in France. He planned and executed his plans with so much expertise that he managed to rake in billions of dollars in the process without anyone raising alarm over the issues. Jerome engaged in unauthorized security trades worth billions of dollars, which were far more than the bank’s market capitalization. He carried his transactions through his veil fake emails for customers’ missing trades and his colleagues’ accounts whose log-in details he secretly obtained. The scandal surfaced when the company could not trace the customers’ emails purporting missing trades in their archives. The case got management’s attention leading to the prompt closure of his trading account. As a result, there was a three-day beginning January 21, 2008, drop-in equity indices, which left the bank with over $ 7 billion losses.
In the scandal, Kerviel was found guilty of three charges: forgery, trust violation, and computer misuse. The scandal of this scale would have not happened through simple techniques used by Kerviel had the company not taken its eyes off the ball. The weaknesses that existed were pure management, poor risk management, and weak internal accounting controls. In rebuilding its corporate image, the bank invested around €130 million in controls (Clark & Jolly 2008). Following the scandal, Kerviel was banned from trading in securities.
The société générale scandal was a wake-up call to investment banks on the gravity of insider threat. First, it revealed the need to establish controls around individuals for easy monitoring. In Kerviel’s case, he circumvented the bank’s security management system with a skill he had acquired while in the bank. He also made use of accounts whose owners had long ceased being employees of the bank; the so-called orphaned accounts. Further weaknesses stand out conspicuously in the inability of the bank to control access by employees.
As aforementioned, White-collar crimes are numerous and pose complex challenges because they are committed with high skill and legitimacy by the office. White-collar crimes can have far-reaching consequences to the organization and the financial markets at large. Thus, the need to create laws and mechanisms to litigate its effects cannot be over-emphasized.
Clark, N., & Jolly, D. (2008). Fraud Costs Bank $7.1 Billion. The New York Times. Web.
Shover, N., & Wright, J. (2000). Crimes of Privilege: Readings in White-Collar Crime. Oxford: Oxford University Press. Print.
Sutherland, E. (1949). White Collar Crime. New York: Dryden Press. Print.