White-collar crime

MARIA SOOKDEO, ACCA Business Development Manager

Sociologist Edwin Sutherland reportedly coined the phrase "white-collar crime" in 1939 to describe frauds committed by business and government professionals.

These crimes are characterised by deceit, concealment, or violation of trust for financial gain including obtaining or avoiding the loss of money, property, or services or to secure a personal or business advantage. These are not victimless crimes. A single scam can destroy a company, devastate families by wiping out their life savings, or cost investors billions of dollars (or even all three).

Typical white-collar crimes could include fraud, bribery, Ponzi schemes, insider trading, labour racketeering, embezzlement, cybercrime, copyright infringement, money laundering, identity theft and forgery. According to the World Bank, the uneven distribution of the Caribbean’s population among countries considerably complicates crime analysis.

While there are 20 to 30 countries and territories in the Caribbean (depending on how they are counted) some 88 per cent of the population is found in just five countries. Since many islands are actually parts of larger countries (for example, the Netherland Antilles and Aruba are part of the Kingdom of the Netherlands, while Martinique, Guadeloupe, and French Guiana are French départments), they are often excluded from discussions of regional issues like white-collar crime. Bearing in mind these variables, is it accurate to say that the Caribbean has a serious crime problem, and how can one assess the presence of white-collar crime?

In his practicum, White Collar Crime and Everyday Corruption: From the Colonial to the Behavioural, Dr Dylan Kerrigan (University of the West Indies) said, “Conversations about corruption, both as white-collar crime and more mundane forms like using personal networks of influence to make bureaucracy more efficient or access jobs and more, are familiar topics. In Trinidad there are many recent and older examples of massive forms of state corruption that distress the populace. These include in recent times the $1 billion Piarco Airport enquiry in the 90s, the Section 34 fiasco in 2012, the $24 billion treasury scandal and collapse of Colonial Life Insurance Company (CLICO) in 2009, the $34 million contract for no work given out in 2014 by a former sports minister and a former prime minister found guilty of infringing the Integrity of Public Life Act in 2002.”

While many of these issues form regular coffee-table and rum-shop talk across the country, the citizenry is well aware that few of these issues ever reach the stage of criminal prosecution.

Kerrigan also suggests that we might propose a relationship between white-collar crime and everyday bobol (an expression for white-collar crime) in TT. One way is the implication that white-collar crime in the past, and continuing today, prepares a fertile ground for corruption in the everyday.

While lawyers can find themselves in a tough spot when it comes to white-collar crimes because they are not allowed to misrepresent facts or purposefully give false information, for finance professionals that may not necessarily be the case. Accountants have an equally difficult role in policing white-collar crimes because accountants are involved in audits and other verification of past financial data. Additionally, like lawyers, accountants have both a responsibility to report irregularities as well as an obligation to their client. This puts accountants in an awkward position, and again, there is conflict between the responsibilities they have on both sides.

In its 2016 research paper on effective speak-up arrangements for whistle-blowers, ACCA examined the challenges, opportunities and best practices associated with various types of speak-up arrangements. Whistle-blowing forms a key means of addressing dangerous wrongdoing and dysfunctional behaviour in today’s society and organisations. The absence of effective speak-up arrangements prevents organisations and societies from avoiding major disasters (Devine and Maassarani. 2011). For this reason, whistle-blowing has become an important issue, both for societies and for organisations, and attempts to alert the authorities to wrongdoing by internal personnel have been increasing.

In many cases, suffering and retaliation experienced by whistle-blowers are exacerbated because few, if any, procedures are in place to receive and follow-up concerns raised by employees. Speak-up arrangements can have economic benefits for organisations and society. Whistle-blowing is important from a societal and an ethical perspective, but it also saves money both for private and public sector organisations.

The question of how to develop effective speak-up arrangements has become urgent. Media attention on whistle-blowing cases has increased, and policymakers across the world are being pressured to pass legislation protecting whistle-blowers. Implementing effective speak-up arrangements is now part of reforming corporate governance, public sector accountability and professional responsibility.

ACCA’s study further indicates that to be effective, speak-up arrangements need to take into account the interactions between cultures and specific speak-up systems. There is no agreement in the research literature about the extent to which whistle-blowing practice is determined by national cultures. In countries where corruption and bribery are said to be more widespread, or sometimes even assumed to be "part of the culture," people have nonetheless spoken up and stood up to corruption by means of hunger strikes and mass street protest (Financial Transparency Coalition 2011).

In the Caribbean, this kind of response is hardly ever the case. The interview data from the research, collated from interviewees on five continents, suggests that having concerns about possible wrongdoing and attempting to voice these concerns is universal. Nevertheless, depending on the geographical location, it emerged that employees may prefer different channels for voicing their concerns.

Countries in the Caribbean do not generally have legislative provision for whistle-blowers’ protection. There are two key obstacles to the successful prosecution in the Caribbean of white-collar crime:

1. finding a jury to handle complicated financial crime cases; and

2. the absence of whistle-blowers to offer evidence in court of the alleged crimes.

The promise of further legislation should help to address the latter.

According to the journal of Global Accounting Alliance (GAA), “In addressing the issue of protection for whistle-blowers, some countries can learn from good practices developed elsewhere. The Committee on Standards in Public Life in the UK has highlighted the role that whistle-blowing plays “both as an instrument of good governance and a manifestation of an open culture.” The committee’s recommendations have been adopted by many regulatory bodies.