White collar crime is not victimless

White collar crime can do as much damage to society as violent crime

Commercial crime, also called “white collar crime”, is often called a victimless crime, because it is not perpetrated against an individual. But it is anything but victimless. And with more and more of our lives conducted online, along with the growth in cryptocurrencies, white collar crime is on the increase. In January this year, SARS was investigating nearly 800 cases of fraud, and the National Prosecuting Authority (NPA) had over 400 cases on trial. More broadly, crime statistics released by the South African Police Service (SAPS) in 2019 indicated commercial crime was at is highest level for six years. In rand terms, white collar crime is estimated to cost the South African economy R150 billion a year, according to Steven Powell, director of ENS Forensics. With our economy already in a perilous state, we can ill afford this. We are all victims of white collar crime.

What is white collar crime?

White collar crime encompasses a range of fraudulent activities and typically involves crimes committed through deceit and motivated by a need or desire to obtain or avoid losing money, property or services, or to secure a personal or business advantage. It ranges from basic theft or fraud committed by individuals to large-scale operations conducted by organised criminals and includes embezzlement, insider trading, bribery, money laundering, tax fraud and securities fraud. Perpetrators of these crimes often exploit positions of power, trust and authority to deceive and manipulate others for personal gain. The victims of white collar crime can be employees, shareholders, investors and ordinary citizens whose lives are impacted by the fraudulent actions of people they trust. The term “white collar crime” was first coined by sociologist Edwin Sutherland in 1939. He defined it as “crime committed by a person of respectability and high social status in the course of their occupation” and it is still associated with the educated and affluent. “White collar” refers to the attire worn by businessmen (and they were mostly men in 1939), whose professional “uniform” was a suit and tie and white shirt. (Manual labourers were likely to wear blue shirts, hence the corresponding term “blue collar worker”.) 

The scope of white collar crime has evolved since the term was coined and now includes crimes that did not form part of the original concept; indeed it describes crimes that did not exist back then. New technology and modern financial products, such as cryptocurrency, have inspired criminals to find new ways to commit fraud and deception. Although “white collar crime” is a commonly expression, SAPS prefers to call it “commercial crime”, and it includes cybercrime and other computer-related offences, as well as offences pertaining to corporate governance and corruption. 

With the growth of cybercrime, no one is safe, including organisations trying to improve our society. Social enterprise and campaigning magazine The Big Issue was recently the victim of a hacker scam. Nearly R600,000 was diverted to an unknown bank account instead of reaching the intended supplier. Compared to the million-dollar ransoms demanded in some of the biggest cybercrimes globally and multi-billion rand Ponzi scheme scandals that have taken place in this country, this may seem like a small amount. But to an organisation operating on a shoestring and trying to lift people out of poverty, it was a devastating blow. The perpetrators clearly had no scruples about the harm they would cause.

For The Big Issue, the financial consequences were severe. Corporations and businesses that fall prey to commercial crime can suffer substantial losses, leading to retrenchments, bankruptcies and economic instability. Investors lose money, retirement savings are destroyed and the livelihoods of employees are jeopardised. The erosion of public trust caused by white collar crime stifles economic growth and deters foreign investment.

Legislation governing white collar crime in South Africa

In recent years, various high-profile cases have exposed the extent of corporate wrongdoing and criminality. Specialised units such as the Directorate for Priority Crime Investigation (the “Hawks”) and the NPA have been established to investigate and prosecute commercial crime. Legislation has been implemented that aims to prevent, prosecute and deter white collar crime. The primary legislation is the Prevention and Combating of Corrupt Activities Act  of 2004 (PCCA). The PCCA criminalises various forms of corruption, including bribery, extortion, fraud and money laundering.

Additionally, the Companies Act of 2008 demands strict corporate governance, financial reporting and accountability to prevent fraudulent activities within companies. Regulatory bodies such as the Financial Sector Conduct Authority and the South African Reserve Bank also play vital roles in overseeing financial institutions and ensuring compliance with regulations.

Crime and punishment

Various punitive measures are used in the prosecution of commercial crime. The severity of the punishment depends on the nature and scale of the offence. Convictions can result in hefty fines, imprisonment, or both. Apart from legal consequences, individuals found guilty of offences may face civil lawsuits, loss of professional licences, reputational damage and the forfeiture of illicitly gained assets.

Recent high-profile cases have highlighted the need for robust legislation, effective enforcement, and stringent punishment to combat commercial crime. The efforts by government and regulatory bodies to prevent and prosecute offences aim to restore public confidence in the integrity of South Africa’s business and professional sectors. Unfortunately, white collar crime extends beyond the private sector. Back in 2015, corruption in government was perceived as the biggest threat to business and investment, more than unemployment, infrastructure and labour instability, according to the risk report of the Institute of Risk Management of SA. Since then, there has been a change of leadership and a commitment to tackle corruption, but progress has been slow, according to the data cited at the beginning of this article. It is only by strengthening preventive measures and ensuring swift and fair justice that we can work toward a society where white collar crime is detected and convicted, and ultimately deterred, and international confidence in South Africa is restored.

For more information

If you need more information on commercial crime, or if you suspect corruption in your workplace and need advice on how to report it safely, contact attorney Simon Dippenaar on 086 099 5146 or email sdippenaar@sdlaw.co.za.

Further reading:

• Stop corruption – whistleblowing without worry
• Cybercrimes Act 2020
• Cryptocurrency theft
• Cyber extortion

Simon Dippenaar

http://www.sdlaw.co.za

Cape Town attorney Simon Dippenaar has a BBusSc LLB degree and Professional Diploma in Legal Practice from the University of Cape Town, and is an admitted attorney of the High Court of South Africa. He is the founder and director of private legal practice, Simon Dippenaar & Associates, with offices in Cape Town and Gauteng representing South African and international clients.

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