This article was published in the newspapers Ceylon Daily News, and Lakbima News on 20th October 2010 and 3rd December 2011 respectively.

White color crimes are high in value and more detrimental to the society compared to blue collar crimes. But more publicity is given to the blue color crimes due its violent nature and along with the ability to grab the attention from the common masses. On the other-hand white color crimes are committed by very powerful people and they control the media and therefore due publicity is not given. White color crime is a global threat, but the governance systems and regulators are not strong enough to prevent them.     

“Corruption and white-collar crimes are common in any society, but greater coverage is given on corruption in the public sector to gain political mileage, in contrast to white collar crimes which are given low prominence by the media due to its high risk nature and the secrecy maintained by the private sector”

Corruption, White collar crimes and blue collar crimes are popular coverage for the media because people prefer to listen, watch, read the dark side of the society. Corruption accusations are common in developing countries where the public sector plays a prominent role in the economic development process. In contrast white collar crimes are more evident in developed countries such as US and UK where the private sector is dominant. Serious allegations of these crimes were raised during many regimes without any remedial measures. But civil society, media, judiciary and regulators have forgotten the past and instead discussed recent developments which finally ended up as costs to society. Corruption and white collar crimes are a result of weak governance, lethargic administration, ineffective professionalism, public ignorance and a biased media.

‘Nicolaus Copernicus (1529), I have observed that in counties with good money the art and business flourish, and there is wealth everywhere, whilst laziness, idleness and indifference prevail in countries where bad money is circulated’.


Corruption occurs when an official transfers a benefit to an individual who may or may not be entitled to the benefit, in exchange for an illegal payment (the bribe). By taking the bribe, the official breaks a legally binding promise given to his principal to allocate the benefit to those who entitled to it. Corruption is neither a property of a social system or an institution nor a trait of an individual character, but rather an illegal exchange. (

White collar criminals are opportunists, who overtime learn they can take advantage of their circumstances to accumulate financial gain. They are educated, intelligent, affluent, confident individuals, who are qualified enough to get a job which allows them unmonitored access to often large sums of money. Many also use their intelligence to con their victims into believing and trusting their credentials. Many do not start out as criminals, and in many cases never see themselves as such.

Crimes such as stealing, burglary, physical assault, are identified as blue collar crimes and they tend to be more obvious and thus attract more active police attraction. In contrast white collar crime identification of a victim is less obvious and the issue of reporting is complicated by a culture of commercial confidentiality to protect shareholder value. It is estimated that a great deal of white collar crime is undetected or, if detected, it is not reported. (\White- collar crime-Wikipedia)

The damage from white collar crime is much greater to society compared to blue collar crimes. Frauds have cost the Australian economy at least $3 billion per year and a significant proportion of cases of fraud detected were not reported to the police for investigation (Source: AS 8001-2008).

Can a single person be responsible?

At least two parties are needed to execute a corruption/malpractice activity; i.e. a receiver and giver. As an example, one person should offer a bribe and another party has to accept it. Without a giver, receiver will not survive. It is apparent that in bribery the private sector is the giver and the public sector is the receiver. Empirical studies found a positive relationship between the extent of bribery and the level of ‘red tape’ tiers of government; of time spent by managers with public officials, the cost of capital and investment and the degree of regularity discretion on the part of officials (

Will the transaction process allow corruption and crimes?

Any transaction must accomplish the following steps, i.e.; authorization, execution and recording. These steps have to be performed by different officers and the support of the entire group is required to prevent the corruption. These officers should possess the required experience and competencies to perform their duties and they must have the capability of understanding the irregularities in unusual transactions. However, some public sector employees overemphasize on procedures and hinder customer service to gain secret profits out of it. They insist on too many approvals and unwanted documentary evidence and sometimes a customer may have to visit several times to get the required service or job done. But the same employee with a bribe could be motivated to be a very flexible and customer friendly person.

Thus an honest competent officer in this transaction loop should be able to understand and resist malpractices. The question is; is it happening? Most of us behave as silent observers’ ad allow others in pursuing corrupt activities, and when things go wrong point a finger at the government a stole sole party responsible for the corruption.

Examples on corruption

John Perkins described himself as an economic hit man, a highly paid professional who cheated countries around the globe to the tune of trillions of dollars (Confessions of an Economic Hit Man 2005). The confessions of John Perkins reveal that he was able to grant enormous sums of unproductive financing to developing countries via bribing rulers and bureaucrats. The question to be raised is; who is guilty; John Perkins, US financial institutions or politicians? If the bureaucracy was honest, energetic and assertive this would not have happened.

Example son white collar crimes

A smart fraudster can commit a fraud individually without the knowledge of others. But for others assistance or ignorance is required to complete approval, execution and recording processes. In 1995, Britain’s oldest merchant bank, Barings PLC, collapsed with an estimated loss of US$1.4 billion, due to loss making deals (futures contracts) of one employee, Nick Leeson (CPA 107, Cooperate Governance and Accountability 2004). From futures contracts Nick Leeson made enormous profits to the company and Baring’s bonus payment dominated culture made him a very powerful person. He was able to deviate from control such as; segregation of duties, getting exempted from audit verifications. Further, the inexperienced staff did not understand the intricacies of future contracts and some had helped him camouflage losses. Similar facts were exposed locally in the Ceylon Petroleum Cooperation hedging deal.

In 2001, Enron Corporation, the world’s largest energy trading and Distribution Company announced an US$1 billion loss. Substantial components of the company’s last four years’ profits had been overstated and insiders used this information and sold stocks. Privileged insiders walked away with US$ millions worth of stock related profits whilst ordinary employees lost their life savings. Arthur Anderson Co a member of ‘Big-Five‘  audited Enron had given a clean report on their creative accounts (CPA 107, Corporate Governance and Accountability 2004). Enron was the most profitable client of Arthur Anderson and knowingly gave a clean audit opinion to be retained by its client. Auditors were held liable and became bankrupt due to this liability.

2007 Sub-prime mortgage crisis: Financial institutions offer attractive, but unrealistic housing loans and also issued asset-backed securities to the stock market. They made very high profits and rating companies offered high credit rankings. CEOs of these companies were highest paid in US and they enjoyed luxurious lifestyles using the company’s money. The housing bobble burst, housing loans were defaulted and people became homeless. Wall Street institutions couldn’t payoff mortgage backed securities which led to the major financial sector collapse in the US. Corporate greed was identified as a reason for this crisis. Theoretically auditors are appointed by shareholders at Annual General Meeting. But in reality auditor and the audit fee is decided by the corporate management. Such acts were revealed in the workings of organizations during their collapses in 2009 leading to a crisis requiring CBSL intervention in the greater interest.


Corruption and white-collar crimes are common in any society, but greater coverage is given on corruption in the public sector to gain political mileage, in contrast to white collar crimes which are given low prominence by the media due to its high risk nature and the secrecy maintained by the private sector. Lack of good governance, control ownership culture and lethargic approach of technocrats and bureaucrats continued to be the main contributory factors on corruption. The corporate greed, charismatic leadership at lower ranks and file, and lack of control awareness are identified as contributory factors to white-collar crimes. Thus clear demarcations of corporate liability and within such the directors’ liability have become an important and debatable issue.