The majority of criminal behaviours are quite universal, but what usually differs, among different jurisdictions, are the punishments and procedures of detection and the processing of the crimes. In that sense, the understanding of white collar crimes (WCC), as a group of specific crimes, is universal.
The main differentiation from other crimes involves the nature of the offender. As the very name says, WCC refers to offenders with a white collar. Therefore, the perpetrators of such crimes are usually business and government professionals. Although commonly characterized as “ones with a white collar,” the types of the crimes they are committing can be very different. Therefore, when speaking about WCC we are usually discussing crimes like money laundering, tax evasion, bank fraud, cyber crime, and embezzlement, but also bribery, forgery, and abuse in respect to public procurement, crimes that are typical for offenders who are government professionals. Another differentiation is that WCC are usually financially motivated and non-violent, i.e., they do not depend on physical force. What makes it very dangerous for each society is that they are not as visible as other crimes (blue collar crimes, for example, which attract a lot of police attention and are very visible). In that respect it is very hard to estimate what the financial impact of WCC is on the economy – i.e., it is difficult to calculate actual damage.
The Serbian Criminal Act classifies a number of criminal acts which can be characterized as typical WCC in one category, called crimes against the economy. This category includes crimes such as tax evasion, money laundering, abuse of monopolistic position, abuse of position by a legally responsible person, abuse in respect to public procurement, and causing bankruptcy.
In Serbia two types of WCC are most common: abuse of position by a legally responsible person and tax evasion.
Abuse of position by a legally responsible person was introduced to the Serbian legal framework in 2012, and represents a shift from the socialist approach regarding these activities. The socialist approach covered – with the same criminal act – criminal activities of public officials and of legally responsible persons from the private sector. The recent changes to the Serbian Criminal Act divided this field into two criminal acts, one involving public officials and the other involving legally responsible persons from the private sector. In general, the manner of abuse can vary. Hence, the law prescribes prison terms of three months to three years for legally responsible persons who have abused their position or that position’s authority by exceeding the scope of that authority or by acquiring for himself or herself or for some other natural or legal entity unlawful material benefit by non-performance of those duties, or so causing someone material damage. The above-mentioned punishment refers to the basic form of this crime. The punishment can increase to ten years in prison in cases when this material benefit or damage is approximately EUR 14,000 or more. In most cases the injured parties in these crimes are the companies whose directors are acquiring for themselves or their families unlawful material benefit. Such cases can be very tricky because, at the same time they may wish to fully punish their “criminal minded” directors, companies may be tempted to preserve their reputation by holding back, as such situations can strongly affect business.
Cases of tax evasion have of course always been present, but recently the number of such crimes has greatly increased. In March the Serbian tax police announced that in fourteen months they have filed 1,500 criminal charges involving approximately EUR 84 million of evaded taxes. Tax evasion schemes usually include phantom companies, forged invoices, and manipulations in bookkeeping. The law prescribes that everyone who acts with the intention to evade payment of taxes and other duties shall be punished with prison from six months to five years, plus an additional pecuniary penalty. Therefore, individuals providing false information on legally acquired incomes or other facts necessary for determination of the tax or who simply do not register legally acquired incomes can be held liable for tax evasion. The punishment can go up to ten years of prison and a pecuniary penalty in cases where the evaded tax is approximately EUR 63,000 or more. The main problem with tax evasion is that sometimes it is very hard to prove an intention to evade taxes.
There is also a notable increase of highly sophisticated WCC cases in Serbia. We had a chance to work, successfully, on several cases of international money laundering and cyber crime which are in their nature very complex and dangerous and involve authorities from different jurisdictions.
At the end of the day, in cases of WCC, a very important element is the state prosecution and its capacity for fighting these particular crimes.
By Milos Mitic, Senior Partner, Andreja Petrovic, Senior Lawyer, JPM Jankovic Popovic Mitic
This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.