110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSEGROUP 2ECONOMIC CRIME AGAINST THE PRIVATE SECTOR
Chairperson
Co-Chairperson
Rapporteur
Co-Rapporteur
Members

Advisers

Mr. Asif Nawaz(Pakistan)
Mr. Teruo Taniguchi(Japan)Mr. Patrick Ochieng Obimo(Kenya)Mr. Marino Francisco Sagot(Costa Rica)
Somarribas
Mr. Saadi Lahcene(Algeria)
Mr. Ramon Crespo Carrilho(Brazil)
MachadoMr. Tetsuo Nagakura(Japan)Mr. Tetsuo Ogura(Japan)Mr. Yoshihiro Ono(Japan)Deputy Director Masahiro Tauchi (UNAFEI)
Professor Tomoko Akane(UNAFEI)
Professor Ryosuke Kurosawa(UNAFEI)

I. INTRODUCTION
At the outset the group would wish toplace on record its gratitude and thanks tothe advisors and visiting experts for theirvaluable advice and guidance in theworkshop sessions. This group workshop
was assigned to deliberate on the issue of
economic crime against private enterprise.
It was agreed that we will consider crimes
where private enterprise is the victim.
However, it was felt that many a times,
crime against private enterprise will haveits effects on investors.
It was observed that economic crime isrampant in both developing and developed
countries, and is eating at the very roots ofsociety. It is vitiating the business
atmosphere and the public in general isloosing faith in the regulatory apparatusof the State/criminal justice system. The
gravity of the problem is highlighted by thefinding of an international survey
conducted by Earnest & Young regarding
the effect of fraud on business (May 1998).
As per its findings, more than half the
respondents (those enterprises who

responded to the questionnaire) had been
defrauded in the last 12 months; 30% had
suffered fraud more than five times in thelast five years; 84% of the worst frauds
were committed by employees (nearly halfof whom had been with the organizationfor over 5 years) and most of the worst
frauds were committed by management.
The group decided to tackle the subject
by discussing the actual situation of
economic crime in various countries. Factsand figures were gathered to appreciate thepreponderance of crime in these countries.
Case studies were undertaken to identify
problems/difficulties faced by criminal
justice officers at various stages ofinvestigation, prosecution, and trial ofoffenders. Solutions were explored andrecommendations formulated.
II. ACTUAL SITUATION OF
ECONOMIC CRIME AGAINST THE
PRIVATE SECTOR
Most of the countries represented in thecourse do not have any definition of
economic crime in their penal codes.

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RESOURCE MATERIAL SERIES No. 55
Offenders are punished under various laws
pertaining to fraud, cheating, breach oftrust, misappropriation andembezzlement, etc. It was agreed thatcrime is a complex phenomenon and offers
no easy solutions. There are multiple socioeconomic factors affecting the state of crimein a particular society. It has to beunderstood in relation to a particular timeand social milieu. However, effort wasmade to explore commonalties and findways to manage criminality.
It was noticed that crime in general, andspecifically economic crime is beingcommitted on a larger scale and becoming
more sophisticated in member countries.
The group will discuss crime against
private enterprise under the categories
listed below:a) (i) Breach of trust by executives/staffof the enterprise(ii) Embezzlement by executives/staffof the enterprise/others(iii)Fraud/fraudulent management byexecutives/staff of the enterprise/othersb) Infringement of intellectual property
rightsc) Counterfeit credit cards/prepaid cardsd) Computer-related crime
The above categorization is not mutually
exclusive. However, ingredients of all thesecriminal acts/behavior may be present in
a particular crime. Since breach of trust,embezzlement, and fraud/fraudulent
management by executives/staff of theenterprise may include similar kinds ofelements constituting the respective
crimes, the group decided to categorize
them for the sake of convenience indiscussion.

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III. BREACH OF TRUST,EMBEZZLEMENT, AND FRAUD/FRAUDULENT MANAGEMENT BYEXECUTIVES/STAFF OF THE
ENTERPRISE
Algeria
These crimes are dealt with under the
Penal Code of Algeria and are on theincrease due to the process of change froma government controlled economy to a freem a r k e t e c o n o m y. T h e r e g u l a t o r yapparatus to deal with such crimes is still
not firmly in place. There is a need todevelop institutions and regulations tohandle this transformation. The total
number of cases convicted during the last
three years are given below.
CRIME (ALGERIA)
Breach of trust
Embezzlement
Fraud
Total

1995 1996 1997
20 122 53
1030
72
42 336 160
72 448 285

Source: Ministry of Justice, Algeria.

The total number of cases prosecuted in1998 from January to July was 1115, muchhigher than previous years. Fraud wascommitted against private enterprise bothby insiders and outsiders.
BrazilBrazil experienced a succession of
bankruptcies since 1970. The Central
Bank decreed intervention in financial
institutions which revealed cases offraudulent management/embezzlement,
and in a few cases, breach of trust
committed by owners/executives of these
institutions. The Government of Brazil
enacted new legislation to ensure stricter
control over and inspection of financial
institutions, which resulted in a decreasein such incidents/cases. Criminal interest
has now shifted to the government sector
and consumers, against whom a significant
number of fraud cases are being

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE

Costa Rica
The Costa Rican Penal Code provides
punishment for economic offences. Fraud
in private enterprise is mostly committed
by insiders. The following chart reflects
the state of this crime in Costa Rica. The
cleared cases are as follows.

Japan
The so-called ‘bubble economy’ swelled
in 1986 to 1990, with a dramatic rise instock and land prices. With the objectiveof countering this phenomena, thegovernment of Japan switched to a belttightening policy. The bubble then burst;
stock and land prices tumbled and around1991 the economy experienced a severe
slump causing bankruptcy in various
enterprises. This contributed to revealing
misconduct done by private companies
during the bubble economy, with aresultant increase in fraud, breach of trustand embezzlement cases by executives offinancial institutions. The table below
illustrates crimes committed by executivesof financial institutions in 1997.

There was a slight increase in clearedcases but the situation in Costa Rica
regarding economic crime in private
enterprise is not very serious. The publicin general is more concerned about
corruption in government departments.

Kenya
Economic crimes against the private
sector are on the increase. Victims do notreport these offences to police for fear ofnegative business repercussions, so
statistics are not reflective of the real

perpetrated, such as off-the-book sales, tax
evasion, misappropriation of public funds,
etc. Law 7492, enacted in 1986, is the main
provision presently used in fraud/embezzlement cases. Although statistics
related to the private sector are notavailable, overall 4304 cases have beenregistered since 1986, and out of them,
1639 have been concluded at investigationlevel.

CRIME (JAPAN)
Fraudulent Management
Embezzlement
Fraud
Bankruptcy
Total

1992
149
121
2063
24
2357

1993
142
89
1878
4
2113

1994
141
122
2097
1
2361

1995
162
160
2397
2
2721

1996
194
169
2481
16
2860

Note: Fraud includes all frauds, not specifically private enterprise (source: Supreme Court of Justice of Japan).

Beach of Trust

Embezzlement

Fraud

Number of cases
Number of persons arrested
Amount of damage
Number of cases
Number of persons arrested
Amount of damage
Number of cases
Number of persons arrested
Amount of damage

6 (-3)
28 (-2)
2.6 billion yen (-78.2 billion yen)
23 (+5)25 (+6)
3.2 billion yen (-0.2 billion yen)
56 (+35)
113 (+83)
5.8 billion yen (-3 billion yen)

Note: Figures in parentheses show the increase or decrease from the previous year
(source: National Police Agency of Japan).

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RESOURCE MATERIAL SERIES No. 55
situation. Global economic turmoil has
affected the Kenyan economy and quite afew companies have gone bankrupt.
Receivers appointed over the companies
have reported many cases of fraud/
fraudulent management. These cases aretried under the Penal Code of Kenya.
Pakistan
The Pakistan Penal Code prescribes
punishment for offences like breach oftrust, cheating, misappropriation etc. The
economic crime which impacted thenational economy, was a co-operative
scandal in which executives of financial
corporations indulged in large scale frauds/
embezzlement, resulting in the bankruptyof these corporations. Banks are also thecommon victims of fraudsters, who obtainloans under various schemes on fakesecurities. The table below indicates cases
regarding economic crime investigated andcleared by the Federal Investigation
Agency. Through statistics of one agency
are not a true reflection of the state of crimein the country, they do indicate a trend
which is on the rise.

the funds of the bank in the securities
market, causing huge losses to the bank.
No significant case of breach of trust/fraud
has been reported in Nepal. Such crimes
however, registered an increase in the
Republic of Korea, with rapid growth of theeconomy (1991-1996). There are numerous
cases in which more than ten million U.S.
dollars were embezzled or swindled by
Korean executives. These executives werelater arrested and indicted by publicprosecutors.
The Economic Crime Investigation
Bureau of the Police Department ofThailand has reported 57, 66, 64, 46, 71
and 92 cases involving financial
institutions and commercial banks in 1992,
1993, 1994, 1995, 1996 and 1997
respectively. In 1997, damage caused bythese offences was more than USD$ 233
million.

Other Countries
Crime data was not available regarding
other developing countries represented in
the course. However many private
enterprise/banks have been defrauded byexecutives/others in India. In the famoussecurities scandal in India (1992),
management of a bank of Karad misused

Case Studies
1. Fraud/Fraudulent Management in
Banco Nacional (BN) of Brasil
Facts
BN ranked 8th among Brazilian banks
and had 13,000 employees and 335
branches throughout the country. In 1986,
the Brazilian economy experienced a rapid
growth, whilst BN provided a great numberof loans to small enterprises. When highinflation struck, hundreds of suchcompanies went out of business, leaving
non-performing loans.

PAKISTANYEARCASESINVESTIGATED
1993
222
1994
224
1995
189
1996
240
1997
303

REFERRED FOR
CLOSED
DEPARTMENTAL ACTION
9
26
6
10
25
8
3
7
4
45

CLEARED
79
69
60
61
146

Note: Figures include economic crime in government organizations as well.

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110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
Executives of the Bank managed to alter
the due dates of these loans in BN’scomputerized accounting system andapplied high interest rates to keep themlooking as good credits. Instead of writing
off bad loans, they were shown as
performing/active loans providing interest
income, generating positive results at theend of the fiscal year. Fictitious income
from interest earnings amounted to nearly
US$ 17 billion from 1988 to 1995. Whenadjusted, fiscal year positive results turned
into a loss of US$ 10 billion. A total of US$
145 million was paid as dividends from1990 to 1995. Undesirable effects weregenerated at same time, such as taxation
on profits and compulsory withdrawals
from the Central Bank.
Independent auditing of balance sheets
and financial demonstrations wereconducted by a private multinational
auditing company during this period. They
granted BN approval based on misleadingassessments from insufficient evidence,
contrary to legislation and accounting
procedure requirements. This crisisbrought problems to stockholders/investors
and to the country’s financial system,
provoking Central Bank intervention in
November 1995. The Brazilian
government created a bail-out program forthe banking system through which BN
demanded US$ 4.98 billion. Investigation
identified inside employees, at the vicepresidency level and executives heading
two other areas, as responsible forconceiving and implementing changes in
the accounting system. They were indicted
for fraudulent management, for providing
false information to the market and for
preparing false balances.
Difficulties/Problems raised by Participant
Stretched over the period 1988 to 1995,
requiring the services of police experts inthe fields of accounting and computer
technology.

Countermeasures/Solutions shown by
Participant
Investigation agencies should be staffedwith skilled investigators and allowed torequest specialist cooperation from otherinstitutions.
Discussion in the GroupThe participant from Pakistan pointed
out that, in his view, this does not qualify
as a case of fraud/fraudulent management
as the investigators have neither indicted
the president of the bank nor proved thebad intention of the executives.
Management of the bank might havemisrepresented the situation to avoid
negative business repercussions. He wasof the view that the banking industry isfacing problems in many countries due toworld-wide recession. In Indonesia,
Thailand, Pakistan and Republic of Korea,
over 30 % of loans granted by banks havegone bad.
The participant from Brazil asserted
that falsification of records amounts to
fraud and Brazilian law provides
punishment for that. The participant from
Kenya opined that management might
have been driven to misrepresent theirfinancial position due to fear of losing theconfidence of the public. Fraud/fraudulent
management involving misappropriation
may well follow in the wake ofmisrepresentation, as inhibitions which
discourage fraud have already been
overcome. In the actual case, had the
management of the bank identified overall
bad loans from good ones at the outset, andshown them in a high risk category, they
could have avoided aggravatingconsequences such as paying taxes,
dividends to share holders and compulsory
withdrawals by the Central Bank.
The participant from Japan introduced
a similar case regarding Yamaichi
Securities Corporation, in which executives

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RESOURCE MATERIAL SERIES No. 55
of Yamaichi concealed debt of 260 billion
yen on the balance sheet in November
1991. Since the investigators required
specific expertise and knowledge tounderstand the transaction of securities
and bonds, the services of inspectors of the
Security and Exchange SurveillanceCommission were co-opted to assist theinvestigators, and the executives of
Yamaichi were indicted in this case.
The participants pointed out theimportance of establishing special
investigation agencies, and close cooperation between criminal justice officers
and executives of the regulatory bodies,such as SESC, which may provide
necessary expertise to investigate suchcases.
2. Breach of Trust in Inditex of Algeria
Facts
A case regarding breach of trust/embezzlement was detected by Algerian
Authorities in 1997, in which a manager
and two executives of the Inditex (a textile
company) manipulated the company’s
funds for their own interests. They enteredinto a partnership contract with a fictitious
off-shore company called Radco (situatedin Spain), purported to be a producer of
raw material which would provide Inditex:(a) Raw material at whole sale price.
(b) Technical know-how.
(c) Sale of goods of Inditex to othercountries.
In return, Inditex would pay 30% of its
annual profit to Radco.
During investigation, it was establishedthat the Spanish company was not the
producer of the raw materials. Inditex waspurchasing raw materials at 5 to 8 % higher
than the market price, and the profit sogained was shared among the group of
perpetrators. Similarly, 30% of the profit
being paid to the Spanish company wastransferred to various banks in

242

Switzerland, France and Algeria through“bank-drafts”. So accessing those accounts
was not possible for investigators.
Difficulties/Problems raised by Participant(a) It was difficult to gather evidence
because the proceeds of the illegal
profits were stashed away in foreignbanks.
(b) Secrecy laws of the banks made it
impossible for investigators to getmaterial evidence of accounts inforeign banks.
(c) I n v e s t i g a t i n g o f f i c e r s l a c k e dknowledge of commercial law
operations.
Countermeasures/Solutions shown by
Participant(a) Regional and international cooperation be strengthened.
(b) The rules regarding bank secrecy bereviewed.
(c) Services of specialized agencies may
be co-opted i.e. audit departments.
Discussions in the GroupThe Algerian participant explained that
it is legal in his country to hold anonymousbank accounts, and the rights of depositors
are protected by law. However this createsproblems for investigators in tracing theflow of a suspect’s transactions in the bank.
In this case, the problem was further
compounded as the profits/money was kept
in foreign banks and the accomplice was aforeign national (Spanish). So gathering
evidence required international cooperation and an extradition treaty with
Spain. He pointed out that the confessionof the accused, recorded by prosecutors,
was the main evidence in this case, and it
would not be possible to convict theoffenders if they convince the court that
confession was recorded under duress.
It was pointed out by a participant that,
ordinarily, it is very difficult and time

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
consuming to get a person extradited or to
get information from foreign banks. He
suggested greater mutual assistance in theinternational field and informal contact
between criminal justice officers of various
countries for resolving this problem. The
Japanese participant told that it is notpossible to hold anonymous accounts inJapan and investigators can thoroughly
examine bank records.
Some of the participants expressed theview that anonymous bank accountsystems and the secrecy laws of banks
should be reviewed/changed. However it
was perceived that Algeria is keeping thissystem to attract deposits/capital so thatthe financial resources of the country will
not be drained by competing European
banks.
The participant from Brazil explainedthat many financial institutions in his
country established off-shore companies in
the Caribbean Islands to indulge in illegal
trade/money laundering. The Central
Bank of Brazil is making efforts to enter
into bilateral agreements with the Central
Bank of Caribbean Islands for allowing
inspectors of the Central Bank to carry out
audits of such affiliated companies.
3. Embezzlement in a Large Financial
Institution of Costa Rica
Facts
From July 1983 to May 1984, in Costa
Rica, four executives of a large financial
institution embezzled money from theinstitution. These executives, who wereauthorized to issue cheques, gave cheques
to fictitious companies, which in turn,through various accomplices, endorsed thecheques many times, and finally depositedthem in the bank accounts of companies
owned by these executives. The total
amount of cheques resulted in damage tothe financial institutions of $1.5 million
dollars.

Difficulties/Problems raised by Participant(a) Judges are overburdened and avoid
taking up cases of a complicatednature. They tend to postpone
hearings in economic crime cases.
(b) A lot of evidence is to be collected.
Investigators require special
knowledge of commercial laws/
operations.
(c) Cheques were endorsed many times,
therefore it was difficult to determine
offenders.
(d) Although the investigators proved
the flow of cheque transactions, illicit
profits could not be recovered.
Countermeasures/Solutions shown by
Participant(a) In Costa Rica, a new law was enacted
to prohibit endorsing cheques morethan once.
(b) Special investigators offices, one in
the judicial police and another inprosecution, have been established.
The offices specialize in economic
crimes.
Discussions in the GroupThe participant from Costa Rica
informed that the law regarding
endorsements of promissory notes/chequeshas been revised in his country, todiscourage malpractice, and now only one
endorsement is allowed.
The participant from Japan was of theview that use of promissory notes provides
ease of transaction in business and is very
common in Japan. Restricting theirendorsement can adversely affect thebusiness atmosphere. Further, the efficacyof restricting endorsements is doubtful aspromissory notes without endorsement(blank) often circulate in the businessworld.

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RESOURCE MATERIAL SERIES No. 55
4. Breach of Trust in a Bank of Pakistan
Facts
Mr. HL, president of a bank in Pakistan,transferred USD$ 5 million to the accountof A.O.Y. via American Express in New
York. The amount was debited to the bankbranch in Karachi. This case wasregistered in 1997 for committing criminal
breach of trust. Both the president of thebank and directors of A.O.Y. were abroad.
The Federal Investigation Agency procured
warrants of arrest from the Special
Banking Court in Karachi and moved
Interpol for their arrest. Mr. H.L. went to
the High Court in Punjab, challenging thejurisdiction of the F.I.A. to investigate thiscase. The Chief Justice of the High Court
directed that the accused shall not be
arrested, pending the writ petition. No
date has been fixed for the regular hearingof the petition.
Difficulties/Problems raised by Participant(a) A f f l u e n t o f f e n d e r s i n v o l v e dinvestigators in legal cases tofrustrate the purpose of criminal
justice.
(b) Defendants, being abroad, were outof reach of the local authorities.
Countermeasures/Solutions shown by
Participant(a) Greater co-operation between variousorgans of the criminal justice system.
(b) International co-operation for
extraditing offenders.
Discussions in the GroupThe participant from Pakistan expressedthe view that economic crime offenders are
generally affluent people. They havemoney to spend on entertaining
bureaucrats and financing campaigns ofpoliticians, who in turn provide necessary
assistance when required. Further theycan engage competent lawyers to create
impediments by raising legal issues in thecourse of investigation, and such delay in

244

investigation buys them time to wriggle outof a situation.
Criminal justice officers enjoy high social
status in developing countries and wield
considerable discretion/influence, but theirsalary structure is not commensurate withthat status, making them prone tocorruption. Political systems in most ofthese countries are still struggling to sheda colonial past. Political executives try to
use the criminal justice system toperpetuate its rule, so it is necessary toprovide a better salary structure forcriminal justice officers and operational
autonomy to insulate them from politicalinfluence.
General Discussion of the GroupA participant raised the issue of theexpertise required of investigators indealing with complicated business
transactions and the plethora ofcommercial laws. Participants from Brazil
and Japan pointed out that they have asystem of auditing private enterprise by
external auditors and various regulatory
bodies, i.e. Security & Exchange
Surveillance Commission, Tax Agency,
Ministry of Finance and Central Bank etc,
all have authority to inspect banks/
companies. Such inspections sometimes
provide the beginning of a case. Better coordination between regulatory bodies andcriminal justice officers can ensure cooperation, and the experts of these bodies
can provide necessary assistance in theinvestigation.
Some participants expressed the viewthat better training of officers ininvestigation techniques will improve theirskills and arranging common training
programs will foster goodwill amongst
officers of various countries and result inbetter informal international co-operation.
The group deliberated to find effective
measures to deal with crime. It was agreed

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
that the nature of private business is sucht h a t o v e r- r e g u l a t i o n m a y k i l l t h e
atmosphere of free enterprise and pose
problems to genuine entrepreneurs in
effectively exploiting business
opportunities.
The following
countermeasures were proposed by someof the participants:(a) Organizations should develop andrefine their fraud control systems,
and encourage a culture of integrity.
(b) Raising the awareness of the publicregarding pitfalls of the market
culture.
(c) Procedures for public disclosure of theb a s i c a s p e c t s o f a c o m p a n y ’s
operations can help safeguard
against such crime.
(d) Criminal justice officers be madeconversant with commercial laws/
operations.
(e) The agencies dealing with economic
crime may be provided with theservices of experts in the field of
accounting.
(f) Regional and international mutual
assistance in the field of criminal
justice matters.
(g) Role of regulatory bodies may bestrengthened.
(h) To prevent the emergence of shellcompanies, rules may be framed torequire them to be registered with the
Chamber of Commerce and Trade of
the host country.
(i) Operational autonomy to various
enforcement bodies to insulate themfrom political pressure/external
influence.
(j) Better service conditions for criminal
justice officers.

IV. INFRINGEMENT OFINTELLECTUAL PROPERTY
Algeria
The old Penal Code prescribed very
lenient punishment for infringement ofthese rights, which is being reviewed toenhance punishment of imprisonment from
2 months to 1 year, and fine from 5000 to
20,000 DA. Special provisions dealing withinfringements of trademark and copyright
law are included in the Competition Law.
The figures regarding these crimes were
not available, however violations of theselaws are common. Both the public and law
enforcement does not attach much
importance to these violations. Further,
the victims are reluctant to lodge
complaints due to the apathy of theregulatory bodies.
BrazilThe usual practice in the past was
related to software copying and official
support for the production of patented
computer technology and pharmaceuticalproducts. With the recent enactment ofspecific laws protecting intellectual
property rights, the previous freedom tocopy any foreign patented item ended, andenforcement was put in place, thus
significantly reducing its occurrence.
Presently, the most common infringement
relates to counterfeiting brand nameconsumer products.
Costa Rica
The Penal Code of Costa Rica provides
for punishment of offences regarding
infringements of intellectual property
rights. Special legislation provides for thesetting up of regulatory bodies to deal withissues regarding the Trademark Law,
Illegal Competition Prevention Law,
Copyright Law, Utility Model Law andPatent and Design Law. However
infringement of these rights are common,as the criminal justice system attaches low

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RESOURCE MATERIAL SERIES No. 55
priority to these violations, and the victims
normally don’t come forward to lodge
complaints.
Japan
The products inscribed with fake brandnames are banned, but can still find theirway into the market. However a few cases
have been registered and successfullyprosecuted in the criminal courts. As mostof the cases are handled by the civil courts,
violations of intellectual property rights are
not frequently reported to the police. The
available statistics from Japan indicatethat violations of trademarks and copyrightare more common than other laws
concerning infringement of intellectual
property rights. The table below shows thecleared cases in Japan during the last five
years.
Kenya
Copyright and trademark laws are
violated with impunity, as victims do notreport these offences to law enforcement
agencies. The officers of law enforcement
agencies lack special knowledge of the laws
and expertise to deal with such violations.
Video and music cassettes are the mostaffected items, and markets abound withgarments, shoes, bags, and medicines using
fake brand names. Few reports received
originate from our local artists. These
cases are considered to be petty and arenever submitted to the statistical bureau
for record.

JAPAN
Trademark Law
Illegal Competition Prevention Law
Copyright Law
Patent Law
Design Law
Utility Model Law
Total(Source: National Police Agency of Japan)

246

1993
465
40
384
1
5
0
895

Pakistan
Pakistan has special legislation
regarding copyright, trademarks, patents
and design. The Penal Code of Pakistan
also prescribes punishments for offences
regarding infringement of intellectual
property rights. However cases regarding
infringement of these rights are rarely
lodged with the police. Society in generaldoes not attach much importance to such
infringements, which take place without
much resistance from either public or law
enforcement bodies. However people dodifferentiate between goods on the basis ofquality, and protection of these rights ismainly determined by market forces or thezeal of the aggrieved party.
Other Countries
The situation in Nepal is almost similar
to Pakistan. In India, the Copyright Act
deals with such crimes. Offences under
this Act are mainly committed in urban
areas. In 1996, the highest incidences ofviolation of this Act were reported from thecity of Bombay (100) and Delhi (55). The
Philippines has, under certain conditions,criminalized the infringement ofintellectual property rights under the newIntellectual Property Code. In Korea, ajoint investigation team was formed in1991 in every District Prosecutor’s Officeto specifically investigate this type of crime.
Figures of indicted cases during the last
three years in Korea are 13683,15166 and13460 respectively.

1994
251
34
138
1
4
0
802

1995
342
43
172
2
2
0
901

1996
517
99
348
0
0
0
964

1997
442
56
433
0
0
0
933

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
Case Study
1. Infringement of Intellectual Property
Case in Japan
Facts
Company A was a legal producer ofvideo-game machine software, bearing the
copyright ‘Arukanoid’. B was a director of
C company, which dealt in the production,
sale or lease of video-game machine
software bearing a different copyright.
During the period between 1986 and 1987,
B was found to have sold 18 pieces ofArukanoid video game machines without
consent or permission from company A.
Company C was found guilty and fined
500,000 yen. B was also found guilty andsentenced to 8 months imprisonment with
2 year’s suspension of execution of thesentence.
Difficulties/Problems raised by Participant(a) It was difficult to gather evidence toprove that B knowingly purchased
the software violating the copyrightof Arukanoid video.
(b) The investigators had difficulty in
distinguishing the software which B
was selling from the genuine
Arukanoid product, due to thesimilarity of appearance.
Countermeasures/Solutions shown by
Participant(a) The analysis of the accounts bookseized from Company C containing
sales records showed variation in
prices between the genuine and thecopied software.
(b) The victim cooperated withinvestigators to recognize thedifference between the genuine andthe copied software.
Discussion in the GroupThe situation in member countries
clearly indicates that low priority is
attached to the infringement of intellectual
property rights by both society and thecriminal justice system. Information
technology has further facilitated thepiracy of software programs through theinternet. This is causing a huge loss to
private enterprise. The Software
Publishers Association has estimated that$ 7.4 billion worth of software was lost to
piracy in 1993, with $2 billion of that being
stolen from the Internet.
Japanese participants pointed out that
products using fake brand names aremostly smuggled into Japan from other
Asian countries. This makes it difficult forinvestigators to collect evidence, i.e
understanding the whole process of theirproduction. So international co-operationis necessary to deal with the situation.
Some of the participants proposed that
there is need to protect the businessinterests of entrepreneurs and suggested
that the regulatory apparatus should playa pro-active role, and punishments
regarding infringement may be enhanced
to deter perspective offenders.
V. COUNTERFEIT CREDIT CARDSAND PREPAID CARDS
Algeria
Credit cards are not commonly used inAlgeria, and there is no special enactment
to deal with fraud relating to credit cards.
Few cases were cleared and prosecuted
under the traditional provisions dealing
with forgery, swindling and counterfeitingof securities.
BrazilSome counterfeit credit card cases havebeen detected and investigated in Brazil,
usually connected to organized crime.
However, the prevalent form of credit card
offence is related to the use of stolen cards
and cards obtained through false
information. Prepaid cards are not yet
widely used.

247

RESOURCE MATERIAL SERIES No. 55
Costa Rica
There are various types of credit cardfraud in Costa Rica. Depending on the typeof the fraud perpetrated, the sufferer of theloss can either be the issuer, card holder,bank or merchant. Counterfeit credit cards
and prepaid card fraud are not known tohave been reported.
Japan
There are few cases of the use ofcounterfeit credit cards. Most crimes
relating to cards are cases in which regularcards issued to authorized holders wereused by unauthorized persons. There aremany cases in which used prepaid cards
are counterfeited (especially telephonecards, cards for pachinko games and so on).
Card crimes are sometimes committed byorganized groups involving foreignorganized crime group members. Statistics
of cases relating to various card frauds aretabled below.
Kenya
The use of plastic money or cards inconsumer spending has exerted
considerable influence in the growth offinancial transactions in Kenya. The major
frauds so far experienced relating to credit
cards are as follows:(i) Use of stolen and lost cards.
(ii) Use of fraudulently acquired or
issued cards.
(iii) Running of extra vouchers (i.e.

JAPAN
Number of
Cases
Detected
Number of
Cases
Cleared

1991
Total
7,740
Credit 6,195
Cash
1,452
Others
93
Total
7,544
Credit 6,270
Cash
1,178
Others96

1992
11,045
9,596
1,303
146
11,53910,205
1,177
157

merchants can bill the card company
by fraudulently preparing extra
vouchers of cards presented to them).
No case involving the use of counterfeit
credit cards or prepaid cards has beenreported.
Pakistan
Pakistan is still a cash economy and useof plastic money is still very limited. A few
large stores and hotels located in big cities
entertain credit cards. People belonging
to affluent classes normally keep credit
cards for use abroad. Prepaid cards ofsmall denominations are used at telephonebooths. There is hardly any cases reported
to police regarding counterfeit cards.
Other Countries
Credit cards are widely used as a modeof payment in Korea. In most of thecriminal cases related to credit cards,
authorized card holders made excessive useof the card with the intention to evade
payment, constituting a fraud under the
Penal Code of Korea. However sometimes
stolen or lost cards, and in a number ofcases, counterfeit cards are used.
Provisions of the Credit Card Act are
invoked to punish offenders along with thePenal Code. A number of suspects arearrested and indicted every year. In thePhilippines, credit card fraud has almost
disappeared due to the adoption of newprocedures by business establishments, i.e.

1993
8,585
7,056
1,314
215
8,268
7,216
923
129

1994
8,740
7,173
1,291
276
8,122
6,998
877
247

1995
6,671
4,951
1,514
206
6,204
5,061
948
195

1996
6,396
4,282
1,408
706
5,586
4,070
845
671

1997
11,714
8,594
1,926
1,194
11,368(31)8,860(26)1,240( 1)1,268( 4)The numbers in parenthesis indicate cases using counterfeit cards (source National Police Agency of Japan).

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110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
verification of credit cards passed onto
them through an Omron Card Authorities
Terminal (OCAT). Credit card companies
have also introduced the system ofrequiring photographs of holder on the card
itself for easy identification.
The problem of stolen and counterfeited
cards is becoming serious in Thailand. As
per the statistics from the Economic Crime
Investigation Bureau of the Police, there
were 58, 54, 57, 71, 79, and 87 cases
regarding counterfeited credit cards in theyears 1992, 1993, 1994, 1995, 1996, and1997 respectively. In 1997 damage causedby these crimes exceeded USD$ 561,000.
Case Study
1. Counterfeit Prepaid Card Case of
Japan
Facts
In June 1995, the suspects ran acounterfeiting machine in an apartment
within Itabashi Ward in Tokyo. The
suspects used the machine to counterfeit
prepaid cards for accessing Pachinko
machines. They collected used prepaid
cards from various sources and copied themagnetic data of genuine cards, using theused prepaid cards, and the counterfeitingmachine. Within two months they had
succeeded in producing approximately
three hundred thousand counterfeit
prepaid cards, out of them one hundred
thousand cards were used by the suspects
and their agents, thereby causing the cardcompany a loss of about 500 million yen.
The suspects were indicted on allegationsof forgery of securities.
Difficulties/Problems raised by Participant
The crime was committed by anorganized gang involving a lot of suspects.
They changed their place of residence
frequently to perpetrate this crime.

Countermeasures/Solutions shown by

Participant
Co-operation of police from various
jurisdictions was solicited to arrest
members of the gang.
Discussion in the Group
Participants noted with concern that
where credit cards have provided ease oftransactions, at the same time they provide
immense opportunity for criminals to use
or appropriate cards, or the stored
information in the card. According to one
estimate, losses amounting to USD$1.3
billion were caused to credit cardcompanies in the year 1995.
The participant from Japan pointed outthat counterfeit credit card crimes are dealt
with under the normal provisions of Penal
Code in Japan, such as illegal use or
production of electromagnetic records,
using forged securities and so forth.
However it was pointed out by a participantthat certain countries have amended theirPenal Codes to provide for crimes related
to credit cards. In Canada, section 342 (1)(c) of the Criminal Code provides that it is
an offence to possess, use or traffic in aforged or falsified credit card, knowing that
it was obtained, made or altered by thecommission of an offence either in Canada
or elsewhere. The participant from
Pakistan pointed out that possession ofcounterfeit cards may be criminalized to
discourage the forgery of cards.
Participants from Japan were of the viewthat the public in general is not ready forsuch legislation in Japan.
The participant from Kenya pointed outthat this crime has a transnational natureas the card issuer, card holder, merchantand offender may be in different
jurisdictions. He suggested that laws invarious countries need to be harmonized
to facilitate trials in multiple jurisdictions.
The participant from Brazil opined thatthe best countermeasures have to come249

RESOURCE MATERIAL SERIES No. 55
from the industry itself, by streamlining
procedures regarding issuance and the useof credit cards and in improving thesecurity features of the card. The
participant from Japan stated that credit
card crime is often perpetrated byorganized gangs/ mafia. He suggested thatend users may be provided immunity fromprosecution to rope in the members of theorganized gang.
It was agreed that the challenge can be
met by a coordinated effort by industries
and governments. The credit card industry
should streamline procedures and improvesecurity features, while cardholders andmerchants should act more responsibly inhandling the cards. At the same time,governments should enact necessary laws
to keep pace with new technologicalchallenges and finally, laws may beharmonized in various jurisdictions so thatcriminals may not take advantage of thediscrepancies.
VI. COMPUTER RELATED CRIME
The use of computer technology inbusiness and governmental organizations
has created unprecedented opportunities
for the storage/dissemination of
information in all areas of human activity.
At the same time, it has createdunprecedented opportunities for crime. Itis perceived that the challenge is so greatthat the law enforcement apparatus in
itself will not be sufficient to deal with thesituation. Consequently, new forms ofcontrol and harnessing non-governmentalorganizations will become essential.
Various forms of crime have alreadysurfaced; i.e. theft of telecommunication
services where hackers get unauthorizedaccess to the telephone facilities and makemany millions in telephone calls.
Electronic funds transfer assist inconcealing and removing the proceeds of250

crime. Given the fact that computer crimetranscends national boundaries, effective
countermeasures will also require
enhanced international co-operation. It
was agreed that for the purpose of thispaper, computer crime may be defined as
crime in which computer technology has
been used to perpetrate the crimes.
Algeria
There is no special provisions dealing
with high-tech crime, so the few cases
where the computer was involved wereprosecuted and convicted under theordinary stipulations of the Penal Code.
However the draft of the new amendmentsof the Penal Code and the Code of Criminal
Procedure, submitted to the parliament,prescribe new penalties and regulations
related to computer crime and to data
seizure, and to admissibility before thecourt.
BrazilAlthough legislation still lacks specificcomputer crime law, other legal provisions
are being used to prosecute rampant
computer-related offences. Brazil has
witnessed a rapid expansion of computersconnected to the Internet. Fraudulent
purchases through this system are being
perpetrated against credit card companies
and other supplier of goods. All other formsof Internet-related offences, i.e. childpornography, hacking, etc are also being
registered in increasing numbers.
Costa Rica
Actually Costa Rica doesn’t have a
specific law to apply in respect to thesecases, but at the moment computers andthe Internet are very popular. Proliferationof computers is changing social life andbringing new forms of computer-related
crime. Child pornography and hacking areprevalent. Offences relating to computers
are punished under the Penal Code of
Costa Rica.

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
Japan
In 1987, the Japanese Penal Code wasamended to enable punishment of three
types of computer-related crime. The firstis the illegal production of certain types ofelectromagnetic records. The second is theobstruction of business by destroying
computers/electromagnetic records. The
third is computer fraud, since under theformer Japanese Penal Code, the article ofthe fraud was applicable only to humanbeings. However, unauthorized access toprotected computers is not punishable
under the current Japanese Penal Code.
Computers are now indispensable tools inJapanese daily life. The following datashows the proliferation of information
technology in Japan. The number of hostcomputers connected with the Internet in
Japan was 300,000 for 1995, 700,000 for1996 and 1,150,000 for 1997. Increase inuse of computers has resulted in a
NUMBER OF HIGH-TECH CRIMESIN JAPAN
YEAR REPORTED NUMBER
1995
111
1996
178
1997
263

CLEARED
110
176
262

Note: cleared figures may contain reported cases fromprevious years (source: National Police Agency).

tremendous increase in computer-related
crimes. The following tables shows thistrend.
Kenya
Computer-related crimes are on theincrease. There is no statutory
interpretation of the term ‘computer crime’,and for the purpose of investigations andprosecutions, provisions of the Penal Codeare used to deal with these cases. So far
the most prevalent cases reported are thosethat target the computer data and thosewhich are committed using the computeras the instrument to facilitate thecommission of the crime.
The kenyan legal justice system, which
is based on common law, has difficulties inaddressing cases falling under the firstcategory. In the first category of cases, thedata exists as electric impulses which are
not tangible objects. Common law only
punish acts against property which istangible. Victims are normally advised toseek a civil remedy.
PakistanComputer technology is gaining groundin Pakistan and the use of computers is
becoming more popular. However no newlegislation has been enacted and cases, if

BREAKDOWN OF HIGH-TECH CRIME IN JAPAN 1997
CRIME TYPE
Computer fraud
Illegal production of private electromagnetic record
Illegal production of official electromagnetic record
Obstruction of business by destroying a computer, etc.
Destruction of official electromagnetic record
Destruction of private electromagnetic record
Network using crime
Others
Total

Reported
162
4
8
4
1
0
83
1
263

Cleared
163
5
7
2
1
0
83
1
262

(Source: National Police Agency of Japan)

251

RESOURCE MATERIAL SERIES No. 55
any, are tried under general penal laws. No
serious cases involving computer
technology has been reported so far.
Other Countries
Computer-related crime is increasing in
Korea. The Information Crime
Investigation Center was established in theDistrict Prosecutor’s Office of Seoul in
1995, and the Information Crime
Countermeasures Headquarters wasestablished in the Central Investigation
Office of the Supreme Prosecutor’s Officein 1996. From April 1995 to August 1997,
263 cases were investigated and 75
suspects were arrested, out of them six
suspects were arrested for hacking.
Computer technology is gaining groundin the Philippines but no cases have beenreported so far. In India, 22,000 counterfeit
share certificates of reputed companies
which were allegedly prepared by using
desk top publishing (DTP) systems wereseized. Several cases of software piracy
have been registered by Delhi police on theinitiative of NASSCOM, India. South
Africa has specific provisions in the South
African Police Services Act 1995 which
criminalizes unauthorized access or
modification of computer material
belonging to or under the control of thepolice service. However the practice of
search and seizure is based on common law.
The computer crime investigation unit of
the South African police service deals withcomputer-related crime. There is no
specific legislation regarding computerrelated crime in Thailand and if any, cases
are dealt with under normal penal laws.
Case Study
1. Online Computer Fraud in a Bank,
Nagoya, JapanFacts
A and B defrauded a bank in Nagoya byillegally using the bank’s computer system.
They pressurized C, a clerk of the bank, to252

take secret data of the host computer,including descriptions of the bankcustomers. A and B, being outsiders,
deciphered the data code and obtained
passwords and account numbers of othercompanies. Posing as customers, A and B
used their own computer to access thebank’s computer system from a hotel roomand sent false remittance information.
They acquired illicit profits by producing
false records. About 1.6 billion yen in total
was remitted to accounts, which the otheraccomplice had established in other banks.
The accomplice was able to withdraw about
140 million-yen from one bank.
However, when the other bank inquiredof the bank in Nagoya regarding paymentof the 1.5 billion yen, the fraud came to thenotice of the Nagoya bank, which prevented
payment and prompted reporting to thepolice. During police investigation, it
transpired that C had acquired data fromthe bank in Nagoya. Next, police suspected
A, since he had a close relationship with
C. A often stayed in a hotel, where thetelephone was suspected of being used toaccess the bank in Nagoya. The police
finally acquired the telephone record andfound that A, along with anotheraccomplice B, were involved in this case.
Difficulties/Problems raised byParticipant(a) Intense anonymity of offenders at theinitial stages of investigation.
Telephone records at the hotel had
already been deleted and thetelephone company did not volunteer
information due to secrecy ofcommunication.
(b) Special knowledge of computer
technology was required in gaining
and examining evidence.
Countermeasures/Solutions shown by
Participant(a) Search and seizure warrants for the

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
bank’s telephone records were carriedout so as to identify the person who
accessed the bank in Nagoya. Thisobtained necessary information
which would not have been otherwise
available due to the secrecy ofcommunication.
(b) Investigators to be provided better
training in high technology.
(c) Improve co-ordination/co-operation
between private enterprises and law
enforcement agencies.
2. K Securities Case of Kenya
Facts
A was employed by K Securities Ltd as
a computer operator. He was sharing his
office with other employees. His duties
included entering all data relating to thebuying and selling of shares for the firm’sclients. During the period between 1996
and early 1998, A colluded with B, thefirm’s dealer at the stock exchange, to form
fictitious companies through which they
perpetrated theft of the client’s shares.
Following frequent complaints by theclients, the matter was discovered by C, theexecutive director of K securities Ltd.
However A destroyed all the data in thecomputer by invoking the delete commandon all the contents of the computer ’s
directory.
The latest backup of data was done latein 1997. The companies operations wereparalyzed as the computer system held 85%of the information required to run the day
to day operations. C enlisted the servicesof an expert who managed to recall most of
the data from the computer database.
Subsequent examination of the recalled
data revealed that A and B had defrauded
K Securities of about Ksh.5 million. They
were arrested five months later andcharged with the offence of ‘stealing byservants’.

Difficulties/Problems raised byParticipant(a) It was difficult to recall the deleted
data from the computer hard disk.
(b) B o t h t h e d i r e c t o r a n d t h einvestigators had inadequate
knowledge about the operating
systems of computer.
Countermeasures/Solutions shown by
Participant(a) Regular training of law enforcement
agencies to update their knowledgeof modern technologies.
3. Computer Fraud Targeting KDD of
Japan
Facts
A, with a view to evade telephone fees,developed software which was capable ofobstructing the KDD computer systemfrom recognizing telephone calls andcharging a fee. Later B and C shared insuch software and evaded telephone fees
individually. However KDD had an alarmsystem which was activated when asubscriber continuously engaged its line formore than two hours with more than two
minutes silence during that hour. The
suspect held the line for two hours,
resulting in detection. So by this alarmsystem the case was found out and KDD
reported it to the police in December 1993.
Police found out that A, B and C had in
total incurred a bill of 27 million yen which
was not recorded by KDD, during a periodof one year and seven months. A, B and C
were arrested on allegations of computer
fraud and all were convicted after trial.
Difficulties/Problems raised by Participant(a) Though KDD was the victim, it was
reluctant to volunteer evidence
claiming its right to secrecy ofcommunications.
(b) The exhibits included personal
computer and data which was very
difficult to preserve. The computer

253

RESOURCE MATERIAL SERIES No. 55
was special because one had to entera password before switching it off,
otherwise part of the data would be
erased.
Countermeasures/Solutions shown byparticipant(a) The evidence was secured by searchand seizure after the search warrant
was issued by a judge.
(b) Services of experts were solicited forpreserving the computer data.
Discussion in the GroupIt was generally agreed that crime
involving high technology poses difficulties
for investigators and requires special
expertise and skill to successfully prosecuteoffenders.
The participant from Japan pointed outthat under the usual interpretation of
search and seizure, the target is supposed
to be tangible, while computer data is
intangible. It is also difficult to identify
the exact location of the data in a computers y s t e m . F u r t h e r, c o m p u t e r s a r emultifunctional and hold large amounts ofdata. Seizure of entire mediums/systems
containing evidence could affect theinterest of others or obstruct the businessof the enterprise. Network computers canbe multi-jurisdictional. In most countries,
prior judicial authorization is required tocarry out searches and courts demand
particularity, i.e. the location, theequipment to be searched (hard drive,
diskettes etc ). He suggested that to solve
this problem new legislation may beconsidered making it obligatory upon thecomputer operator to cooperate withinvestigation authorities, and newinternational arrangements (bilateral andmultilateral) may be made to deal withemerging challenges.
Another participant from Japan
reported that in the KDD case, the offender254

destroyed significant evidence by one keytouch during the police search. He
proposed that investigators should beaccompanied by experts in computer
technology during search and seizure
operations, so as to ensure the preservationof data.
The member from Kenya observed thatin common law countries, the best evidence
during criminal proceedings is primaryevidence and in multi-functional
computers, seizure of the original medium
may obstruct the business operations of anenterprise. He proposed that there is needto enact new legislation that would allow
admissibility of computer generated copies
as evidence, in special circumstances.
Members from Pakistan, Kenya andCosta Rica pointed out that computerrelated crimes are dealt with under normal
penal laws in their countries. Most
common law countries prescribe
punishment in relation to mischief toproperty, and as property is defined as
something tangible, it may not be possible
to punish an offender who, by tapping
computer keys, destroys data, because data
exists as electromagnetic impulses which
are not tangible.
The participant from Japan stated thatunauthorized access to the computer is not
an offence in Japan, while some othercountries have prescribed punishment forthis offence. He opined that due to the dual
criminality principle in international law,
it may not be possible to extradite such an
offender. He proposed the harmonizing oflaw by enacting new legislation.
The participant from Brazil expressedthe view that in order to prevent computerrelated crime, it is necessary to co-operatewith industry to establish security systems,saving log data systems, and improvementof encryption. A participant pointed out

110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
the need to have informal contact between
law-enforcement agencies of various
countries to ensure better co-operation at
the international level, especially in hightech crime, as data can be destroyed very
quickly.
It was observed that it is necessary to
impart training to investigators incomputer technology and co-opt theservices of experts in these fields.
Establishing special investigation
departments for computer crime(Cyberpolice) may be considered.
Countermeasures suggested by theparticipants are summarized as follows:(i) Tr a i n i n g o f i n v e s t i g a t o r s i ncomputer technology.
(ii) Establishing special investigation
departments for computer crime(Cyberpolice).
(iii) Soliciting services of experts in therelevant fields while investigatingcases of a complicated nature.
(iv)Better co-ordination between
regulatory bodies and criminal
justice officers.
(v) N e w l e g i s l a t i o n r e g a r d i n gcomputer-related crimes, andsearch and seizure of electronic datain certain jurisdictions.
(vi) Computer generated copies madeadmissible pieces of evidence in
special circumstances.
(vii) Unauthorized access to information
made an offence.
(viii)Mutual legal assistance among
nations in the field of computer
crime.
(ix) Government and private industry to
work in close collaboration to
improve the security of information.

VII. DIFFICULTIES COMMONLY
FACED BY CRIMINAL JUSTICEOFFICERS AND SUGGESTEDCOUNTERMEASURES
A. Globalization of Crime
1. Difficulties
The advent of technology has made it
possible for a person sitting in one part of
the globe to transact business thousandso f m i l e s a w a y. T h e w o r l d i s n o w
characterized by unprecedented mobility of
information, finance, goods, services andpeople. This globalization has also
provided opportunity to criminals to
operate transnationally. They commit
crime in one country and find safe havens
elsewhere in the world, where criminal
justice officers cannot keep track.
Even if one is able to advance the law,the chances of locating the offender,
obtaining extradition and launching
successful prosecution or recovering
compensation is almost impossible. The
shear cost of sending officers from one
country to another for collection of evidence
may be prohibitive. The operation ofdifferent laws in different countries further
accentuates the problem.
2. Countermeasures
International cooperation in the field of
Criminal Justice Administration should beenhanced. Governments should enter intobilateral and multi-lateral treaties for the
extradition of offenders and to ensure
mutual legal assistance. In the absence oftreaties, governments may co-operate witheach other on the basis of reciprocity.
Informal contacts between law
enforcement officers of various countries
may be encouraged by having common
training programs. The United Nations
may assist member countries, whenrequested, by providing model treaties
which have been already developed.

255

RESOURCE MATERIAL SERIES No. 55
B. Lack of Technical Know-how
1. Difficulties/Problems
Modern information systems provide aneffective means by which offenders cancommunicate in order to plan and execute
their activities. Emerging technologies ofencryption and high speed data transfer
can greatly enhance the capacity ofcriminal organization to place theircommunication outside the reach of police.
The offenders are able to disguise theiridentities through the use of complex
electronic technologies. Computer
technology calls for knowledge beyond theexpertise and skill of most investigating
officers. Further, complex commercial andfinancial transactions require special
knowledge of these laws/operations. So
criminal justice officers find it difficult tosuccessfully prosecute offenders.
2. Countermeasures/Solutions
Criminal justice officers may be trainedin the latest technologies and provision
may be made for hiring the services ofexperts in these fields to assist
investigators. Services of investigatorsfrom regulatory bodies like SESC (Security
Exchange and Surveillance Commission)
may be co-opted to assist police
investigators. Governments should
encourage research in the field of computer
technology so as to ensure the safety of dataand its retrieval, when required by criminal
justice officers.
C. External Influences in the
Criminal Justice System
1. Difficulties/Problems
Most of the developing countries haveremained under the colonial yoke. The
colonial rulers had designed the criminal
justice system to ensure their rule over the
population. The justice/rights of citizens
were secondary to their predominant desire
to rule. The political authorities in thedeveloping countries inherited that legacy
but political institutions being nascent256

were not strong enough to put the systemon its right track, i.e. ensuring the rule oflaw and democratic control of the criminal
justice system. Instead they tried to gain
control over criminal justice officers witha view to perpetuate their rule. Thus
criminal justice officers were made to act
as servants of the political executives
rather than as custodians of the rule of law.
This has bred corruption in the system andcreated a gap between the criminal justiceofficers and the public in general, resulting
in loss of support/cooperation from thecitizens.
2. Countermeasures/Solutions
Criminal justice officers should be
provided operational autonomy byinstitutional arrangements, so as toinsulate them from external interference.
In Japan, operational autonomy of thepolice is ensured by the Public Safety
Commission, where members ofcommission (five in number, not more than
two from the same party) are selected by
the Prime Minister with approval of bothhouses of Parliament. They have a fixed
tenure and can only be removed by thePrime Minister with consent of both thehouses of Parliament. This institution
appoints the Commissioner General of
Police, with approval of the Prime Minister,and also supervises the working of the
National Police Agency.
The concept of accountability of officers,
both external and internal, should be
strengthened. Review of executive actions,by having the office of Ombudsman, will
provide citizens a forum for redress of theirgrievances. This will restore publicconfidence and also help earn theircooperation in combating crime.
D. Lack of Cooperation by Victims
to Criminal Justice Officers
1. Difficulties/Problems
Business enterprises are reluctant toreport crime committed against them to the110TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
police for fear of negative businessrepercussions. Employees of theseorganizations are not ready to report theircolleagues/seniors. Further, corruption in
the criminal justice system of developing
countries erodes public confidence in thesystem. Witnesses will not come forward
to depose as the inquiries by investigating
agencies take a long time and protracted
trials further tax their time and money.
High rates of acquittal in developing
countries further dampens the enthusiasmof plaintiffs and witnesses.
2. Countermeasures/Solutions
Close co-operation between government
and industry will help in building theconfidence of entrepreneurs in the criminal
justice system. Better training of officers
and operational autonomy will bringprofessionalism to criminal justice officers
and earn them the confidence of the public.
E. Poor Coordination Among
Various Agencies
1. Difficulties/Problems
It has been observed that at many times,
regulatory agencies like the Central Bank,
Corporate Law Authority, Income Tax
Bureau and other financial bodies detectfraud/crimes but they do not pass on thisinformation promptly to investigation
agencies, resulting in destruction ofevidence and losing material witnesses. At
times, investigating officers hardly
communicate with prosecutors during theinvestigation and prosecutors only learn
about cases when the file is submitted tothem. This can be detrimental to thesuccessful prosecution of offenders.
2. Countermeasures/Solutions
Common training courses consisting of
officers from various fields will promote
understanding among various organs of
the State. In Japan, various kinds oftraining courses, conferences and otherinter-action activities are organized toprovide police officers, public prosecutors,
national tax administration officers andofficers of other agencies to promote
understanding of the activities of various
agencies and to improve technicalknowledge in other fields. Such interactions also help to establish personal
contact points in the event of actual
investigation, and promote better
coordination for the future among different
organizations.
F Search and Seizure of Digital
Data
1. Difficulties/Problems
Collection of digital data from computersposes problems to investigators, as thecomputers are not just storage mediums
but are performing multiple functions inan organization and hold large amounts ofdata. The exact location of data in thecomputer system may not be known. Data
may be stored in the server, hard drive,
diskette or paper printouts. Data, at times,
may be mingled with other irrelevant
information. Courts in certain jurisdictions
require that investigators should intimate
the exact location of data for issuing searchand seizure warrants. Further, the seizureof entire mediums/systems containing
evidence could affect the interests of others
and may cause obstruction to legitimate
business. Selective retrieval of data may
damage the information contained in thecomputer system. Problems can further becompounded where cross-border searches
may be involved in the future.
2. Countermeasures/Solutions
To ensure proper search and seizure ofdata, investigation agencies may be staffedwith computer experts for identification/
safety of data. Courts should flexiblyinterpret the principle of particularity ofdata when issuing search and seizure
warrants. Criminal procedure laws should
also permit investigating authorities tosearch computer systems and seize data

257

RESOURCE MATERIAL SERIES No. 55
under similar conditions as in the
traditional powers of search and seizure.
Computer generated copies may be madeadmissible as evidence in special
circumstances.
Specific obligations should be imposedon service providers, who offer
telecommunications services to the public
either through public or private networks,
to provide information to identify the user,when so ordered by the competent
investigating authorities. International
agreements should be negotiated as to how,when and to what extent, search andseizure should be permitted. Developmentof mutual legal assistance treaties may be
encouraged.
VIII. CONCLUSION
Economic crime is a complex
phenomenon acquiring greater significancein this global era. Economic offenders do
not act on the impulse of the moment,
rather they carefully plan their crime andexecute it in a manner so as to leave no
trace. Present day technology has provided
the opportunity to act transnationally withease. It is imperative that governments,
over the world work in close cooperation
by entering into formal/informal assistancearrangements. Regulatory agencies may
be strengthened to play a proactive role incombating such crime. It is important toenhance their investigative capacities,
facilitate coordination of their tasks andencourage cooperation amongst them.
Awareness of the problem in itself is only
part of the solution.

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