Criminal defamation of character is knowingly spreading the slander that a particular person is a criminal or sexually immoral, when in fact they are not. To this you might add spreading the lie that a person is insane when they have never suffered mental illness.
Clearly such extreme slander will poison the target’s entire social field. The damage of slander is supported by the existence of laws of slander and libel – but these are Torts, they do not fall under criminal law. The result is the wealthy and powerful who can afford civil actions can silence their critics who might well be telling the truth about that person’s crimes and sexual immorality, but poor people are left with no protection.
To add to the problem if a person acting under color of law spreads the lie and tells the recipient of the lie to remain quiet about it, the police and security services (spies), have a foolproof weapon they can use against anyone they please, and the victim has no recourse.
No-one could be so naive as to believe that a lie told about an innocent person, that that person is a paedophile/drug dealer/prostitute/insane is harmless.
This is the kind of thing you expect in a third world fascist dictatorship,where the state commits crimes against citizens with impunity.
In a civilised country citizens should at least expect that spreading the slander that a law-abiding person is a criminal or insane should be classed as a criminal act and subject to criminal penalties.