Fraud is finally acknowledgement as a hidden threat to financial institutions in the country. It has remained a Jig Saw Puzzle in our commercial Banks and other financial institutions. People view it with astonishment considering the devastating effects uncontrollability, increasing trend and magnitudes in our news headlines.
In recent times, the frequency of occurrence of fraud and fraudulent practices in almost all non-banking establishment, ministries, schools etc. is unimaginable.
The sporadic rate of spread din banks and even the Apex Bank (CBN) is enough warning signal of eminent doom for the indispensable financialsector of the Nigeria economy.
Based on this fact, this research paper is a source of examining the management reaction towards fraud control using selected commercial banks in Nnewi as a case study.
This study is divided into five-(5) chapter’s chapter one is the introduction outline, deals eminent authors, banking experts, banking chief inspectors and auditors.
Chapter two (2) (literature review) is substantially sub sectioned into various heading which highlight definitions, classification and nature of fraud, causes of fraud, legal implications and liability for losses, manpower resource and financial resource and financial losses resulting from fraud, the innovations in information technology and limitation in human actions.
The concern by the monetary and regulating agencies, the government agencies and all embracing methods of detection and control.
Chapter (3) discuses all research design namely sources of data ie primary and secondary data, questionnaire, face to face interactions with the employees of the three(3) commercial banks in nnewi.
NDIC reports, textbooks, business and financial papers, handout. The area of study was focussed on three (3) banks such as first bank, union bank and all state trust bank, the astonishment used for data collection/questionnaire and personal interviews as well as the derivation formulated and computation of the sample size.
Chapter four (4) leaded presentation and analysis of data,the first section is questionnaire according to how they relate to the research question while the last section in chapter. Four (4) is the summary of result.
Chapter five (5) we have the discussion, recommendation and conclusion of the study, the first section deals with the result obtained from questionaires, the second section on recommendation deals with the researcher suggestion’s towards the problem of the topic and in the conclusion, the final remark of the topic made by the researcher, the researcher made suggestions for further research.
CHAPTER ONE
Introduction
Background of Study
Statement of the Problem
Purpose of the Study
Scope of the Study
Significance of the Study
Limitation of the Study
Definition of Terms
References
CHAPTER TWO
Review of Related Literature
Definition of Fraud
Major Cause of Fraud in the Commercial Banks
Effect of Fraud on Human Resources in the Commercial Banks.
Effect of Fraud on the Bank Profits and Losses Account.
Impact of Technology on Fraud.
Punishment and Penalties.
Fraud Detection, Prevention and Control.
Reference
CHAPTER THREE
Research Design and Methodology
Research Design
Area of Study
Population of the Study
Sample and Sampling Procedure Techniques
Instrument For Data Collection
Validation of Instrument
Reliability of Instrument
Method of Data Collection
Method of Data Analysis
References
CHAPTER FOUR
Presentation and Analysis of Data
Summary of Result
References
CHAPTER FIVE
Discussion, Recommendation and Conclusion
Discussion of Result
Conclusion
Implication of Result Findings
Recommendation
Suggestion for Further Research
References
Bibliography
CHAPTER ONE
INTRODUCTION
In Nigeria, Bank fraud has assumed a frightening scale and sophistication. The levels in the present day have also grown into epidemic dimension. It has eaten deep into every nerve aspect of our life to the extent that a three years old child talks about 419, (the new discovered sobriquet for an advanced fee fraud) that is shunting us has a nation. The fear is now rife that the increasing wave of fraud in the commercial bank in recent years, if not the commercial banks in recent years, if not arrested, might pose certain threats to the stability and survival of individual, financial institution and the performance of the industry as whole.
For one thing, a fraud result in life financial loses to commercial banks and their customers deposition of shareholder funds and capital base as well as loss of confidence in financial houses.
For another, the incidence of fraud could in the extreme cases lead to the closure of some badly affected banks as have happened in some parts of the world.
The Demise Bank of credit and commerce international (BCCI) London, and the national Banking of Nigeria, the Morgan finance house in Nnewi are few examples.
Many of the distressed banks in Nigeria today suffer from fraud and other fraud relates problem, inside credit abuse and indiscipline.
The extent of fraud in commercial banks rather than that abate has continued to escalate. It is therefore necessary now than ever before that attention is paid to this nefarious international phenomenon as fraudstars become more sophisticated and daring in their approach.
Management of fraud is likened to the management of an ailment.
Before a patient is treated, diagnosis is carried out, the essence of the diagnosis is to define the ailment, thus given the direct or insight towards the root cause, prescription and medication is embarked on latter.
Given this reason, the definitions of what actually constitutes fraud for all practical purpose define precision. This is so because there are multifarious forms, styles, and manifestation in the commercial banks.
Similarly, we are aware that fraud cut cross all sectors of the economy and that the size of an enterprise usually determines the volume of fraud takes different dimensions, which amongst others include the following
However, the list is in exhaustive, new methods are devised with all sophistication by fraudstars. Many writers define fraud “as an act or course deception deliberately practiced to gain unlawful or unfair advantages, such deception is directed to the detriment of another”.
In all designs directly or indirectly, covertly or overtly omission or commission, it implies that fraud result in an unfavourable event which occur such that the financial position or cash flow stream of an organization, individual or institution is adversely affected. For sure, cash is the ultimate in all fraud cases,. Thieves so because it is the most valuable asset of a commercial bank and because of its very nature and the difficulty of identification once it has been stolen, it is the highest risk asset most desire it and other criminally minded individual.
The reasons for these are obvious. The first is that it is difficult to prove ownership or determine the second is that it is not difficult to deal with cash or to convert it to other good or chattels, thus making it difficult of the culprit to be apprehended. Quits often, large amounts of cash have mysteriously disappeared from commercial bank without trace and this risk will continue to exist as long as the present monetary system remains a fraud unabated.
In any premeditated act of criminal deceit trick key, or falsification by a person or group of persons with the intention of altering facts in order to obtain undue personal monetary advantage is fraud Chizea whichever way or manner fraud is described, there is always that element of dishonestly, cheating, embezzlement, falsification, exception etc. resultant in loss of frauds .
Fraud is a hydra headed monster in the commercial banks, and banks in general it is not knew that rather it is as old as the industry itself. How even like in greater societies, they have become one of the most intractable problems of modern day banking.
While the concern of the banking community is growing by the day and management vigilance is improving with the help of computerization amongst others. it is on records that millions of naira are still being lost in fraud on a daily basis (CBN)
While some of the fraud are the hand work of outsiders, others are perpetrated by the staff and sometimes management of the bank concerned. The most significant percentage of fraud is done by fraudstars in collaboration with banks staff. As a result of this very source of serious economic crime, some staffs in the industry have either been dismissed or have their opportunities terminated or prematurely retired. This implies that some experienced hands in the sector are lost due to involvement in fraud according to the (NDIC)
Similarly, the involvement of some executives in large-scale fraud is now a serious concern in the industry. Frequent fraud cases have also created grossly awareness to the generality of the public to the level that even the Nigerian union of Banks, Insurance and financial institutions employees (NUBIFIE) affiliate of Nigeria labour congress (NLC) in 1996 Launched aggressive anti-fraud champion. They realized the damages posed by fraud to their numbers, the economy and the publication warns.
“FRAUD IS DANAGEROUS”
BE HONEST DON’T AID OR ABET FRAUD IT IS CRIMINAL KEEP OFF BAD FRIENDS DO TO HAVE FRADULENT INTENTION THINK TWICE
YOU MAY RUIN YOUR CAREER OR END UP IN JAIL
DON’T BETRAY THAT TRUST SAY NO TO FRAUD
GOOD NAME IS BETTER THAN IL-GOTTEN RICHES IF INTEGRITY IOS LOST
ALL IS LOST THE UNION IS BEHIND THE TRUST
Fraud in the Nigerian commercial Banks has remained an unavoidable problem and also resisted all practicable treatment the incident has not only become incessant but also been on the increase in the recent past.
Although it has assured global dimension, the rate of growth in Nigeria has been outstanding in sophistication from N1542.91 million in 1996 the amount involved in commercial banks alone rose to N3590.31 million in 1997 whereas the actual/expected loss went from N371.08 million to N224.54 million NDIC. This has affected the commercial banks profitability negatively in no small measure.
The general confidence reposed in the banking institutions has become eroded since the new concept of distress bank failures and closure of 1990’s from available records, out of about 115 financial institutions operating in the country as at 1996 surprisingly 52 were distressed while 6 were acquired with frequency of fraud, people are no longer at ease keeping their monies in the conventional banks but prefer to keep them in their houses or concretize them in wares (An uncivilized practice for undeveloped economy). The internal control measures in the commercial banks seen to have fault. Such that it has aided the perpetration of fraud. As a result, the industry shares 90% off all cases of malpractices, forgeries and frauds.
Going through the papes of the financial dailies, one wonders at such shucking comment or writes ups like unstilling sanity in banking industries. To fresh bank chiefs for trial, 7 suspended over alleged bank frauds and acquired banks and their survival etc. as a conclusion that fraud and fraud related activities have become an attractive stock in trade in the banking industry.
Be that as it may be, we consider the higher rate of fraud in banks as clearly unacceptable. Sometimes drastic ought to be done ungently to stem the tidy in view of it’s image implication for the banking industry and the crises of confidence with it could further agenda among bank customers.
The study is therefore undertaken to find a lasting situation to all the above problems.
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