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CHAPTER ONE

INTRODUCTION

The occurrence of fraud in many Nigerian organizations in becoming too predominant, especially in the banking industry. According to Anyanwu (2013), bank fraud entails a conscious or deliberate effort aimed at obtaining unlawful financial advantage at the detriment of another person who is the rightful owner of the fund. However, Orjih (2014), stated that increasing incidence of frauds and forgeries in banks in recent years, if not arrested might pose certain threats to the stability and survival of individual banks and the performance of the industry as a whole.

So, what exactly are the causes of bank fraud? Could it be from the side of the bank staff or the customers? Or could it be  from both parties? Who bears the incidence of fraud? And how can the occurrence of fraud be minimized and if possible be prevented? Therefore, the researcher intends to investigate on the causes and incidence of bank fraud, as well as obtaining possible measures of  minimizing or preventing the occurrence of bank fraud.

RATIONALE OF STUDY

Actually, fraud cannot easily be totally eradicated in Nigeria banks, but the rate of fraud can only be minimized. So, it is of this reason that the researcher has actually seen the situation which the country is facing as a result of this problem. The researcher actually has seen this problem as one of the problems the society is facing and decided to seek for a way out of this problem. Now the question is why do we still experience fraud after all provision made to control fraud in our society. In our bank we have internal and external auditors, shifting of staff from one department to another penalties for fraudulers etc. Despite all these measures to minimized or control fraud we still experienced fraud. The question now is how do we control this ugly situation the society if facing. So, come out with the following rationales are:

To know what is actually bank fraud

To know also various forms and nature of bank fraud in Nigeria

To know element that facilitate bank fraud

To know effects of bank fraud in the economy.

Finally, to give situations on how control bank fraud in Nigeria.

SIGNIFICANCE OF THE STUDY

This research will be of great important to both the government and financial institutions.  Government: The money spent by Nigeria deposits insurance co-operation (NDIC) will be reduced on liquidity banks if fraud can be controlled among Nigerian banks. This is so because whenever a bank liquidates in Nigeria it will lead to bank failure and such will amount to more expenses on Nigeria Deposite Insurance Co-operation.

On the side of banks, they will equally benefit from this research, since it vividly gave solution to the problem of fraud in Nigeria. Bank customers will equally benefit from this research as this research will prevent fraud in Nigeria, thereby making customers fund to be safeguard without banks getting distressed. Students will at the same time benefit in this research work. The research will help them to make more enquiries to problem relating to bank fraud in Nigerian.

DEFINITION OF TERMS

According to the Oxford Advanced Learners’ Dictionary of current English, the word fraud simply means criminal deception. This definition is straight forward and very brief. Perhaps, the meaning and explanation which I consider more elaborate is the definition offered in Hamlyn Encyclopedic world Dictionary. According to this great master dictionary, the word ‘fraud’ means ‘deceit, trickery, sharp practice or beach of confidence, by which it is sought to gain some unfair or dishonest advantage,…any deception, artifice or trick”.

In other words, based on these definitions put forward above, it means that any act exhibited by someone by which it is pursued towards gaining undue and non-meritorious credit at the detriment of the right beneficiary, constitutes an act of fraud. However, it is the authors view that an ct of fraud is never committed, unless the intention of the perpetrator was present at the time of execution of the dubious plan. Therefore, any illegal fraud which does not meet this test, must be construed and interpreted as aiding and abetting fraud.

There are, in fact, several ways fraud can be committed, like by duress, for example, where a dishonest bank manager tells one of his staff to “rock deal in the bank within two years”, (so that both of them should share inter). Otherwise he, the manager will write the head office about the staff ‘redancy for the purposes of  laying-off. If such a staff lacks understanding and sense of judgment, having received his manager’s instruction, he may “rock the deal” and only to discover later on, that he is in soup. The manager may escape inhurt, where the plan leaks, and such a staff may not even have the courage to mention his colleague during interrogation by the police.

Hardworking managers might contest the possibility of this occurrence, but experience has show that an illiterate and down-to-earth staff is capable of doing anything, provided it receives the managers’ approval. The possibility of the occurrence is undebtable, after all, no person has the exclusive responsibility of defrauding a bank. Therefore, bank fraud is understood to mean, an intentional and criminal deception by the perpetrator, which is sought to gain some unfair, unpleasant and dishonest advantage.

But, in the eye of a practicing banker, any record made by a bank official or group of bank officials in a customer’s account which was performed, resulting the payment of an amount by the bank to a wrong and fictitious hand, with a view of gaining unjustifiable advantage in preference to the rightful owner is termed fraud. Even though that bankers have no exclusive dictionary  of their own, they still maintain that no bank fraud can succeed without a bankstaff. This sharp recognition, for example, is evident in the African Continental Bank – General managers message, where he started interalia.

“One the banking scene, the industry has continued to witness increased number of frauds with varying degree of sophistication. We  at ACB have had our own share of the problem. However, no fraud in any bank can ever succeed without collusion of some people within the bank”.

a) Fraud: This simply means decrepit, trickery, sharp practice or breach of confidence of which it is sort to gain some unfair or dishonest advantage over someone.

b) NDIC: This means Nigeria deposite insurance corporation. It is a body that regulate every banking institution in Nigeria and insures their customer deposit against bank failures.

c) Banking Industry: There are institutions that deals on financial transaction of deposite acceptance and payment, and transfer on fund surplus end to deficit end.

d) Bank Customers: This refers to anyone who has or maintain regular account such as current, savings ad fixed deposite account with any commercial bank.

e)  Bank Penalties: Punishment meant for any earning staff of worker of a bank.

f)   Effect: Outcome of an event.

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