THE EFFECT OF BANK FRAUD IN THE NIGERIAN ECONOMIC DEVELOPMENT (21ST CENTURY EXPERIENCE)

The concept fraud is a term known in all works and cranny in Nigeria. Fraud has eating deep into the fabrics of Nigerian society, mostly in this present 21st century. The only remedy to this ugly situation will be self-discipline and honesty among bank staff, otherwise this decadence will persist. What is fraud? Some well- read individuals have tried to bring the subject home in a better language for easy understanding. Okorie (2000). Defined fraud in his book “understanding practical auditing and investigation,” as irregularities involving the use of criminal deception to obtain unjust or illegal advantage. The word irregularity is used to refer to intentional distortion of financial statements for whatever purpose and misappropriation of assets. Donnel (2001) argued that “fraud in the contemplation of civil court of justice, may be said to include all act of omission and concealment, justify reposed and are injurious to another by which undue or unconscientiously is taken of another”. Microfinance bank certification programme study manual (2012) define fraud as a deception deliberately practiced in order to secure unfair or unlawful gain. Adewumi (2011) described fraud as a “conscious premeditated action of person or group of person with the intention of selfish or personal monetary gain”. It involves the use of deceit and trick and sometimes highly intelligent canning, and known how. The action usually takes the form of foregoing falsification of documents, outright theft. Fraud in its entering whereby another is sought to be deprived by illegal or inequitable means what he is entitled to donnel (2001). The above definition may not enough to express what fraud is to the reader, but can at least give a vivid definition of the term because it contains the fundamental of fraud which includes. 1. There must be deceived through motive immaterial. 2. There must be damage to the person deceived, infact, where there is money, there is bound to be fraud. Harry (2000) opined that “no one is entirely immune to fraud. It crop up in small and large amount. It is perpetrated by management both senior and junior employees whenever fraud is mentioned, one thinks of loss of money in financial institution like banks and insurance companies. In the 1960s, banks and insurance fraud are not tetched. The establishment of banks and more insurance companies concomitant at over stretched of staff resources and accordingly, the weakness in the system the result of these is the speed at which fraud in banking and insurance companies has risen. Commercial fraud covers multitude of malpractice including such “with dollar crimes”, as obtaining credit without intending to pay, obtaining money in mart-order business without supplying the goods, obtaining money by promising to invest and not doing so, obtain by computer fraud insiders trading and tax fraud. “a corporate crime”. Where business people commit frauds against other invest or one tax authorities or where directors commit fraud against companies. Fraudsters involve themselves in fraudulent activities so as to be reckon with the society as those who have made it. The loss of funds assets through fraud reduces resources available for use in bank and insurance company operations. Considering the up-short the rate of frauds, hence the study of the effect control and possible solution to these special crime in bank. . According to rose (1999), they are the principal source of credit (loanable funds) for millions of households (individuals and families) and for most local unit of government (school districts, cities, countries, etc). She further maintained that for small local businesses ranging from grocery stores to automobile dealers, banks are often the major source of credit to stock them with merchandise or to fill a dealer’s show room with new cars. According to rose (1999), when businesses and consumers must make payments for purchases of goods and services, more  often than not they use bank provided cheque books, credit or debt cards, or electronic accounts connected to a computer network. In addition, according when they  need financial information and financial planning, it is the banker to whom they turn most frequently for advice and counsel.  Rose (1999), states aptly that banks are financial service firms, producing and selling professional management of the public’s funds as well as performing many other roles in the economy such as intermediation role, the payments roles, the guarantor role, the agency role, and policy role. In nigeria, according to ofanson, aigbokhaevbolo and enabulu (2010), the banking industry is the hub of productive activity, as it performs thevital role of financial intermediation and effecting good payments system as well as assisting in monetary policy implementation.  The process of financial intermediation involves the mobilization and allocation of financial resources through the financial (money and capital) market, by financial institutions (banks and non – banks) and by the use of financial instruments (savings, securities and loans) (ofanson, aigbokhaevbolo and enabulu, 2010). In the words of the above authors the efficiency and effectiveness of financial intermediation in any economy depend critically on the level of development of the country’s financial system. In effect, the underdeveloped nature of the financial system in most developing countries accounts largely for the relative inefficiency of financial intermediation in those economies. In these countries, the financial system is dominated by banks, which are typically oligopolistic in structure and tend to concentrate on short – term lending as against investment with long – term gestation period (ofanson, aigbokhaevbolo and enabulu 2010).
     okpara (2009) supports the above ideas when he noted that banks represent the nerve centre of the payment system, the vessel endowed with the ability of money creation and allocation of financial resources and conduit through which monetary and credit policies are implemented. The success of monetary policy, to a large extent, depends on the health and stability of the banking institutions through which policies are implemented. As a result of this central role of banks in the economy, their activities have kept under surveillance to ensure that they operate within the law in line with safe and sound banking practices so that the economy will not be jeopardized. Hence, governments generally legislate to influence and directly control banks activities to suit the developmental objectives of the economy (okpara 2009).
 okpara (2009), states that legislation was absent in the nigeria banking system from august 1891 that marked the establishment of commercial banking in Nigeria to 1952 when the banking ordinance was enacted. The era of supervision, examination and control of banks in nigeria was necessitated by the banking ordinance of 1952 and Subsequent amendments made especially with the establishment of central bank of Nigeria (cbn) act of 1958. The establishment of cbn created the platform for adoption Of monetary management by indigenous personnel, stricter rules and regulations, and improved institutional facilities (okpara 2009). The level of fraud in the present day nigeria has assumed on epidemic dimension. It has eaten deep into every aspect of our life to the extent a three years old child talk about 419, the name given to the newly discovered fees fraud that is hunting us as nation. Fraud is defined as deceit deliberately practiced in order to gain some advantage dishonestly. For an action to constitute fraud therefore there must be a intended to benefit the perpetrator to the detriment of another person.
Fraud in the nigeria economy cannot be restricted to the bank alone. Fraud has been find in all sector of the economy and the size of an enterprises usually determines the volume of frauds perpetrated such problems as inadequate manpower, incentives and unsuitable legal framework for dealing with offenders down turn in the economy. It has been resulted in huge financial losses to financial institutions and their customers, share holders and capital based as well as loss of confidence in financial institution.
The increase of frauds has made people to prefer to keep their money at their homes instead of keeping them in the bank. The fear is now that if this act is not arrested our economy will be detrimental and set back ward.
Banks has continued to witness increased number of fraud and malpractice with varying degree of sophistication. It was reported by the Nigeria Deposit Insurance Corporation (NDIC) that “Banking Industry has lost billions of naira to fraudulent activities, indicating a continuing increase in banking fraud” in the present 21st century in Nigeria. This shows that while bank management are busy working out means of checking fraud and malpractice fraudsters on the other hand in conjunction with some dishonest bank staffs are designing new methods on how to circumvent those measures. It will then be pointed out here that the results or implication of these is damaging. Fraud and malpractice leads to unnecessary loss of huge amount of money. This loss of money by the bank cripples banks activities and transactions. 
Again, every incidence of fraud reduces public confidence on bank; hence they question the credibility of the banking industry in protecting their money and meeting up with daily transactions. Banks fraud and malpractice delay or slow down the development of banking habits in Nigeria economy. People shy away from banks in fear of losing their money in case fraud occurs. Banks fraud and malpractice keeps the management of banks alert and cause them to waste resources and energies on fraud prevention and detection.
1.2   OBJECTIVES OF THE STUDY
The main aim of the study is to look out for the effect of bank fraud on Nigerian Economic Development. In view of the aforementioned problems it becomes obvious that if nothing positive is done to check the incidence of fraud, it may lead to frequent bank liquidations in the Economy.
The main objectives of this research work therefore are as followed:
1. To Carry out the survey and investigation of the major type of bank fraud and malpractice in Nigerian Economic development in 21st century using Ecobank as a case study.
2. To determine the causes and the basic factors encouraging bank fraud and malpractice and examine the various forms and area of occurrence.
3. To look into the possible effects or consequence of banks frauds and  malpractice in the operation of banks in Nigerian Economic development   in 21st century.
4. To examine the various management and government devices geared towards eliminating or controlling financial fraud.
5. To represent recommendations or solution that many help in reducing it not  eliminated, bank fraud or malpractice in Nigerian Economic development in 21st  century.
 1.3    RESEARCH QUESTIONS
The investigation concerning this study will be based on the following questions.
1.  To what extent does fraud and malpractice affect banks earning?
2.  Does fraud and malpractice lead to loss of funds in the banking industry?
3. To what extent do dishonesty bank staff, societal value and inadequate staff, training contribute to the existence of fraud or malpractice in the banking industry.
 1.4   RESEARCH HYPOTHESIS
According to Donnel and Orwell (2011) in a book American Encyclopedia Hypothesis is defined “as a preposition assured to be true merely for the purpose of argument or a preposition or theory put forward to account for an order of a body fact”. To guide this research work and to accomplish the above outline objectives the following hypothesis will be subject to testing.
1. H01:  Fraud malpractices lead to /do not lead to unnecessary loss of fraud in the Banking Industry.
2. H02: the occurrence of fraud and malpractice reduces/ do not reduce public  confidence in banking industry.
3. H03: Dishonest bank staff societal value and inadequate staff training are/are  not major causes of fraud or malpractices.
 1.5   SCOPE OF THE STUDY
The main focus of this study is on the effect of fraud and malpractice on Nigerian banks with reference to Union Bank Plc, Eco bank Plc, and Skye bank. The staff of the banks, which includes top managers, middle managers, lower managers and other staff in Asaba, Delta state. The study cannot be said to have covered all aspect of the topic under study and no single text, articles can pretend to have done so. Since the work is purely for academic purpose.