DETECTION AND CONTROL OF FINANCIAL FRAUDS IN NIGERIA BANKING SYSTEM: PROBLEMS AND SOLUTION

(A CASE STUDY OF ZENITH BANK PLC)

TABLE OF CONTENTS

Title page                                                              i

Approval page                                                        ii

Dedication                                                             iii

Acknowledgements                                                        iv

Abstract                                                                v

Table of contents                                                    vi

List of Tables                                                         ix

CHAPTER ONE: INTRODUCTION

1.1      Background of the study                                   1

1.2      Statement of the problem                                 4

1.3      Objective of the study                                      6

1.4      Research Hypothesis                                        7

1.5      Research Question                                           8

1.6      Significance of the study                                   9

1.7      Scope of the study                                           11

1.8      Limitation of the study                                     12

1.9      Definition of terms                                           12

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1  Who are the Bank fraudsters                             15

2.2  Debased moral standards                                        18

2.3  The legal framework                                         21

2.4  What is fraud                                                  26

2.5  Causes of fraud in Zenith Bank Plc                      26

2.6  The effects of bank frauds                                 29

CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY

3.1  Research design                                              38

3.2  Area of study                                                  38

3.3  Population of study                                          39

3.4  Sampling method                                            39

3.5  Research instrumentation                                 40

3.6  Validity and reliability of research instruments      41

3.7  Source of data                                                42

3.8  Method of investigation                                           42

CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA

4.1  Presentation and Analysis of data                       43

4.2  Test of hypothesis                                           59

CHAPTER FIVE: SUMMARY OF FINDING/CONCLUSION AND RECOMMENDATION

5.1  Findings                                                         68

5.2  Conclusion                                                      68

5.3  Recommendation                                             73

References                                                      79

Questionnaires                                                82

Appendix                                                       97

LIST OF TABLES

Table 1 qualification of respondents                                 44

Table 2 number of years worked with the bank           45

Table 3 Rank of respondents                                    46

Table 4 the extent the respondents partake in

decision making                                                     47

Table 5 preparation of voucher                                 48

Table 6 regularity of the auditors in the banks            49

Table 7 Happenings in the bank                                50

Table 8 Performance of the auditors                          51

Table the results of the auditors                               52

Table 10 the internal auditors                                   53

Table 11 Reports of the internal auditors                    53

Table 12 management of the banks                                 53

Table 13 account and stock taking                            55

Table 14 payment in the bank                                         56

Table 15 Contingent table                                        61

Table 16 Hypothesis table                                        62

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

There has been no single accepted definition of the term “fraud”.  Fraud in whatever form is limitless on classification, this is why courts and writers on fraud try to escape away from giving a decision definition, notwithstanding the varied meaning, attached to the concept of financial fraud the author addressed the subject with the following working definitions.

Oxford and chambers dictionaries define fraud as a criminal deception, act of deceptive, trick, cheating swindling person or thing that deceives.

Longman dictionary define fraud as ‘an act if deceitful behaviour for the purposes of gain which may be punishable by law.

In the mind of civil court of justice, fraud may be said to cover “all act, omissions and concealment which involve a branch of legal or equitable duty trust or confidence justly reposed and injurious to another or by which an undue influence or available ie taken off.

Bronifagbeni define banking fraud to mean an act or cause if deception deliberately practiced to gain unlawful or unfair advantages such deception directed to the detriments of another. The goes further to define fraud to mean depriving a person dishonestly or something which is his  or of something to which he or would or mighty but for perpetration in the fraud be entailed.

Having closely studies these approaches to definition to fraud especially from the banking perspective one may correctly see bank financial fraud as a deliberate act by an individual or group within or without the Nigeria banking system to cheat, swindle, deceives or manipulate in other to disposes the banking depressions/share holders of their funds.

Therefore fraud and forgone in banking transactions can be perpetrated through falsification of entire in accounts of customers with a view to take advantage of the excess proceed.

Despite several definitions of frauds, the author believes that the ones so far given are rather appropriate advantages, and inspiring for the purpose in which the research work intends to achieve.  This is because they contain the basic elements of fraud which include that:

(a)       There must be decent or deception directed to the detriment of another or entirety

(b)      A false representation has been made knowingly or without belief in its truth or recklessly, carelessly, whether it is true or false.

(c)       Obtain damages for deceit, it must be proved that the defendant intended that the plantiff should act on it and suffered damages in consequences.

The position of banking system in our economy cannot be over emphasized.  They act as the conduct pipe through which all the financial transactions pass.  However, fraud has proved a serious bottleneck to the proper functioning of the roles of banking system to the Nigeria economy people are beginning to get worries and sooners than later may loose confidence in our banking sector due to mainly the very increasing incidence of fraud in our today’s bank Banks as the store house of the public funds and properties should be on trust not fraud.

1.2  STATEMENT OF PROBLEM

The frequent cases of financial fraud in many financial institutions in our country is now taken as the utmost concern to financial experts and micro economists.  This has also limited that task of seeking solution to eliminate its occurrences.  To some banking experts the issue of fraud in an internal vice in the Nigeria banking system. They argue on this because of good number of frauds occur among our banks without the knowledge of outsider even where the public is aware it does not effect the rate at which customers withdraw or deposit money.

These experts are inclined to believe this because the nation is under-banked, the populace are at no option but to use the available banks like especially the foremost and well established banks like Zenith Bank Plc even if there are glaring inefficiencies in the operations incompetence and laziness among most banks staff give birth to fraud.

Fraud has paralyzed the roof, the foundation and creditability of our banking system, just pick up any national daily or from police record and you will be alarmed at the extent and magnitude of bank fraud in Nigeria banking system.  Many banks have gone on distressed.  Therefore the researcher is arming at finding out if there is any significant effect or solution to financial fraud in the Nigeria banking system which has to offer to these deficiencies aforementioned with special references with Zenith Bank Plc station road, Enugu.

In summary, the major problems of this study are as follows

(a) The incessant/consistent case of financial fraud.

(b) Weakness this has attributed to banking industry prior to the introduction of effective control of financial fraud.

1.3   OBJECTIVE OF THE STUDY

This research work is generally set towards ascertaining the effects finical fraud have had on Nigeria banking industry since its inception in the Nigeria industry furthermore, the study is;

1) To determine if any lost of bills, the banking have in relationship with the financial fraud in banking and to what extend.

2) To examine the facts contained in the detection and control of financial fraud issued.

3) To research into the reason why people involve in financial fraud.

4) To diagnose the banking procedures with a view to fishing out loopholes and suggested way of plugging them.

5) To examine the various management and government controlling devices geared towards alimentation or checking financial fraud in our banking system.

6) To recommend solutions that may help in checking financial fraud in our banking system.

1.4   RESEARCH HYPOTHESIS

To fulfil the above outline purpose, the research declares the following prepositions.

Ho:  Hypothesis II – most financial frauds have not succeeded because of the complexity of banking activities.

H1:  Most financial frauds have succeeded because of the complexity of banking activities.

Ho:  Hypothesis II – auditing and investigations are indispensable weapons in the efficient management it banking industry.

H2:  Auditing and investigations and indispensable of banking in the efficient management of the banking system.

H1:  Hypothesis I – commercial banks do not place any value on the auditors reports.