Introduction
Scholars of the 19th and 20th centuries viewed crime as an outgrowth of class conflict. The early traditional criminologists viewed it either as individual pathology or as an outgrowth of poverty whose existence was taken for granted.1 either way, criminals could principally be found amongst the ghetto dwellers who are generally poor with little or no means of subsistence.
As society progressed into the 20th century it began to be argued and equally noticed that the wealthy also perpetrated some form of unlawful activities by their deceptive and exploitative ways in the cause of their business undertakings. These were initially not discussed as part of the societal crime problems. The reason for that was simple, the perpetrators are rich and so their activities, no matter how indecent, were not labeled as criminal by their status.
From the latter
part of the 19th century, series of regulatory laws were enacted to embrace
commercial misconduct,in the 20th century further new policing agencies were
established to police and control abuses in the business world. Unfortunately,
because of the power of the wealthy, they were segregated from the traditional
criminals and their crimes were adjudicated by regulatory agencies such as the
Federal Trade Commission in the United States of America and in Nigeria, the
Nigerian Medical Council and the Institute of Chartered Accountants and other
professional bodies, thus shielding them from the traditional criminal justice
system.
Their offences were handled administratively
resulting only in minor fines. Few offenders ever went to prison, thus criminal
statutes were enforced against the business world in a way that was
advantageous to the rich and educated compared with the poor and less privileged.
Some authorities went further to call the activities of these wealthy and
professional people “white collar crimes”. These include crimes such as Bank
fraud, Advanced fee fraud (419), Postal fraud, Computer fraud, Credit card
fraud and Money laundering among others.
BANK FRAUDS
In recent times Bank frauds and allied offences have threatened the foundation of the Nigerian Economy. The increase in the number of banks from thirteen in the seventies to over 131 in recent times has created serious economic problems. The creation of banks is not the subject matter of this discourse but the outcome and other ripple effects will surely be.
In any event several banks sprang up in several corners with diverse names. Alongside these were innumerable finance houses and mortgage institutions. They offer all sorts of profits and undertake near impossible deals. Indeed they were financial magicians. The consequence of this phenomenon is that, there emanated a new face to the Nigerian Banking industry which was inadequately prepared for the explosion it witnessed.
That is not to say that the incidences of fraud was a new phenomenon to the Nigerian Banking Industry, but the frequency and trend of frauds in Bank took an entire new dimension in the late 1980s and 1990s.
It is difficult to pin point with accuracy the cause of frauds like all property crimes. Many factors have been identified by scholars as being the causes of frauds in Banks some of these factors include inter alia:
1. Greed
2. Lack of social control
3. Peer group influence
4. Decay of religious life
5. Heredity, etc.
Sociologists have on their part used several models to analyze the concept of frauds and crime generally. These models include:
1. The moral model
2. The sociological model
3. The psychological/behaviorist model
4. The frustration Aggression model
5. The medical model
6. Abraham Maslow’s Hierarchy needs.
However, it is quite possible to identify specify factors that are catalysts to Bank frauds and any measure taken to prevent them must be holistic in orientation so as to take adequate care of the causative factors.
TYPES OF FRAUDS IN BANKS
It is difficult to discuss exhaustively all types of frauds perpetrated in Nigeria banks but listed hereunder are some of the most prevalent ones.
a)
Clearing of Cheques:-Substituting clearing
cheques with forged ones of higher denomination and altering clearing forms to agree
with the forged cheques.
b)
(ii) Directing cleared cheques into wrong accounts.
c)
Opening of Accounts: account may be opened
by using forged documents, signature cards and blurred passport photographs
d)
Cash theft: Staff under wrap bundles of
notes. Such cashiers may not stamp cash wrappers thereby making it difficult to
identify the cashiers responsible.
e)
Suppression of Lodgments meant for customers
accounts.
f)
Fraud in foreign exchange transaction where funds
are transferred to foreign account on the strength of forged letters of credit
g)
Forged Drafts, Bankers payments and Bank cheques.
h)
Fraudulent use of Dormant accounts — those with
credit balances are debited with forged cheques which may be destroyed after
the fraud.
i)
Cheque Book Fraud ;false requisition,
- Stealing cheque books from stock
- Tearing out cheque leaves from stock and using same for fraudulent purposes.
- Using cheque leaves recovered from closed account holders etc.
j) Illegal printing of security documents e.g. cheque books, drafts vouchers etc.
k) Interception of coded messages from other branches and the use of such information for fraud.
l) Robberies
m) Computer frauds
n) Overloading of accounts with wrong credit balance
We shall at this juncture take a critical look at some of the factors that are responsible for the type of Bank frauds discussed above.
FACTORS THAT AID BANK FRAUDS
1. Lack of motivation: When Bank staff are not positively motivated, their productivity will diminish resulting in lack luster performance and carelessness in handling sensitive responsibilities. Lack of motivation can be manifested in these ways:
a. Poor salaries and wages
b. Inadequate allowances — housing, medical etc.
c. Lack of promotion
d. Preferential treatment of staff matters
2. Lack of adequate security arrangements for security documents e.g. cheque books, drafts, specimen signature cards, vouchers etc.
3. Poor supervision: Lack of adequate supervision. Negligence of regular call-overs, lack of regular internal auditing. Bye passing of rules and regulations.
4. Poor training/retraining of staff
5. Under staffing: This increases the work load thereby making staff vulnerable to mistakes.
6. Poor Banking experience: Inexperienced staff arc sometimes put in sensitive areas. youth coopers and other casual staff are put to man sensitive positions like opening of new accounts and writing of drafts and confirmation of inter Branch transactions.
7. Customers Negligence- Some customers are very careless in the handling of their cheque books tellers etc, this makes them fall easy prey to fraudsters.
8. Lack of commitment of law enforcement agents in the prosecution of fraudsters coupled with the inadequate punishment meted out to offenders by our courts.
THE WAY OUT:
The only way out of his problem, which has bedeviled the banking industry is to take adequate measures to plug loop holes mentioned above, this should be effectively done by internal checks and control mechanism deliberately designed to forestall fraud and to aid early detection of errors and omissions. The following control measures will enhance fraud prevention.
a)
Effective dual control system of sensitive
instruments like strong room keys, key registers, drafts etc.
b)
Use of cameras to film customers making large
withdrawals.
c)
Early balancing of books and rendition of mandatory
returns
d)
Verification of signatures on instruments before
value is given to them
e)
Rotation of staff
f)
Strict adherence to lending limits
g)
Sound staff recruitment policies
h)
Constant call overs of accounts
i)
Sound division of labor to ensure that no single
staff handles a transaction single handedly from start to finish.
j)
Effective coding and decoding of instruments and
messages.
k)
Effective control of customers files, passport
photographs, signature cards etc
INSTITUTIONAL APPROACHES
1.
Prudential guidelines by Central Bank of Nigeria
2.
BOFID — Banks and Other Financial Institutions
Decree of 1991
3.
Failed Bank Decree 18 of 1994
OTHER FINANCIAL CRIMES
Apart from Bank frauds, other financial crimes have infested the Nigerian economy. The most glaring among them being:The Advanced fee fraud (419).
This trend is a crime emanating from a conspiracy between some dubious Nigerians and usually gullible foreigners to illegally transfer abroad, non existing funds belonging to the federal government of Nigeria and corporate organizations in Nigeria to foreign accounts by using business and bank accounts of the greedy foreign collaborators. In this process the foreigner gets defrauded of the monies they may have paid to their Nigerian collaborators to facilitate the transaction.
Advanced fee fraud is synonymous with obtaining property under false pretences which is provided for under Section 419 of the criminal code. The new trend in Advanced fee fraud started with the introduction of the Structural Adjustment Programme (SAP). Prior to the introduction of SAP the Naira was relatively stronger vis-à-vis the value of the foreign currencies. In 1984 the exchange rate of the Naira was 62k to one US dollar while N1.20 exchanged for one British Pound Sterling. With the introduction of SAP the Naira depreciated to an absurd level and this brought about unbridled craze for the pound sterling and the dollar or hard currencies as often referred toAdvance fee fraud (419) has transformed from the concern of few syndicated fraudsters of the early 80s to now an advanced fee fraud industry.
FACTORS THAT AIDED ADVANCED FEE FRAUD
1.
Erosion of societal values
2.
Emergence of
communication revolution of fax, computers, cellular phones, digital telephone
networks etc.
3.
Greed on the part of foreign collaborators/victims
4.
Lack of social security
5.
Governments initial lack luster approach to the
problem of 419.
Consequences of Advanced Fee
Fraud
Apart from economic and social problems associated with the crime in terms of giving Nigeria a bad image abroad and scuttling inflow of genuine business into the country, there is a growing general discontentment of the international community of the handling of Advanced fee fraud cases. In all it is estimated that as far as 2005, about 244,300 scam letters had emanated from Nigeria to about 30 countries in the world out of which about 700 victims had been recorded. The trend is that USA, UK and Germany top the list recipients.
The incidence of Advance fee fraud in Nigeria has caused serious losses to the economy and upsurge in allied crimes such as counterfeiting of travelling documents, misrepresentation and impersonation of government officials, forgery of official documents. Besides easy funds that is laundered into the economy, advanced fee fraud brings with it inflationary trends that have caused some distortions in the Nigerian economy.
INSTITUTIONAL APPROACH TO FIGHT ‘419’
1. Presidential Task Force on Trade malpractices
2. Establishment of Police Special Fraud unit
3. Decree No. 13 of 1995
4. Propaganda and awareness using the mass media.
5. Closure of business centers and withdrawal of several telephone lines
OTHER FTNANCIAL CRIMES WORTH
MENTIONING INCLUDE
1. Credit card fraud
2. Investment fraud
3. Money laundering
CONCLUSION
The prevalence of fraud in the Nigerian Banking industry coupled with other financial crimes are bad signals for the Nigerian economy.
To argue that there is a strong correlation between socio economic problems and crime is to state the obvious. The indices of socio-economic problems include unemployment, poor education, low income, high cost of living, inadequate housing etc. Logically the more serious these problems are the higher the crime rate.The assumption in this hypothesis is that finding solutions to these socio-economic problems would drastically reduce the crime problems. But can Bank frauds and other financial crimes be attributed to poverty the answer obviously is in the negative.
In the 1970’s the oil boom encouraged
the influx of Nigerians from the rural to the urban centers in search of wealth
and because few people became millionaires over night many more thronged into
the cities with the idea of “making it”. Farming and other traditional serene
vocations were abandoned for the fast life of the cities. Soon the cities
started witnessing the emergence of a host of vices including Bank frauds.
Another important factor is the steady drift in the cultural values which held
our communities together, a consequence of the breakdown of the basic
traditional institutions such as the family. Honorintegrity, transparent
honesty and contentment, have given way to materialism and in the process of
acquiring wealth, the method whether fair or foul is irrelevant and the end
justifies the means worse still, the major criminal justice institutions in
Nigeria, that is the Police, Courts and Prisons have been riddled with
administrative and operational problems as a result of inadequate finding and
unprofessional and unethical attitudes.
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