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PROJECT TOPIC: MANAGEMENT OF FRAUD IN THE NIGERIAN COMMERCIAL BANKS

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CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

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

(a)  Cheating by market women/men on scale measurement.

(b)  Failure to pay correct import duties/tax evasion.

(c)  Over invoicing and inflating contracts.

(d)  Payment for services not rendered.

(e)  Stealing and other 419 activities

(f)   Political fraud

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 .


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