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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

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 individual 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.

1.2 STATEMENT OF THE PROBLEM 

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.