THE CAUSES, EFFECT AND PREVENTION OF FRAUD IN THE BANKING INDUSTRY
(A CASE STUDY OF UNION BANK PLC)
ABSTRACT
In chapter one, I made brief introduction of the project work. Chapter two, a review of previous work of some notable authors was made. Chapter three dealt with the research methodology used gathering data. Chapter four highlighted the presentation and analysis of the research questions chapter five dealt with the summary, conclusion and recommendation.
TABLE OF CONTENTS
Chapter one
1.0 Introduction
1.1 History of Union Bank of Nigeria Plc
1.2 Objectives of study
1.3 Significance of study
1.4 Scope of study
1.5 Limitation of Study
1.6 Background History of Union Bank Plc
1.7 Definition of terms
Chapter two
2.0 An overview of Banking – Meaning of Banking
2.1 Types of Banking Account
2.2 The basic Banking functions (CBN)
2.3 What is Fraud?
2.4 Types of fraud
2.5 Causes of fraud in a Bank
2.6 Effect of fraud in a Bank
2.7 Prevention of in a Bank
2.8 Prevention of fraud between two different banks
2.9 Prevention of fraud by Bank customers
Chapter three
3.0 Research methodology
3.1 Research design
3.2 Characteristics of study population
3.3 Research instruments
3.4 Administration of data collection
3.5 Method of data analysis
3.6 Limitation to research methodology
Chapter Four
4.0 Data presentation and analysis
Chapter Five
5.1 Summary
5.2 Summary of findings
5.3 Conclusions
5.4 Recommendations
Bibliography
CHAPTER ONE
1.0 INTRODUCTION
With the existence of so many banks and the establishment of new ones in the banking industry, the banking environment is becoming more competitive and sophisticated as each bank in new ideas
The banking industries have always been associated with some degree of fraud. The issue of bank frauds and forgeries should not be surprising in view of the fact that money is mainly the trade-mark of banking industries. In Nigeria, bankers are particularly concerned because fraud perpetration is on the increase and continuous to acquire greater dimension. More importantly, the high rate of frauds and forgeries in the overall banking system has negative effect on the growth and development as well as stability of banks which invariably affects the financial sectors in the economy.
Fraud, in a nutshell, is a criminal deceptive act of a person, fraud in itself is the number one enemy of business because of the magnitude and degree of importance of the amount that could be involved.
The charted institute of banks of Nigeria (CBN) and the central bank of Nigeria (CBN) have made various efforts to reduce or eliminate fraud in banks in Nigeria, but desired result have not been achieved. The institute has been able to establish a fraud investigation panel to look into cases of bank frauds and dishonest conducts involving their members. Also government agencies such as ICPC, EFCC, police and law court etc set up to examine these cases, while most of them have become fraudsters, and had become nuclear and concise in their operation, the bankers have failed to wake up to challenges, that’s why fraudsters always succeed in their operation and millions of naira had been carted away.
This problem has invariably affected the trust of the depositors in banks and has resulted in their deciding to keep away a substantial part of their money from the bank.
As a result of this, this study intends to proffer solutions to this serious problem that is now a cankerworm eating into the fabric of the banking industry by using Union Bank of Nigeria Plc as sample case study.
1.1 STATEMENT OF RESEARCH PROBLEM
This study has the general problem of finding out the causes, effects of fraud in the banking industries. Therefore, the research question which this study hope to seek answers to are:
1. Do auditors (External/Internal) carry out their duties independently in terms of investigation?
2. Does the accountants or book-keeper records all transaction accurately?
1.2 OBJECTIVE OF THE STUDY
The objective of the study includes the following:
1. To identify the causes, effects and the possible means of preventing frauds in our banking industries.
2. To ascertain whether the members or staffs are well compensated and motivated in order to discourage them from engaging in fraudulent practices.
3. To evaluate the different strategies of curing frauds in the banking industries.
4. To ascertain the problems associated with their detection and possible prevention.
(a) Does the management recruit the right personnel?
(b) Does management invite external auditors for periodic auditing?
1.3 SIGNIFICANCE OF THE STUDY
This project work would be useful in the following as stated below:
1. To the banking sectors, this will enable the management and staff to identify the root causes, effects and possible means of preventing fraud. The study will also assist them in identifying the appropriate system of control to adopt in their day to day activities in order to control fraudulent practices in banking industry.
2. To the society, it will provide an insight and enlightment as to the existence and nature of fraudulent practices and how best to detect or provide assistance to banks for their prevention.
3. To the academic, this will provide appropriate channel through which further investigation and research findings could be under taken in order to unfold and bring to the surface hidden features yet unknown in the society at large.
4. To the world in general.
1.4 SCOPE AND LIMITATION OF THE STUDY SCOPE OF STUDY
This research study focuses attention on the financial figures reported on the annual report and accounts for curb fraud in banking industry.
1.5 LIMITATION OF THE STUDY
In the course of carrying out this research work, some constraints that hindered the extensiveness of the research include:
1. Secrecy of information
The bank restricts access to its core financial documents. Staff could not reveal to the researcher some facts because of fear of retimization.
2. Time constraints
In nutshell, the time available for due completion of the days work is short considering the scope and purpose of the study.
1.6 BACKGROUND HISTORY OF UNION BANK PLC
Union bank of Nigeria plc has her origin dating back to the year 1917 when the colonial bank authorized by the British Act of 1916 started operation in Nigeria. In 1925, Barclays Bank(Dominion Colonial and overseas) was formed to take over the activities of the colonial bank. The name of the bank abbreviated Barclays banking 1950 and a Nigeria head office established in Lagos a year later.
The bank legally incorporated in Nigeria 1969 as a wholly owned subsidiary of Barclays Bank DCO, but as a private limited ability company. This structure of ownership remained until 1970 when 8.3% of the bank shares were offered in Nigerian stock exchange for the first time thus, it became a public limited company. As a result of the Nigerian enterprise promotion decree of 1972, the federal government of Nigeria acquired 51.67% of the bank shares which left Barclays bank plc, London with 40%.
A landmark in the bank’s history occurred in 1979 when Barclays sold 50% of it’s share holding in the bank of Nigerian. This resulted in the change of the bank’s name from Barclays bank of Nigeria to Union Bank of Nigeria Limited to reflect its new progressive image and ownership of Barclays Bank was disposed in 1989. today, union bank is one of the oldest independent and non-governmental banking institutions that is 100% owned and wholly managed by Nigerians.
In 2008, the bank has a total asset of N76.55 billion, deposit N51.61 billion, gross earnings of N9.87 billion and net profit after tax of N574. 46 million. Union bank of Nigeria has won the Nigeria stock exchange president’s merit award in the financial sector more times than any other bank in Nigeria. In the year 2000, it won the bank of the year in 28 out of 36 states including Abuja and its has also won this award consecutively for over ten years. In year 2008 and 2009 it was named by financial times of London as the best and number one in Nigeria. The Bank has a branch network of 258 branches in Nigeria and one in London as at 2019 its staff strength stand at about twelve thousand, one hundred and thirty six in a nutshell, union bank is presently a very successful bank and it is one of the leading commercial bank in Nigeria.
1.7 DEFINITION OF TERMS
Fraud: this is a false representation by means of a statement or conduct, in order to gain a material advantage.
Theft: This is the act or crime of steeling.
Auditor: A person or firm appointed to carry out an audit of an organization or the people who run and control a business.
Bank: This is a commercial institution that takes deposits and extends loans to customers.
Banking industry: This is an institution in which transaction involving fund placement as well as foreign exchange transaction in an economy is carried out.
Central Bank: This is the apex of the banking system of every country.
Fraudulent: This is a deceitful or dishonest act.
Fraudulent trading: The carrying on of the business of a company with intent to defraud creditors or for any other fraudulent purpose.
Fraudulent conveyance: The transfer of property to another person for the purse of putting it beyond the reach of creditors.
