A STUDY OF MARITIME FRAUD AND ITS EFFECTS ON WORLD SEABORNE TRADE
Abstract
This study examined maritime fraud and its effects on world seaborne trade. The Nigeria port authority is in charge of seaport and other marine elements in Nigeria and responsible for the regulations of shipping and other international trade in the country. This study adopted a doctrinal method. That is, library oriented using a qualitative research design. The internet was also consulted. Materials consulted are statute books, international treaties, textbooks, journals and articles on the subject matter under consideration. Primary source of data involved the use of questionnaire. The Questionnaire was administered to 105 stakeholders, whose responses were used to determine the expected findings.For the purpose of this research, the population was defined as 105 stakeholders in the maritime cabotage industry in Nigeria. Out of the 105 questionnaires administered, only 54 were completed and returned. So, in all, therefore, 54 persons formed the study sample of which 24 are senior officials of various shipping companies, while the remaining 30 are senior staff of NPA, NMA, etc.Tables have been used for presentation of data and percentages to determine results from the data presented in tables.The Nigerian Maritime Transportation System comprises seas and inland waterways and associated infrastructure (e.g. dams, aids to navigation etc.), which is linked to a network of international ocean trade routes.From the analysis made, it was rediscovered that the introduction of the Nigerian Maritime Cabotage law will help curb maritime fraud especially on national waters, the Nigerian entrepreneur lives to benefit from the various business opportunities opened by the Cabotage industry.It was also discovered that most stakeholders who are active participants in the Cabotage regime are fully aware of the Cabotage Laws and the benefits accruable to the participants. The study concluded that defective and distasteful as Cabotage regime might appear to others, the NMA and other stakeholders still have the statutory duty to assist the maritime development of Nigeria. The study recommended that a Maritime Business Development Unit should be established to determine the issue of availability of Nigerian ships and capability of indigenous operators whenever such matters arise from public cargo generators, shipping companies or other agencies.  
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background to the study
1.2 Statement of the Problem
1.3 Objectives of The Study
1.4 Research Questions
1.5 Significance of the study
1.6 Scope of the Study
1.7 Research Methodology
CHAPTER TWO: LITERATURE REVIEW
2.1 Historical background
2.2Maritime fraud
2.3 Resurgence of maritime fraud
2.4 The nature of maritime fraud
2.5 Types of fraud
2.6 Nigeria Maritime Regulatory Institutions
2.7 Meaning of Cabotage  
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research Method
3.2 Justifications for the Approaches
3.3 Research Instruments
3.4 Research Population and Sample Size
3.5 Sampling Procedures Employed
3.6 Justification for Sample Selection Procedure/Sample Size
3.7 Statistical Techniques Used In Analyzing the Data
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION
4.1 Introduction
4.2 Analysis of Biographic Data of Respondents
4.2 Analysis of data according to research questions
4.3 Discussion of findings
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
5.1 Summary of findings
5.2 Conclusion
5.3 Recommendations
References
Appendix
Questionnaire
 CHAPTER ONE
INTRODUCTION
1.1 Background to the study
Today's international shipping involves people of many different nationalities with different laws, customs and institutions. Where world economies in the past were the result of empires, the present world economy grew out of relatively free exchange. Today's shipping community comprises shippers, charterers, shipowners, bankers, insurers, importers, and exporters and the system designed for the transfer of goods is simple and efficient, with the sea remaining the life blood of trade. In international trade, as a matter of custom, the seller gets paid before the buyer receives the goods, as because the delivery of goods takes considerable time. The system of letters of credit involved with banks as the intermediaries has proved fruitful and documents rather than goods form the focal point of these transactions (Becka,2010).
An international marine contract therefore requires the intervention of several parties. Fraud is a very insidious crime and arises when one of the parties to the marine contract; succeeds in obtaining money or goods belonging to another party connected in the carriage and financing unjustly. The threat of fraud is that it undermines the system by putting trust' at risks. The simplicity of the system of international trade makes it attractive and vulnerable to j forgersTj scuttlers and cheats. Maritime frauds takes place when any one of the various parties involved in an international trade transaction intentionally deceives another as to some fact or circumstance in' connection with maritime activities which enables him to obtain money or goods dishonestly. In some cases, several of the parties act in collusion to defraud another (Slonw,2015).
Fraud in commerce is as ancient as commerce itself, with examples going back to the Roman world and before. The International Maritime Bureau defined maritime fraud as: “An international trade transaction involves several parties – buyer, seller, shipowner, charterer, ship’s master or crew, insurer, banker broker or agent. Maritime fraud occurs when one of these parties succeeds, unjustly or illegally, in obtaining money or goods from another party to whom, on the face of it, he has undertaken specific trade, transport and financial obligations (Skuld,2014).”
Maritime fraud is becoming more common due to a number of reasons: Criminals are increasingly turning to new methods such as computer hacking, ports are adopting new technologies that in the worst case can enable new types of fraud (such as automatise container operations) and as shipowners are under pressure to win new business, many have disregarded due diligence when dealing with new business partners. As both the greater reliance on IT and electronic trading platforms and documents increases, so does the need to stay ahead of the game played by the Fraudsters. There is a “cost” of course, to greater security, both in terms of investing in better technology and processes, but also in potential business opportunities. In order to achieve the right commercial balance it requires experience, skill as well as knowledge of what scams and schemes are out there. Given that Shipping is a global business, with many players and jurisdictions involved in any single shipment of cargo, even a simple A >>> B voyage, there are a myriad of potential pitfalls where the unscrupulous seek to take advantage of the unprepared. As parties are often based in multiple jurisdictions, and necessarily deal with each other at “arm’s length” and / or through Brokers and Financial Institutions, there may be little or no opportunity to make “physical checks”(Skuld, 2014).
1.2 Statement of the Problem
Maritime fraud never has been so profitable and secure proposition than during the recent decades. In the late Seventies, maritime crime reached a new peak and the trend is going on in full swing. Now the question naturally arises as to how a maritime fraud occurs. We know that maritime transport plays an important role in international trade transaction where several parties such as sellers, buyers, shippers, shipowners, charterers, ship masters and crew, port authorities, inland howlers, bankers and insurers are involved. Maritime fraud occurs when one of these parties succeeds in intentionally and illegally obtaining money or goods from another of these parties. Maritime fraud is, therefore, that species of general fraud which is connected with the maritime field. It may take a variety of forms i.e. documentary fraud (by forging documents or signature) chartering frauds, intentional or non-existing loss of or damage to cargo, barratry, the scuttling of ships etc., etc (Kazi,2015).
Maritime fraud is truly international and the victim can come from any corner of the globe. The fraudster is indifferent to the colour, creed or political belief of his victim. There may be various form of maritime fraud and there is a great deal of evidence that a significant proportion of maritime frauds and related offences are perpetrated by organized groups. For years the shipping industry ran freely and well on spoken commitment, within a system. But there has been continuing infiltration by organized groups in the shipping industry and this is the single worrying factor to curb maritime crime and fraud. The deliberate destruction of the ship, whether by scuttling, fire or other means achieved a certain degree of prominence in the twenties. It then subsided until the Seventies, when it emerged as a totally new art. For example in the case of the Salem, not only was the cargo taken, but also the ship cast away. The days of the sinking of old and useless vessels by owners, if not past, have had to make way for methods employed by a much more intelligent, solvent, and organized group of fraudsters (Kazi,2015).
Maritime cargo frauds can range from the non-shipment of any cargo at all through to deliberate destruction of over insured cargo. Overvaluation as a means of fraud relates naturally to both vessel and cargo. For example, in the Medina Princess a vessel insured for a value at $350,000 was in fact worth only about$65,000 when insured (Kazi,2016).
1.3 Objectives of The Study
The purpose of this study is to show the various fraudulent practices in the maritime industry or the seaport and the perpetrators of this act and to expose what the law has to do in such situations. Although a number of studies have been undertaken on the phenomenon of fraud in seaports, the increasing pace with which frauds are being committed called for continuous research on the subject to keep track of new devices employed by the fraudsters in defrauding the system, hence the rationale for this research work. To achieve this objective, the following secondary objectives have been specified.
 i) To identify the cause(s) of fraud in maritime industry,
 ii) To identify the various types of fraud perpetrators in martime industry,
 iii) To identify the various means employed in defrauding maritime activities,
 iv) To determine the effects of fraud on the business of international trade
 v) To recommend measures for reducing the incidence of martime fraud
1.4 Research Questions
How does a fraud practice in the bank affect the maritime sector?
 i. What are the impacts of fraudulent acts of maritime industry, over the transaction of their customers?
 ii. What are the existence measures in maritime industry that can be used to check such fraudulent acts?
 iii. What measures can be used for prevention and control of such fraud practices in maritime sector (seaport)?
1.5 Significance of the study
The significance of this study is in the fact that it highlights the immediate and remote causes of fraud practices, effects, prevention, and control in Nigeria Shipping industry with particular reference to Nigeria Seaport. Several attempts have been made by researchers, writers e.t.c. On how to minimize or eradicate it if possible. In various organizations but such efforts have been focused mainly on manufacturing and distributive as well as public finance management, while little has been done on areas of Banking and other services industries. The studies have been geared towards finding out causes and consequences, prevention and control of frauds in Nigeria Banking Industry.
Therefore, the suggestions that are advanced in this study would no doubt be useful not only to the shipping industry but to all shipping firm be it public or private sector of the Nigerian economy. The content of this research and the suggestions to be proffered will serve as resources for further study in the same or similar areas maritime in the area of fraud practices (internally) prevention and control.
1.6 Scope of the Study
The study which aims at looking at the effect of maritime fraud on world seaborne industry will make special to the Nigeria port authority. The Nigeria port authority in charge of seaport and other marine elements in Nigeria and responsible for the regulations of shipping and other international trade in the country.
1.7 Research Methodology
The methodology adopted by the researcher is the doctrinal method that is, library oriented using a qualitative research design. The internet was also consulted. Materials consulted are statute books, international treaties, textbooks, journals and articles on the subject matter under consideration. The sources of materials consulted are primary and secondary sources. The primary sources are local and international statutes, textbooks whereas the secondary sources are articles in journals and paper presentations at the international law.  This research work wholly depends on textbooks, articles, journals and the internet.