Corporate Fraud Control And Prevention Systems In Commercial Banks

Statement of the Problem

Commercial banks in Nigeria including those operating in Enugu State are adversely affected by various forms of corporate frauds because  of  the recent computerization of bank products and services coupled with the huge financial assets handled by the banks. The recent use of computers, the internet and other electronic devices for banking services in commercial banks  in Nigeria has made certain fraudulent activities more efficient, faster and easily concealed. For instance, Ochejele (2004) stated that the incidence of corporate frauds in the Nigerian banking system has become more pronounced in this era of increasing globalization of the financial markets and other economic institutions owing to the use of the internet and the computerization of banking services. Nwude (2006) also stated that the advent of computerization, the use   of the internet and other electronic systems in commercial banks  in  Nigeria have introduced new technology-based frauds which when committed successfully would become difficult to detect. Such frauds, according to him, continue to multiply the financial losses of banks to  an  unimaginable dimension.

The number of commercial banks in Nigeria since 1892 when the first commercial bank in Nigeria was established has not increased steadily because of intermittent bank failures mainly caused by frauds. The statistics of failed banks in Nigeria show that the licenses of about 50 commercial banks were revoked by the Central Bank of Nigeria between 1994 and 2006. Kalu (2009) Stated that most of the banks went distress as a result of huge financial losses resulting from insider abuse and other fraudulent means including collaboration of bank officials with third parties. Aderinokun (2007) also stated that Nigerian commercial banks lose billions of naira every year and had lost more than N48 billion between 2001 and 2006 to various forms of fraudulent activities.

The prevalence of fraudulent activities in commercial banks has resulted to poor image and low credibility to commercial banks in  Nigeria. Consequently, foreign investment inflow into Nigeria is restricted. Corporate frauds greatly devastate the assets and revenues of commercial  banks  in  Nigeria as well as the trust and confidence of the stakeholders of  the  commercial banks. Udegbunam (2004) stated that corporate frauds heavily undermine the business and profit of commercial banks which  most  times  result in highly risky and volatile financial environments that led to the collapse of many commercial banks in Nigeria.

In order to stay afloat in their commercial  activities, commercial banks  in Nigeria install and utilize corporate fraud control and prevention systems to fight the scourge of corporate frauds. However, there was doubt whether the corporate fraud control and prevention systems were adequately available, extensively utilized, and effective in the control and prevention of fraudulent activities in the commercial banks. It was also suspected that the commercial banks were encountering some problems in the utilization  of  the  corporate fraud control and prevention systems. An identification of the necessary strategies for enhancing the effective utilization of the corporate fraud control and prevention systems in the commercial banks was, therefore, imperative.

Based on the foregoing, there was the need to determine the corporate fraud control and prevention systems in commercial banks in Enugu State of Nigeria. The Purpose of the Study

The major purpose of the study was to determine the corporate fraud control and prevention systems in commercial banks in Enugu State. Specifically, the study was to:

1. ascertain the corporate fraud control systems available in commercial banks in Enugu state.

2. ascertain the corporate fraud prevention systems available in commercial banks in Enugu State.

3. find out the extent of utilization of corporate fraud control systems in the commercial banks.

4. find out the extent of utilization of corporate fraud prevention systems in the commercial banks.

5. determine to what extent corporate fraud control systems are effective in the commercial banks.

6. determine to what extent corporate fraud prevention  systems  are effective in the commercial banks.

7. identify the problems encountered by the commercial banks in the utilization of the corporate fraud control and prevention systems.

8. explore the strategies for enhancing the effective utilization of the corporate fraud control and prevention systems in the commercial banks.