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An Evaluation Of The Effect Of Fraud And Related Financial Crimes On The Nigerian Economy
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Economic
and financial crimes in whatever form and nature have potentially
devastating impacts on economy, security and social wellbeing of the
people. It is perhaps pertinent to stress that as modern financial
system encourages and facilitates local and international commerce,
antithetically, financial criminals are also enabled by modern financial
global liberalization to transfer millions of dollars around the world
instantly through available information communication infrastructures
such as internet, electronic money transfer (wire transfer) and the
rest.
Money laundering among other forms of economic and financial
crime requires existing financial system and operation. Money is
laundered in Nigeria through currency exchange houses, stock brokerage
houses, casinos, automobile dealership, and trading companies. These
institutions are capable of masking proceeds from illegal criminal
activities. The overall effects of these activities on the
socio-political lives and economic wellbeing of the people of the
developing countries and Nigeria in particular could be well imagined
(Ribadu, 2004).
In the developed economies of the West, evidence
emerged (which was at first difficult to believe) that the criminal
manipulation of Company balance sheets created a much more favourable
picture about their finances than was the reality. The Enron Company
which unexpectedly went bust is probably the best known example of
accounting books manipulation in our time. Here in Nigeria, the Lagos
state government funds are trapped while there was also crisis in US in
the management of mortgages which were inflated. It was a boom and
investors made huge profits on their mortgage investments. This
encourages people and financial institutions all over the world to
finance mortgages in the USA hoping to earn profits which proved both
unrealistic and unsustainable. With time, there were massive defaults in
payments leading to foreclosures which caused chaos, doom and gloom in
housing market. Since the world is a global village, investors in the
business were world-wide; the financial crisis in the US had a contagion
effect on the world economy.
Webster’s collegiate dictionary of
current English defines fraud as: “deceit, trickery, specifically:
international pervasion of truth in order to induce another to part with
something of value or to surrender a legal rightâ€. This definition more
specifically focuses 419ners, or con-men and other forms of commercial
dishonesty. We can then characterize fraud by the following elements:
(i) Intent to commit a wrongful act or to achieve a purpose inconsistent
with law or public policy; (ii) Disguise of (purpose): falsifications
and misrepresentations employed to accomplish the purpose; (iii)
Reliance by the offender on the ignorance or carelessness of the victim
(s); (iv) Concealment of the violation.
The most prominent of frauds
in banks and agencies of government detected in Nigeria in the recent
times includes: Fraudulent transfer and withdrawals; Use of unauthorized
overdraft;; Posting of fictitious credits; Presentation of forged
cheques; Conversion of banks money into personal use; Granting of
unauthorized loans; Abuse of medical scheme; Insider abuse; Illegal
conversion of pension funds in various agencies and ministries; Ghost
workers fraud resulting into millions of naira paid into private
pockets; Abuse of political office leading to contract over billings and
over invoicing.
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ABSRACT - [ Total Page(s): 1 ]The objective of this study is to determine the impact offraud and related financial crimes on the growth and development of Nigerian economy. Data for the study were collected from secondary sources only. The research analyzed the data generated using regression analysis. The research findings revealed that, fraud and related financial crime has significant effect on the Nigerian economy while fraud and financial crime have no significant effect on inflation. The research therefore recommends t ... Continue reading---
