Public Perception In The Contributions Of Fraud And Other Related Financial Crimes On Nigeria Economy

Project and Seminar Material for Criminology And Security Studies

Abstract

This study was carried out on public perception in the contributions of fraud and other related financial crimes on Nigeria economy using residents in Owerri Metropolis Imo State as a case study. The study specifically was aimed at to asses the level of public awareness of fraud and other related financial crimes in Nigeria, ascertain public perception on the extent of the prevalence of fraud in Nigeria, assess public perception on other forms of financial crimes prevalent in Nigeria, ascertain public perception on economic effect of fraud and other related financial crimes in Nigeria and ascertain public perception on the effect of fraud and related financial crime on inflation in the economy. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprised civil servants and business owners in Owerri Metropolis Imo State. In determining the sample size, the researcher purposefully selected 147 respondents and 141 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables, and mean scores. The hypotheses was tested using Chi-square Statistical tool. The result of the findings reveals that the level of public awareness of fraud and other related financial crimes in Nigeria is high. The study also revealed that the economic effects of fraud and other related financial crimes in Nigeria includes: undermining the legitimate private sector, undermining the integrity of financial markers, loss of control of economic policy, economic distortion and instability, loss of revenue.. Furthermore, access and effective use of loan by small scale farmers contribute to agricultural development in the study area. Therefore, it is recommended that auditors and Accountants in organizations and financial institutions should be trained on how to carry out forensic investigation since the fraudsters are now sophisticated in their act. Also internal control systems should be strengthened to block opportunities that attract fraud perpetrators. To mention but a few.

Table of Content

Chapter One:

Introduction

1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objective of the Study
1.4 Research Questions
1.5 Significance of the Study
1.6 Scope of the Study
1.7 Limitation of the Study
1.8 Definition of Terms
1.9 Organizations of the Study

Chapter Two:

Review of Literature

2.1 Conceptual Framework
2.2 Theoretical Framework
2.3 Empirical Review

Chapter Three:

Research Methodology

3.1 Research Design
3.2 Population of the Study
3.3 Sample Size Determination
3.4 Sample Size Selection Technique and Procedure
3.5 Research Instrument and Administration
3.6 Method of Data Collection
3.7 Method of Data Analysis
3.8 Validity of the Study
3.9 Reliability of the Study
3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

4.1 Data Presentation
4.2 Analysis of Data
4.3 Answering Research Questions

Chapter Five:

Summary, Conclusion and Recommendation

5.1 Summary
5.2 Conclusion
5.3 Recommendation
References
APPENDIX
QUESTIONNAIRE

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 right”. 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.

Commer (2008) noted that motivations for corporate fraud include: Personal greed; Possibility of getting away; Low prosecution rate; societal pressures; Opportunity; Staff morale problems and Anti-institutional posture.
However, Nigerian government like many other governments of developing countries until recently has been very slow in putting in place strict policy measures and legislative framework in combating the effects of economic and financial crimes. As a result economic and financial crimes have eroded the integrity of Nigerian financial institutions since sizeable numbers of them were actively involved in money laundering and other financial crimes on the economy and sociopolitical development of Nigeria as a developing nation. It is instructive to stress from on set that this study is not intended to delve into details legal discussion on the concept of economic and financial crimes and the relevant provisions of Nigerian law regulating same. This of course will not obviate occasional reference being made to various forms of economic and financial crimes as known to Nigerian law and relevant statutory laws regulating those forms of crimes.

This study aims at evaluating the effect of fraud and related financial crimes on the economy of Nigeria.

1.2 Statement of the Problem

There have been concerns about the management of the country’s resources, particularly oil and its revenues, has been on the operation of the Excess Crude account by the government because it does not comply with relevant provisions of the 1999 constitution. Section 162 of 1999 constitution specifically stated that “internally Generated Revenues (IGR) of the federal government of Nigeria must be paid into the federation Account”, but the operation of the Excess Crude Account (ECA) by the Federal Government violates this provision. Apart from concerns over the mismanagement of the Excess Crude Account, there are also worries about revenues from the sale of gases.

Falana (2010) noted that facts have continued to emerge daily on huge sums of money that have either been looted, misappropriated, shared, mismanaged or committed into white elephant projects. It is worrisome to observe the highest level of profligacy and irregularities by all tiers of government in the management of the country’s resources and wealth of the nation. In view of the above development, the researcher is interested to investigate the impact of fraudulent fiscal practices and financial crimes on the growth and development of Nigeria economy.

1.3 Objectives of the Study

The main objective is to assess public perception in the contributions of fraud and other related financial crimes on Nigeria economy.

The specific objectives include the following:

Asses the level of public awareness of fraud and other related financial crimes in Nigeria.
Ascertain public perception on the extent of the prevalence of fraud in Nigeria.
Assess public perception on other forms of financial crimes prevalent in Nigeria.
Ascertain public perception on economic effect of fraud and other related financial crimes in Nigeria.
Ascertain public perception on the effect of fraud and related financial crime on inflation in the economy.

1.4 Research Questions

The study will be guided by the following questions;

What is the level of public awareness of fraud and other related financial crimes in Nigeria?
What is the extent of the prevalence of fraud in Nigeria?
What are the other forms of financial crimes prevalent in Nigeria?
What is the economic effects of fraud and other related financial crimes in Nigeria?
What is the effect of fraud and related financial crime on inflation in the economy?

1.5 Research Hypotheses

Ho: Fraud and related financial crime has no significant influence on Nigeria economy.

Ha: Fraud and related financial crime has a significant influence on Nigeria economy.

1.6 Significance of the Study

This study at its completion will help to present the forms and prevalence of financial crimes in Nigeria, the harm it poses on the Nigerian economy, and the need to map out strategies to curtail this economic menace. The outcome of this study will serve as a source of valid information to students, and researchers who may wish to carry out a research on a related topic.

1.7 Scope of the Study

This study is structured to generally examine school management motivational strategies and staff retention in secondary schools. However, the study borders on assessing the level of public awareness of fraud and other related financial crimes in Nigeria, ascertaining public perception on the extent of the prevalence of fraud in Nigeria, assessing public perception on other forms of financial crimes prevalent in Nigeria, ascertaining public perception on economic effect of fraud and other related financial crimes in Nigeria, and ascertaining public perception on the effect of fraud and related financial crime on inflation in the economy.

The respondents for this study will be obtained among residents in Owerri Metropolis Imo State. Hence the respondents will comprise of civil servants and business owners in the study area.

1.8 Limitation of the Study

Financial constraint

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint

The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9 Definition of Terms

Fraud

Fraud is the crime of deceiving somebody in order to get money or goods illegally.

1.10 Organization of the Study

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, abnd selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.

Chapter Five

Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on public perception in the contributions of fraud and other related financial crimes on Nigeria economy using residents in Owerri Metropolis Imo State as a case study.The chapter consists of summary of the study, conclusions, and recommendations.

5.2 Summary of the Study

In this study, our focus was to examine on public perception in the contributions of fraud and other related financial crimes on Nigeria economy using residents in Owerri Metropolis Imo State as a case study. The study specifically was aimed at to asses the level of public awareness of fraud and other related financial crimes in Nigeria, ascertain public perception on the extent of the prevalence of fraud in Nigeria, assess public perception on other forms of financial crimes prevalent in Nigeria, ascertain public perception on economic effect of fraud and other related financial crimes in Nigeria and ascertain public perception on the effect of fraud and related financial crime on inflation in the economy.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 141 responses were validated from the enrolled participants where all respondents were civil servants and business owners in Owerri Metropolis Imo State.

5.3 Conclusions

Based on the findings of this study, the researcher made the following conclusion.

The level of public awareness of fraud and other related financial crimes in Nigeria is high.
The public perceive that the prevalence of fraud in Nigeria is high.
The public perceive that the other forms of financial crimes prevalent in Nigeria includes: cyber crime, money laundering, terrorist financing, embezzlement, bribery and corruption.
The public perceive that the economic effects of fraud and other related financial crimes in Nigeria includes: undermining the legitimate private sector, undermining the integrity of financial markers, loss of control of economic policy, economic distortion and instability, loss of revenue.
The public perceive that the effect of fraud and related financial crime on inflation in the economy is positive.

5.4 Recommendations

Based on the findings of the study, the following recommendations are proffered.

Fraud Detection and Prevention Measures:

It was recommended that Auditors and Accountants in organizations and financial institutions should be trained on how to carry out forensic investigation since the fraudsters are now sophisticated in their act. Also internal control systems should be strengthened to block opportunities that attract fraud perpetrators.

Fight Against Corruption:

Corruption has become a way of life in Nigeria since authorities no longer frown at it because chief cronies are involved. Despite various agencies and commissions established to fight corruption and crimes in the country, the crime rate especially financial related crimes are on the increase hence the researcher suggested that government should be serious in the fight against corruption. Recently a chieftain of PDP that was jailed for corruption was released after completing his jail term, but surprise he was received by statesmen and government officials in a well celebrated reception. This type of attitude does not portray the government in good light before the international community; hence, anti-corruption agencies should improve on their strategies in fighting corruption and fraud so as to reduce the negative effect of fraud on the Nigeria economy.