by CHAPTER ONE
INTRODUCTION
Background of the Study
Nigeria is endowed with abundant natural and human resources, including petroleum, natural gas, tin, coal, a large arable land and an estimated population of 188, 621, 425(UN, 2016; World Meters, 2016). In spite of these resources, the Nigerian economy has not witnessed a corresponding growth and improvement in the living standards of its people (Gashinbaki, 2016). The root cause of this ugly scenario has been linked to corruption (Global Financial Integrity, 2017). Corruption is a global problem and no country in the world is completely free of corruption. It is one the major development and governance challenge confronting African counties including Nigeria. These challenges of governance have produced an environment that causes political tension, increasing unemployment and poverty, and series of social and economic crises. Although corruption is a major challenge for several other developing states, very few countries have been so affected by its graft as Nigeria (TI, 2015 Global Financial Integrity, 2017). In their report for the Royal Institute of International Affairs, Hoffman and Patel (2019) maintained that though corruption is openly acknowledged as a destructive and complex practice in Nigeria, it still remains pervasive in the functioning of society and economic life.
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, 2014).
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”. 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.
Fraud and related financial crimes remain some of the most pressing challenges undermining Nigeria’s economic development and institutional integrity. These illicit activities range from embezzlement, money laundering, cyber fraud, to procurement fraud and abuse of public office. They not only drain national resources but also erode investor confidence, reduce the effectiveness of public spending, and hinder socio-economic progress. In response to the endemic nature of financial crimes, the Nigerian government has established several anti-graft agencies, such as the Economic and Financial Crimes Commission (EFCC), the Independent Corrupt Practices and Other Related Offences Commission (ICPC), and the Nigeria Financial Intelligence Unit (NFIU). Despite these interventions, financial crime continues to thrive due to weak enforcement mechanisms, political interference, poor judicial processes, and public apathy. For instance, Transparency International’s 2019 Corruption Perception Index ranked Nigeria 146 out of 180 countries, highlighting the persistent perception of widespread corruption in the country (Transparency International, 2019). This raises critical questions about the efficiency and impact of existing government interventions in combating financial crime. Many institutions have been created to combat corruption in Nigeria. These chiefly include the Independent Corrupt Practices and Investigation Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC).
Statement of the Problem
Fraud and related financial crimes remain persistent and damaging issues in Nigeria, despite the existence of multiple government agencies tasked with combating them. Institutions such as the Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices and Other Related Offences Commission (ICPC), and the Nigeria Financial Intelligence Unit (NFIU) have been at the forefront of the fight against financial malfeasance. However, the impact of their interventions on reducing the economic consequences of fraud remains questionable. Year after year, Nigeria continues to rank poorly on global corruption indices. For instance, Transparency International (2019) placed Nigeria at 146 out of 180 countries, indicating a persistently high level of perceived corruption. This suggests that fraud-related activities continue to thrive across public and private sectors, leading to massive revenue leakages, reduction in foreign direct investment, poor infrastructure, and the mismanagement of public funds. Although anti-graft agencies frequently announce large asset recoveries and arrests, the disconnect between enforcement and economic improvement is stark.
