1.0 INTRODUCTION
The word fraud refers to the irregularities involving the use of criminal deception to obtain an unjust or illegal advantage. It send a wave of doubts, curiosity, anxiety and concern to people as regards the safety of be it financial or otherwise. It exists in different sectors of our nations economy, education, agriculture, mining, production, banking etc. However, First Bank of Nigeria Plc was founded in 1894, by a shipping magnate from Liverpool, Sir Alfred Jones, the Bank commenced as a small operation in the office of Elder Dumpster & company in Lagos. The Bank was incorporated as a limited liability company on March 31, 1894 with Head office in Liverpool. It started business under the corporate name of the Bank for British West Africa (BBWA) with a paid – up capital of 12,000 pounds sterling, after absorbing its predecessor, the African Banking Corporation, which was established earlier in 1892. This signaled the pre-eminent position which the Bank was to establish in the banking industry in West Africa. In the early years of operations, the Bank recorded an impressive growth and worked closely with the colonial government in performing the traditional functions of a central bank, such as issue of specie in the West African sub region To justify its West Africa coverage, a branch was opened I Accra, Gold Coast (now Ghana) in 1896 and another in Freetown, Sierre Leone in 1898.
These marked the genesis of the Bank’s international banking operations. The second branch of the Bank in Nigeria was in the old Calabar in 1900 and two years later services were extended to Northern Nigeria. Currently with 339 branches spread throughout the federation, the Bank maintains the largest branch network in the industry. The Bank became the first financial institution in Nigeria to establish a subsidiary bank in the United Kingdom. Over the years, the Bank has experienced phenomenal growth. With a share capital of N55.6 million in 1980, the Bank share capital grew to N1.270 billion as at March 2003. the bank’s total asset base was N320.58 billion while its deposit base stood at N193.955 billion as at March 2003. Also the Bank’s market capitalization stood at N66.05 billion i.e. N26.00k per share as at 31st March 2003.
To reposition and to take advantage of opportunities in the changing environment, the Bank embarked on several restructuring initiatives. In 1957, it changed its name from Bank of British West Africa to Bank of West Africa in 1969, the Bank was incorporated locally as the standard Bank of Nigeria Limited in line with the companies Decree of 1968. Changes in the name of the Bank also occurred in 1979 and 1991, to First Bank of Nigeria limited and First Bank of Nigeria Plc; respectively. Apart from this, fraud in the Nigeria Banking Industry is as old as the system itself, a retrospective analysis disclosed that between 1892 and 1952, a period commonly refer to as “free banking era” in Nigeria. This happened when there was no form of Banking Act or Ordinance to regulate the establishment and operations of commercial banks or a central bank which supervises and control other banks. Within this period expatriate and indigenous banks were established, all being commercial bank. Among the banks were: The British Bank of West Africa in 1894. which later become the First Bank of Nigeria Plc in 1991. The Colonial bank in 1917 (later became Barclays Banks Dominion Colonial and Overseas and presently the Union Bank of Nigeria Plc.
The African continental Bank Plc in 1947 The National Bank of Nigeria in 1933 The Agbormagbe Bank (now called Wema Bank) in 1945 and Other indigenous banks that failed following introduction of banking ordinance of 1952 whose provisions they could not meet. Some of these banks that were registered between 1892 and 1952 never opened doors for business even for a day while some simply collected customer’s deposit and vanished into tin air. It is a bitter truth that those that failed were for reasons traceable to fraud; mismanagement and lack of government patronage. The consequence was, it deprived the individuals, organisations concerned and nation in general, funds needed for development and increased standard of living. This resulted in a loss of faith and trust on the banks by Nigerians and thus on impediment for rapid development of banking operations in the country. With the banking ordinance of 1952, some element of sanity entered the Nigerian banking industry whish was noticed in the regulation of the formation, operations and activities of commercial banks in the country.
From history to the present, fraud has remained a permanent feature, a regular cankerworm and an infested blood in the Nigerian banking industry and assuming greater proportion, different dimensions and sophistication day after day. Subsequent to the first banking ordinance in 1952 the Central Bank of Nigeria (CBN) Act of 1959 and other Acts and ordinances with their amendments from time to time which regulated and controlled the operations of the banking industry in Nigeria, the occurrence of fraud could not be helped either. Today, the era of modern banking operation with improved communication systems, computer technology and automated electronic gadgets and other precautionary measures by the banks, fraud has nevertheless been on the increase with its attendant misfortunes on its victims. Discoveries during investigations shows that banks now take extra precautions before clearing cheque because of rampant incidents of fraud and forgery which a bank boss placed on the average of N1 million per working day of the year in Nigeria. Because of this precautions, customers now waste a lot of hours in the banks before ever they were paid their cheques; thus a defect in the quality of banks services. These customers get tired in the midst of the waiting crowd in the bank hall. Even with the long process of clearing, fraud could not be terminated as those who perpetrate it are always clever devising more sophisticated fraud scheme to circumvent the already installed measures. It is interesting to note that the Nigerian Banking industry comprises of the Central Bank, Commercial banks, Merchant banks, Development banks, People’s bank and community banks. The aim of this research work is to make an empirical examination of fraud in the industry in general using the First Bank of Nigeria Plc Enugu. It is hoped that whatever happened in this bank as regard to fraud also applied to the rest of the banks in Nigeria.
