ABSTRACT
The objective of this study is to determine the impact of fraud 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 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 and oversight function of the National Assembly be strengthened to make public office holders accountable. Key words: Fraud, Financial Crime, Nigeria, Economy.
CHAPTER ONE
INTRODUCTION
BACKGROUND INFORMATION TO 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.
