From John Ofikhenua,

Abuja

and Joseph Jibueze



Banks lost N53billion to fraudulent workers last year, the Nigerian Deposit Insurance Corporation (NDIC) said yesterday.

The fraud was more prevalent in 10 banks, involving 313 workers. The banks lost N34.14billion, which is 64.11 per cent of the total money involved.

In 2007, N2.59billion or 25.93 was lost.

In its 2008 yearly report released in Abuja, NDIC lamented the high fraud rate.

It said of the cash stolen, those not fully covered by the Fidelity Insurance Bond (FIB) and those with low probability of recovery were in excess of N17billion.

According to NDIC, the 313 workers represent 14.65 per cent increase over 273 workers involved in fraud and forgeries in 2007.

The report said the fraud was perpetrated by core operations staff, such as supervisors, officers, accountants, managers, executive assistants, clerks and cashiers was 223 representing 71.25 per cent of the total crime.

The 223 represent a decrease of 4.57 per cent when compared with the 2007 records.

The corporation put the number of reported cases of attempted fraud and forgeries in the year under review at 2,007, representing an increase of 29.2 per cent over the 1,553 reported in 2007.

It said two major factors were responsible for the criminal act – institutional factors or internal factors and the environmental or societal factors.

The report said: "Institutional cases of frauds and forgeries in insured banks include poor accounting and weak internal control systems, ineffective supervision of subordinates, uncompetitive remuneration, and perceived sense of inequity in reward.

"Undue societal demands, low moral values, slow and tortuous legal process, lack of effective deterrent as well as reluctance on the part of the individual banks to report fraud cases due to negative publicity it could attract to their image."

The corporation advised banks to plug leakages in their systems by strengthening their internal control and security systems to curtail the trend.

It said: "Insured banks should thoroughly screen prospective employees by obtaining status report from previous employers and relevant agencies and to desist from deploying casual members of staff to sensitive positions."

The frauds were mainly committed through forged cheques, unauthorised credits, posting of fictitious credits, illegal transfers/withdrawals, cheque suppression, cash defalcation and outright theft of bank money by the staff.

Also yesterday, Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi listed the gains of his efforts at sanitising the banking sector; saying the recent reforms have rekindled investors’ interest in the country.

He said the removal of nine banks’ managing directors, injection of N620billion to beef up eight banks’ capital base and prevent systemic banking crisis, and the initiation of investigation into infractions were all consistent with international regulatory standards in dealing with liquidity problems.

Sanusi said the deposit base of the affected banks remains robust, correspondent banks have not stopped credit lines to Nigeria, there has been a significant drop in inter-bank rates, and there has been no effects on oil importation.

Sanusi spoke in Lagos at the Fourth African Alternative Dispute Resolution (ADR) Summit, jointly organised by the Negotiation and Conflict Management Group (NCMG) and the National Judicial Institute (NJI).

Speaking on the topic: "The Nigerian Banking Sector Reforms: Effects on Investment Promotion," Sanusi, who was represented by CBN Deputy Governor Tunde Lemo, said the recent reforms demonstrated Nigeria’s zero tolerance for poor corporate governance culture.

"Foreign investors are encouraged when they are assured of the ability of our system to adequately deal with corporate malfeasance.

"We have adequately demonstrated this through the ongoing reforms, which makes Nigeria a preferred destination for Foreign Direct Investment (FDI)," he said.

Sanusi called for the establishment of an Asset Management Company (AMC) to address systemic liquidity squeeze and inhibition of credit growth.

The AMC, he added, will enable banks to resume real sector lending, and remove the pressure on them to sell down shares to recover loans, among others.

He added: "Infrastructural development remains of utmost importance to investment promotion".

The recent interest of banks in promoting investment in infrastructure through the raising of long term capital via private bonds market will further deepen our financial system and promote investment."

The CBN’s current strategic regulatory agenda, Sanusi said, include ensuring exchange rate and price stability, managing interest rate for stability and development, macroeconomic development.

Others are vigorous pursuit of CBN’s developmental roles, improvement of payment systems, diversifying the financial sector, and integrating Nigeria’s financial system into the African and global financial systems.

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