Abstract
The overall objectives of this
research work are to analyze the existence of unethical practice.
Unethical professional practice is of special concern to the monetary
and supervisory authorities, as these activities undermine the safety,
soundness and stability of the banking industry. The purpose of this
research work is to assess the implication of unethical practices in the
banking industry. The research also intended to give a brief discussion
on the need for ethics in the banking industry. It also discussed the
cause, nature, extent and consequences of unethical professional
practice in the banking industry. As such that it will put on the alert
with a view to stimulating the banking activities to considered ways and
means of making or restoring customer’s confidence and reducing this
syndrome. Unethical practices are wide in its nature and because of this
the research areas that some malpractices has occurred in the banking
industry. It also shows the cause and ways of reducing these problems of
unethical practices and it will help the monetary authorities to take
appropriate measures in order to sanitize the industry.
...
CHAPTER ONE: OUTLINE OF THE STUDY
1.1 GENERAL INTRODUCTION
After the
implementation of liberalization of the financial sector which was part of
Structural Adjustment Programme (S.A.P) introduced in 1986. The finance
industry in Nigeria” In particular the banking sector witnessed a tremendous
growth. This growth was manifested in the number of banks and other financial
institution and their branches, their total deposit, total loan and advances,
total assets and total capital and reserve during the period. Banks are
normally the institutions that accept deposits from different customer’s
payables on demand and organized loans. Banking activities started in Nigeria
in 1892, when the African Banking Corporation was established by British West
Africa (B.W.A) Which Later Known in 1894 as standard Bank limited (Now First
Bank Plc.). This was followed by Barcklays Bank Limited (Now Union Bank Plc) in
1917, By 1984 commercial banks in Nigeria were twenty six (26) now in Nigeria
we have twenty two (22) commercial banks. As for the year 2013.
The
tremendous growth witnessed in the banking industry and increased economy
education in the financial service industries. Like in all deregulated economy
have led to unethical professional practice in the sector to survive and
enhanced profit margins. Those sharp unethical practices later metamorphose
into malpractices that lead to the collapse of many banking institutions. There is fear that if the increase of
malpractices is not checked, it will pose the additional threat to the
stability and survival of individual’s banks and the performance of the
Industry as a whole. The issue of malpractice is a special concern not only to
the shareholders and depositors of the banks, but also even the regulatory and
supervisory authorities such as central bank of Nigeria (CBN), the National
Insurance commission (NAICOM), Federal Ministry of Finance (FMF), Security and
exchange commission (SEC), Federal Mortgage bank of Nigeria (FMBN) and National
Board for Community banks (NACB) whose
responsibility is to ensure the safety and soundness of individual banks and
the other financial industry as a whole.
Banking
business is usually built on confidence and trust consequently regulators of
the financial institutions less more and the behavior of the players in the
market by demanding either higher code of conduct of ethical behavior from the
operators and their client in the market. The need to encourage ethical practice
or to discourage unethical practice is usually underline by the legal
requirement for operator and their clients and other professional operators in
the industry. For the Nigeria banks, despite their higher Oath to act ethically
at all times. It has to do in practice always being caught in a dilemma of how
to reconcile the needs in most cases they cultivate the habits of being skills,
care and diligence at all times not even during his time of working (working
hours), so as to encourage him in shunning of any malpractice and other
unethical professionals in the banking and other financial institutions. Record
have shown that, only a few banks as
unity Bank Zanith Bank, and Ecobank render return on fraud and forgeries
even when such cases exist at the time
of rendering their statutory returns to the regulatory authorities.
1.2 HISTORICAL
BACKGROUND
First bank of
Nigerian Plc. is the pioneer banking institutions in Nigeria with over 120 i.e.
(1894-2014) years of banking experience, the bank traces its history back to
1894 as the bank of British West Africa. The bank originally served the British
shipping and trading agencies in Nigeria. The founder Alfred Lewis Jones was a
shipping magnate who originally had a monopoly on importing silver currency in
to West Africa through his elder dumpster shipping company. According to its
founder without a bank economics were reduced to using barter and a wide
variety of mediums of exchange, lending to unsound practices.
A bank could provide secure facilities for
deposit and also a uniform medium of exchange. The bank primarily finance
foreign trade, but did little lending to indigenous Nigerians, who had little
to offer as collateral for loans. In 1957, Bank of British West Africa changed
its name to Bank of West Africa (BWA). After Nigeria’s independence in 1960 the
bank began to extend more credit to indigenous Nigerians. At the same time
citizens began to trust British banks since there was an independent financial
control mechanism and more citizens began to patronize the new Bank of West Africa. In 1965,
standard Bank acquired Bank of West Africa and changed its acquisitions name to
standard Bank of Wes Africa. In 1969 the (SBWA) incorporate its Nigerian
operations under the name Standard Bank of Nigeria.
In 1971, Standard Bank of Nigeria listed its
shares on the Nigerians stock exchange
and placed 13% of its share capital with Nigerian investors. After the end of
the Nigerian civil war, Nigerians military government sought to increase local
control of the retails – banking sector. In response, now standard chartered
Bank reduced its stake in standard Bank Nigerian to 38% once it had lost
majority control, standard chartered wished to signal that it was no longer
responsible for the bank and the bank changed its name to First Bank of Nigeria
in 1979. By then the bank had re- organized and had more Nigerian directors
than ever.
In
1982 First Bank opened a branch in London, that in 2002 it converted to a
subsidiary, FBN Bank (UK). Its most recent international experience was opening
in 2004 of a representation office in Johannesburg, South Africa. In 2005 it
acquire MBC International Bank ltd and FBN (Merchant Bankers) Ltd Paribas and a group of Nigerian investors had
founded MBC in 1982 as a merchant bank, it had become a commercial bank in
2002. In June 2009 Stephen Oasis Onasanya was appointed as Group Managing
Director and chief executive officer, replacing Sanusi Lamido Sanusi who had
been appointed as a governor of the central bank of Nigeria (CBN) and later on
2014 Sanusi was accused of twenty three (23) case by the president Goodluck
Jonathan’s administration.
The
Bank has undergoes some transformation since inception in 1892 politically, it
has posed through hand of our British colonial masters, West African countries
before the present state in indigenization in an area of
operation. The bank established branches in all state of the federation
including the federal capital territory (Abuja). The bank branch chosen as a
case study came to being in 1979 along Gusau road Anka local government in
Zamfara state.
1.3 OBJECTIVE OF THE STUDY
The overall
study objectives is to analyze the existence of unethical professional practice
in the form of fraud and forgery, in the banking industry, with an aim of
assessing the level of honesty and the extent to which they affect the ethical
atmosphere in the bank, These areas include:-
§ The causes of unethical professional practice in
the banking industry.
§ The effects of unethical practices and its
consequences so as to restore the confidence of shareholders and customers in
banking industry, and alert the banking management in order to make, their
internal control system more effective.
§ The extent to which unethical professional
practice had come to existence and to find a solution to the problem.
1.4 RESEARCH
QUESTION
The research
used the following question that will guide to carry out this research work.
1.
How was the
condition of service?
2.
How the
management of the bank was, is it poor or good?
3.
How can you
explain the internal control system of your bank?
4.
How effective
was the security arrangement of documents?
5.
Does your bank
been supervised extremely by other independent bodies?
6.
What are the
effects of fraud and malpractice on the economy?
7.
What are the
remedies/ techniques of unethical practice control?
8.
How could fraud
or unethical profession in Nigeria bank be traced?
1.5 SCOPE
OF THE STUDY
Unethical
practice are wide in its nature and because of this the research work will
cover the areas that some malpractice has occurred in the banking industry from
2010-2013. The research also
discovered the existence of banking business in Nigeria, the concept, causes,
types and the nature of unethical practices in the banking industries.
1.6 LIMITATION
OF THE STUDY
Unethical professional practices are wide
issue and the banks are not ready to give data for fear of publication. The
study is restricted only to the data so far gathered and this was what made the
research limitation. Also the research work limit itself, because
the topic selected is wide in nature and
the time for carrying out this project report is very limited and there
was also financial problems to the researcher which is also one of the
yardstick of the shortcoming which the
research work is facing at the time of work.
1.7 SIGNIFICANCE
OF THE STUDY
The important
of the research work on the implication of unethical professional practices in
the banking industry, is simply to highlight anybody who happens to go through
this project, about the implication of unethical practices taking place in the
banking industry. It also shows the cause and ways of reducing these problems
of unethical practices and it will help the monetary authorities to take
appropriate measure in order to sanitize the industry. Nevertheless this work
will help the fellow student more especially those that in the field of
accounting to know what the profession is expecting them to do, and what is
prohibited (ethics and morality).
1.8 DEFINITION
OF RELATED TERMS
§ Authority: the power or right to give orders make decision,
and enforce obedience.
§ Bank : the
business organization that
accept and hold deposit from the public, transfer fund on order from
their deposit and use those bank to make loan or purchase and safe keeping of
valuable documents.
§ Collateral
for Loan: These are assets standing against the amount
of money collected by the borrower.
§ Depositors: A person who keeps money in a bank or building
society account.
§ Forgery : The crime of copying money, document etc. in
order to cheat people,
§ Fraud: A wrongful or criminal deception intended to
result in financial or personal gain.
§ Industry: A specific branch of manufacture and trade.
§ Profession: A paid
reoccupation especially that require enough skills and training. E.g.
Banking and Medicine
§ Regulation: A principles rules or laws designed to control or
govern conduct.
§ Return: The gain
or loss of a security in a particular period.
§ Shareholder: Any person, company or other institutions that
owns at least one share in a company.
§ Supervision: The action or process of watching and directing
what someone does or how something is done.