22 November 2009
editorial
Lagos — When bankers steal it is sad. When bankers steal, the whole concept of banking becomes meaningless. The 2008 Annual Report of the Nigeria Deposit Insurance Corporation (NDIC) has revealed that 313 bank staff of various categories stole a staggering N53 billion in the year 2008.
According to the NDIC the number of bank workers involved in stealing increased by 14.65 percent over the 273 workers involved in fraud and forgeries in 2007. That is a disturbing trend.
Worse, the NDIC report stated that some 223 workers - core operations staff such as supervisors, officers, accountants, managers, executive assistants, clerks, cashiers or 71.25 percent of the total number - were involved in the overall fraud in the industry.
The NDIC identified the causes of the theft as institutional or internal factors and environmental or external factors. The internal factors include poor accounting, weak internal control systems, ineffective supervision of subordinates, uncompetitive remuneration and perceived sense of inequity in reward.
Environmental causes were identified as low moral values, slow and tortuous legal process, lack of deterrence for potential fraudsters and fear of negative publicity by the banks leading to failure to report fraud cases to the authorities for prosecution.
In real or operational terms, the frauds were mainly committed through forged cheques, unauthorized credits, posting of fictitious credits, illegal transfers and withdrawals, cheque suppression, cash defalcation and outright theft of bank money by the staff.
Coming on the heels of the recent banking reforms during which nine Managing Directors of banks and their Executive Directors were removed for various offences including inappropriate use of depositors funds, the NDIC report and the alarm it has raised about the rot in the banking industry, speaks for many people. Many Nigerians are alarmed that the traditional core values of banking are being deeply eroded.
As at now the image of the Nigerian bank worker, manager and banks generally is at its nadir, and the banking industry is in opprobrium in the Nigerian publics. That is a shame, considering that banking is based on honesty, trust, integrity and probity.
However, coming at a time of general concern about the trustworthiness of banks and the on-going reforms spearheaded by the Central Bank of Nigeria (CBN) all hope is not lost. The banks should accept the challenge of the negative publicity they have caused themselves and move to strengthen their internal control system.
They should launch internal anti-fraud campaigns to encourage whistle blowing and harsh penalties or outright dismissal should be the punishment for proven fraudsters. Such punishment should be given maximum publicity in the internal communication organs of any bank like the internet and staff magazines.
Banks should ensure that their staff members are well-trained to handle any new products and services as well as existing ones. Ignorance by bank staff can trigger fraud and incriminate innocent workers. Regular training should be a priority for all banks in Nigeria.
Also inspection departments in banks should be strengthened with honest and efficient staff. The practice where some inspectors blackmail managers of branches they inspect and indict only to be promoted to replace such should be discouraged. Bank management should be wary of bank staff who offer or volunteer to work in inspections departments and should only select or recruit honest and diligent workers from their track record as good overall performers.
As at now the NDIC report has opened the can of worms on the moral standards of our bank workers wider. We are worried about the decay in the banking system exposed by the CBN and the NDIC. The level of public confidence in the industry is at a low ebb at a time when the contribution of all Nigerians is required to grow the economy.
It is, however, hoped that the ongoing reforms will restore the needed trustworthiness of the banks to enable them play their traditional roles in economic development. At this point, eternal vigilance is required by all stakeholders in the banking industry to stem the growing tide of fraud and irresponsibility.
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