A letter from the Director of Banking Supervision (DBS), Central Bank of Nigeria (CBN), to banks and other financial institutions has once again brought the crucial issue of ethics and professionalism in the financial services industry to the front burner of public discourse. The letter dated September 22, 2022 was titled: “Membership registration and payment of annual subscription for staff of banks with the Chartered Institute of Bankers of Nigeria: Compliance by banks and other financial institutions”.
Specifically, the letter says: “the attention of the Central Bank of Nigeria has been drawn to the non-compliance of banks with the provisions of Section 2(3) of the Chartered Institute of Bankers of Nigeria (CIBN) Act 2007, which states that “all corporate members shall cause their staff to register with the Institute to promote ethical standards, professionalism and self-regulation in the banking and financial services industry”
“This situation”, the letter says “is capable of hindering the effective performance of the statutory responsibilities of the Institute as enshrined in the CIBN Act,” adding that “all banks are hereby required to register their employees with the Institute not later than January 31, 2023.” The letter said further that banks were enjoined to encourage registered members of the Institute in their employment to pay their annual subscriptions to enable the CIBN discharge its statutory responsibilities.
Really, this directive to the banks by the apex bank is most timeous, coming when cyber-crimes and criminality, variegated insider-abuses, fraud and forgeries and sloppy corporate governance are on the increase in the financial services sector. Hitherto unheard-of-abuses and fraud cases now take place in banks and other financial institutions almost on a daily basis. And hardly has there been any case of (successful) fraud in any of the banks without the obvious collusion or collaboration of employees (bona fide or ‘contract’ staff). The worrisome trend is borne out by the number of fraud cases and volume/value of amounts of money lost via cases of fraud and forgeries in banks as reported periodically by the banks and other relevant agencies.
For instance, as widely reported in the media in the last week of October 2022, three of Nigeria’s ‘new generation banks’ recorded a whopping 26,877 fraud cases in the first six months of this year. This gives an average of about nine thousand cases per bank; and one thousand five hundred cases per month. Specifically, data culled from the financial reports of Access Bank, Guaranty Trust Bank and Fidelity Bank summed up to these fearsome figures.
In line with Section 5.1.2 (L) of the CBN Code of Corporate Governance, the Guaranty Trust Holding Company and subsidiary companies reported 15,004 fraud incidences in the period under review (first half, 2022). The bank reported that N1.55 billion and US$50,700 were involved in these cases, with N158.37 million recorded as actual/expected loss.
Similarly, Access Bank Plc reported N1.2 billion as fraud losses for the period. The bank recorded 10,706 fraud attempts in the first half of 2022. About 7,104 attempts were successful while 3,602 were unsuccessful. The sum of N12.55billion was involved in these attempts, according to the report.
On its part, Fidelity Bank Plc recorded 1,167 fraud incidents in the six months under review. The amount involved was N471.01million and US$8,367 but actual loss was N4.90 million and US$2,400. Further analysis of these reports show that electronics/USSD fraud cases were the highest, followed by fraudulent transfers/withdrawals/reactivation of accounts; and then cash theft/suppression/ pilferage/dry posting, among others.
Last year (2021), four Nigerian deposit money banks (DMBs) reported in their financial statements, loss of a total of N1.77 billion to fraudulent activities involving their employees. The banks are Wema Bank, First City Monument Bank, Access Bank and Guaranty Trust Bank. According to their financial statements, WEMA and GTB incurred the biggest losses as a result of fraud within the period under review, as they lost N670.73 million and N511.9 million respectively.
For Wema Bank, the cost of fraud rose by N27.46 million, year on year, as the loss incurred in 2020 was N643.277. In the case of GTB, the fraud losses were almost tripled in 2021. At N511.9 million, the losses the bank incurred due to fraudulent activities rose by N337.5million from N174.40 million recorded in 2020. GTB also disclosed that it recorded 15,204 cases of fraud and forgeries in 2021 involving N1.2 billion.
Access Bank revealed that while it lost N502 million to fraud in 2021, third parties lost about N1.98 billion. The bank also reported that it recorded a total of 17,697 cases of fraud in 2021, majorly comprising electronic fraud/USSD (17,911), cash theft/suppression/pilferage/dry posting (33), fraudulent transfers/withdrawals/reactivation of account (16), and armed robbery (6). During the review period, FCMB’s losses as a result of fraud climbed from N59.03 million to N89.8 million.
As these banks’ reports show worrisome fraud trends, so are daily reportage in the electronic, print and online media full of cases of actual or attempted fraud in banks. Some media monitoring and research outcomes hereby provide a few recent examples. Buttressing the collusion and connivance of bank staff in fraud and forgeries, Channels Television in its ‘Crime Watch’ report said the Enugu Zonal Command of the Economic and Financial Crimes Commission (EFCC) on Friday, October 14, 2022, arrested twelve bankers for suspected insider fraud (suspects’ names given but withheld).
Preliminary investigations, according to the report, showed that the suspects allegedly stole funds from some dormant accounts in a branch of an old generation bank in Enugu. The stolen funds were transferred from the dormant accounts to various beneficiaries, with the principal beneficiary already identified by the EFCC.
On Wednesday, March 2, 2022, the Daily Trust newspaper ran a story captioned: “EFCC: How bank staff stole over N870m within 3 days” in which the Economic and Financial Crimes Commission (EFCC) alleged that some bank staff defrauded their bank and its customers of N874 million within three days. The agency said the bank staff were being prosecuted for an alleged N874 million fraud, before Justice Oluwatoyin Taiwo of Special Offences sitting in Ikeja, Lagos.
The arraigned staff allegedly played roles in the hacking of the bank’s database and cloning of more than 22 ATM cards used to steal and divert to personal use about N874 million belonging to five corporate customers, including: American International Insurance Company Limited (AIICO); Interswitch; OVH Energy Marketing Limited.
Also, ThisDay newspaper in November 2022 came up with a headline: “Police Arraign Ex-Banker for Alleged N205 million Fraud”. According to the paper, men of the Police Special Fraud Unit (PSFU) have arraigned a former staff of Stanbic IBTC Bank Nigeria (names withheld) for allegedly defrauding the bank of the sum of N205 million. The former banker and his company (names withheld) were arraigned before Justice Abimbola Awogboro, on three count charge of conspiracy, obtaining by false pretence and unlawful conversion.
These reported cases of fraud are by no means isolated incidents in the banks; but daily occurrences that are being aided and abated by the mastery of technologies that now form the fulcrum of banking. The rising spate of unethical and unprofessional practices is also a feature of the times—when there is a growing apathy among many banking staff towards truly professionalising as chartered bankers.
Not a few bank staff these days take their jobs as ‘interim work’ to enable them put resources together to emigrate in search of better life and greener pasture in other climes. Human resources departments of all the DMBs are daily battling with the high rate of staff turnover—especially among the young ‘internet natives’ who take the whole world as their ‘constituency’. They are leaving in droves.
The CBN’s directive to the banks to register their staff with the CIBN is therefore rather an eye opener to the pervading nonchalance of bank staff to identify with the professional body. Same trend is obtainable in the accounting and other professions in Nigeria—where aspiring chartered accountants would rather go for membership of international accounting bodies than belonging to the local institute. This reality leaves banks with so much dangerous vulnerabilities: uncommitted ‘gorilla bankers’ who want to make money and move on with their lives—with scant regard for banking tenets that are rooted in integrity and trust.
•Okeke is an economist, sustainability expert and business strategy consultant.