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Banks record N23.3bn fraud in nine months

By on June 20, 2015

Deposit Money Banks recorded a total of 8,502 fraud cases between January and September 2014, amounting to N23.34bn, the Managing Director/ Chief Executive Officer, Mr. Henry Semenitari, said on Thursday, quoting the latest FITC Report on Frauds and Forgeries in Banks.

According to him, the report is based on 66 returns received from 22 DMBs.

He said the N23.34bn fraud cases were committed through Automated Teller Machine withdrawals, computer manipulation, over-the-counter withdrawals, suppression of entries, and opening/operating of accounts.

The Unity Bank CEO made the disclosure at the 30th quarterly meeting of the Committee of Chief Internal Auditors of Banks in Nigeria hosted by the bank in Lagos.

He said, “Fraud is an epidemic that has eaten deep into the banking sector and the Nigerian economy. Its devastating effect manifests itself in the deteriorating balance sheet of banks as well as economic backwardness of third world countries, including Nigeria.

“Over the years, it has been established that substantial part of banks’ revenue is lost to fraud with no single bank spared.

“From the FITC Report on Frauds and Forgeries in Banks (January – September 2014), a total of 8,502 cases were reported.

“The total amount of money involved was N23.34bn out of which N3.01bn was actually lost. N20.33bn of the total amount involved was recovered through the collective efforts of banks’ internal and external control techniques as well as intervention of the law enforcement and anti-graft agencies.”

Semenitari told chief auditors of banks present at the meeting to make fraud prevention their main focus.

He noted that fraud had succeeded in killing organisations and “sending home everybody right from the gateman to the managing director/chief executive officer; the case of Enron Corporation is a popular case study.”

Speaking on the topic ‘Operational efficiency: a panacea to the survival of an organisation’, the CEO said the time had come for banks to rethink their operating models and become more operationally efficient.

He argued that banks were spending fortunes trying to recover money lost to fraud.

He said, “The recoveries (of part of the money lost in fraud cases) could not be achieved without costs direct and indirect, thus impacting negatively on the performances of our organisations. This implies that it could have been better for us to prevent the fraud than pursuing recoveries after it has been perpetrated.

“It therefore becomes imperative that in considering operational efficiency to help our organisations survive, we as the chief internal auditors need to focus effectively on fraud management.”

Semenitari described operational efficiency as banks’ ability to operate profitably by matching or exceeding every customer’s satisfaction while adopting good cost control strategies across all balance sheet indices.

He said, in the past, banks had built their business model and revenue strategies around deposit mobilisation, creation of risk assets, treasury activities and traditional front-end business coverage.

But current realities such as weak macro-economic conditions, uncertain growth prospects, unpredictable regulatory policies, global fall in oil prices and its ripple effects on various economic sectors were demanding otherwise, he added.

 

[Punch]