CORRUPTION AND ECONOMIC CRIMES IN THE PUBLIC SECTOR OF NIGERIA


CORRUPTION AND ECONOMIC CRIMES IN THE PUBLIC SECTOR OF NIGERIA   

ABSTRACT

This study focus on corruption and economic crimes in the public sector with a particular reference to ministry of finance, Lagos state. The study identified the major causes of corruption and economic crimes and these were numerous ranging from bad government to societal values in public. 

In the course of the study, it was discovered that checks and balances in ministry result to the effectiveness and utilization of public funds. 

Having made the analysis, recommendations are proffered as to the measures the government, law enforcement agencies, ministry and the public will adopt in fighting the menace. 

The entire work is divided into five chapters. In chapter one, an introduction to the study was made. A review of literature was carried out in chapter two research methodology, data presentation and Analysis and summary of findings, recommendation and conclusion were made in chapter 3,4, and 5 respectively.  

TABLE OF CONTENTS

Title page…………………………………………………..…ii

Certification…………………………………………………….…iii 

Dedication…………………………………………………………iv 

Acknowledgement………………………………………………..v 

Table of contents…………………………………………….….vii 

Abstract……………………………………………………………xi 

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study…………………………..1

1.2 Statement of Research Problem………………….4

1.3 Objectives of the Study……………………………..6

1.4 Statement of Hypothesis……………………………7

1.5 Scope of the Study…………………………………..8

1.6 Significance of the Study…………………………..8

1.7 Limitation of the Study……………………………10

1.8 Historical background of the Organization…..11

1.9 Definition of Terms…………………………………14

References…………………………………………………..18

CHAPTER TWO: INTRODUCTION; LITERATURE REVIEW

2.1 Definition of corruption and economic 

Crimes………………………………………………..20

2.2 History/Trend of corruption and economic 

crimes in Nigeria……………………………………24

2.3 Types of economic crimes………………………..26

2.4 Types of corruption………………………………..33

2.5 The causes of corruption and 

economic crimes……………………………………37

2.6 Consequences of corruption and 

economic crimes in the public sectors………..39

2.7 The effects of corruption and 

economic crimes……………………………………40

2.8 Social-political and economic reforms…………42

2.9 Methods of tackling corruption and economic crimes…………………………………………………46

2.10 Due process as a mechanism to curb corruption in the Nigeria public sector………………………48

References…………………………………………………..53

CHAPTER THREE: INTRODUCTION

3.1 Research methodology…………………………….56

3.2 Research design…………………………………….56

3.3 Data collection………………………………………57

3.4 Method of data analysis…………………………..59

3.5 Method of data presentation…………………….59

3.6 Population of study………………………………..60

3.7 Coding procedure………………………………….60

3.8 Reliability of data…………………………………..65

References…………………………………………………..66

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction……………………………………….67

4.2 Presentation of data…………………………….68

4.3 Data analysis procedure……………………….68

4.4 Statistical testing of hypothesis………………85

References………………………………………………..90

CHAPTER FIVE: SUMMARY, RECOMMENDATION AND CONCLUSION

5.1 Findings……………………………………………..91

5.2 Recommendation………………………………….93

5.3 Conclusion………………………………………….99

Bibliography………………………………………………102

Appendix…………………………………………………..105

CHAPTER ONE 

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Economic crimes has been described as the manifestation of a criminal act done either solely or in an organized manner with or without associates or groups, with an intent to earn wealth through illegal means, carrying out of illicit activities which violate the laws of the land and other regulating statutory provisions governing the economic activities of the government and its administration. It can erode the confidence in the system of a country; threaten the integrity of government, its programmes and institutions, thereby undermining national security, law and order. On the whole, the overwhelming presence of economic crimes can make such a country unattractive to investors (Okolie 2006).

Irrespective of the sophistication of the methods adopted by criminals, the common characteristics of the crime include cheating, lying and stealing. Corruption is a menace in the public sector, although is a global malaise, the extent of its reach in the public sector was tragically stupendous. All indicators showed that the spread of this cancer had become frightening.

The menace of corruption leads to slow movement of files in offices, police extortion at tollgates and slow traffics on the highways, port congestion, queues at passport offices and gas stations, ghost workers syndrome, election irregularities, among others. Even the mad people on the street recognize the havoc caused by corruption – the funds allocated for their welfare disappear into the thin air.

Corruption is endemic in all governments, and that it is not peculiar to any continent, region and ethnic group. Corruption is found in democratic and dictatorial politics; feudal, capitalist and socialist economies.  Corruption practices did not begin today; the history is as old as the world. Ancient civilizations have traces of widespread illegality and corruption. (Lipset and Lenz 2000).

The price of corruption has been extremely high. The economic, political, social and moral bases of the country have been severely eroded and degraded. It has brought us near the brink and almost rendered us helpless and hopeless. It became imperative that something drastic had to be done to arrest the rot. This impelled the commitment of the president to tackle corruption head – on. (ICPC ACT 2000).

1.2 STATEMENT OF RESEARCH PROBLEM

Due to government insincerity in fighting corruption and economic crimes in the public sector, civil servants in the ministry of finance take advantage of looting the treasury. The civil servants perpetrate these act because they are connected to the top government functionary and thereby they were spared from been punished.

Interference in the duties of the anti – graft agencies such as independent and corrupt practices commission and economic financial crimes commission in combating the scourge. The anti – graft agencies are been used to witch – hunt any civil servants that do not dance to their tune by the government in power. The independence of the anti – graft agencies to punish corrupt civil servants in the ministry has been distorted.

Inefficiency and underutilization of public funds surface as a result of corruption and economic crimes. Due to corruption and economic crimes in the public sector, the ministry have not be able to perform efficiently and proper utilization of the resources that have been assigned to their ministry.

Collusion by officials in the public sector with foreigners to perpetrate corruption and found safe refuge and acceptance abroad. The officials in the public sector have engaged in this act now. This has caused the resources provided to the public sector to be mis – spent and misplaced.

1.3 OBJECTIVES OF THE STUDY

Corruption and economic crimes have hitherto hindered the efficiency and growth of the public sector in rendering their services. It is in this stead, the study is aimed at:

(1) To evaluate measures by government in curbing corruption and economic crimes in the public sector.

(2) To determine the role-played by anti – graft agencies.

(3) To evaluate the effectiveness and utilization of public funds by ministry.

(4) To evaluate the checks and balances in ministry on public funds.

1.4 STATEMENT OF HYPOTHESIS

The following hypotheses are formulated for testing in the course of this research.

(1) Null Hypothesis (H0) – The measures by government and anti – graft agencies in curbing corruption and economic crimes does not eliminate crimes in the public sector.

Alternative Hypotheses (H1) - The measures by government and anti – graft agencies in curbing corruption and economic crimes eliminate crimes in the public sector.

(2) H0 – The checks and balances in ministry does not result to the effectiveness and utilization of public funds.

H1 – The checks and balances in ministry result to effectiveness and utilization of public funds.

1.5 SCOPE OF THE STUDY

The research work focus on corruption and economic crimes, its possible effect in the public sector. The time frame covers from 1991 to 2008 using ministry of finance and to know the possible effect of corruption and economic crimes in there. This is necessary because it takes an equal amount of time from the last years of military regime and an equal amount of time from the first few years of the present democratic the economic and financial crimes commission and independent corrupt practices commission were established.

1.6 SIGNIFICANCE OF THE STUDY

Corruption and economic crimes have eaten into the fabrics of the public sector and it has been taken as business as usual. These deadly acts had been perpetrated without any regret, since these crimes started from the top. It is in this light the study is carried out to find a means of drastically reducing the ugly menace called corruption and economic crimes.

This study will be beneficial to civil servants in the public sector, relevant to law enforcement agencies, public office holders, researchers, bankers, accountants and the general public. This will help to unfold perpetrators of such crimes and how these crimes are perpetrated.

This study will also serve as a basis for putting into place various procedures and policies, which will help, curb this dreaded monster (corruption and economic crimes). This development would help to bring sanctity and sanity in the public sector and re – introduce confidence in the public sector.

1.7 LIMITATION OF THE STUDY

As this is a relatively new era, not much has been carried out due to insincerity of purpose amongst writers and non – availability of important literature works and text. Due to the sensitive nature of the study, this would place a constraint on the method analysis available for this study.

Non – cooperation by the officers in the ministry also posed a challenge in this research works. Despite the shortcomings, this research is aimed at carrying out a comprehensive and empirical work that will meet the yearnings of people.

1.8 HISTORICAL BACKGROUND OF THE ORGANIZATION 

FEDERAL MINISTRY OF FINANCE

The Federal Ministry of Finance was established in 1958 by the finance (control and management) ordinance to replace the then Finance Department. The Ordinance conferred on the Ministry the responsibility for the control and management of the public finance of the federation.

In the 1980s, attempts were made to re – organize the finance ministry either by excising some of it departments or ceding others to it. For example, in 1980 the budget office became an Extra – Ministerial Department under the Executive Office of the President and headed by a Special Adviser to the President on Budget matters. From 1987, the Budget Office functioned once again under the Ministry of Finance and was supervised by its own permanent security. In 1988, the office was merged with the ministry of national planning to form the office of budget and planning in the presidency under a ministry of state. Then in 1991, the budget office was excised again from the ministry of budget and planning and returned to the ministry of finance where it is to date.

In the case of the customs, it was a Department in the Ministry of Finance until 1985 when it was transferred to the Ministry of internal affairs where it was managed under the customs, Immigration and Prisons Services Board. However, in 1992, customs was returned to the jurisdiction of the Ministry of Finance.

With regard to the Development Aid Department, it was transferred in 1988 from the National Planning to form the Federal Ministry of Finance and Economic Department. The Development Aid Department was eventually returned to National Planning in 1991.

Functions of the Ministry

The following are the functions of the federal ministry of finance

1. Preparing annual estimates of revenue and expenditure for the federal government.

2. Formulating policies on fiscal and monetary matters.

3. Mobilizing domestic and external financial institutions through both internal and external financial institutions for development purposes.

4. Maintaining adequate foreign exchange reserves aimed at ensuring a healthy balance of payment position.

5. Maintaining the internal and external value and stability of the Nigerian currency, monitoring government revenue from oil and non – oil resources.

6. Supervising the insurance industry.

7. Managing revenue allocation matters.

1.9 DEFINITION OF TERMS

PUBLIC SECTOR: This include all organization set up by the government to satisfy human want to take care of specific want, specific needs of the public without profile purpose.

DUE PROCESS: This refers to the mechanism, procedure and set of standards applied to public sector procurement of goods and services to ensure budget discipline.

FRAUD: This is defined as an irregularity of impropriety involving the use of deception to obtain an unjust or illegal financial advantage (Okolie 2006).

CRIMES: This can be defined as a dishonest, violent, or immoral action that can be punished by law.

ECONOMIC: According to Longman dictionary of contemporary English, defined economic as the system by which a country’s money and goods are produced and used.

FINANCIAL: The management of money especially money controlled by a government, company or large organization.

TRANSPARENCY: As used in the humanities and in a social context more generally, implies openness in every area of business or globally.

MISAPPROPRIATION: This is the misuse of public fund especially by public office holder in the ministries.

ETHICAL VALUE: These are those qualities, which ensure that a member behaves with integrity in all professional, business and financial relationships and that he or she should strive for objectivity in all professional and business judgments.

ACCOUNTABILITY: This is the true openness or giving account of what has been expended by the public officer holder.

FAVORITISM: This is a mechanism of power abuse implying a highly biased distribution of state resources.

PROCUREMENT: This is the acquisition of goods and/or services at the best possible total cost of ownership, in the right quantity and quality.

TREASURY: This is the keeping of accounts of government funds and investment.

BUDGET DISCIPLINE: This involves strict compliance with all the variables about the budget.

CONTRACT: This is a project executed by persons or person normally evidenced by an agreement between two or more parties.

REFERENCES

Okolie, A.O (2006): Techniques of financial investigations (A practical guide) Progress Printing Associates.

Aigbokhaevbolo, O.M. and Ofanson, E.J. (2002): Project Work, Ejodamen Publishers.

Nigerian Federal Ministry of Finance: Figures at http//wwwfmf.govng/detail.php?link=facview.

Independent Corrupt Practices and Other related Offences Commission Act 2000.

Economic and Financial Crime Commission Act 2002.

Lipset et al (2000): Corruption, Culture, and Markets, in Culture matters, New York Basic Books.

Banfield, E. (1961): The moral basic of a backward society (Chicago: free press).

Nye, J.S. (1967): Corruption and Political Development: A Case Benefit Analysis, The American Political Science Review, PP. 417 – 427.

Mauro, P. (1997): Why Worry About Corruption, Editor, IMF Publications: Economic Issues, No. 6.

2.1   DEFINITION OF CORRUPTION AND ECONOMIC CRIMES

According to section 2 of the I.C.P.C Act (2000), corruption simply connotes impropriety and encompasses all forms of reprehensible, indecorous, and infamous conduct in the performance of some official and non – officials responsibilities. This means any act, which goes out of any normal societal behavior. According to Nye, J.S. (1967), Corruption is a behavior, which deviates from the formal duties of a public role, because of private (gains) – regarding (personal, close family, private clique, pecuniary or status gains). It is behavior, which violates rules against the exercise of certain types of duties for private gains – regarding influence. Banfield (1961) says that corruption includes such behavior as bribery (use of a reward to prevent the judgment of a person in a position of trust; nepotism (bestowal of patronage by reasons of ascriptive relationship rather than merit); and misappropriation (illegal appropriation of public resources for private uses. Corruption is the efforts to secure wealth or power through illegal means private gain at public expense; or a misuse of public power for private benefit. (Lipset and Lenz 2000). According to Gboyega (1965), “Corruption and Democratization in Nigeria”, Corruption involves the giving or taking of a bribe, or illegal acquisition of wealth using the resources of a public office, including the exercise of discretion”. Section 46 of the Economic and Financial Crimes Commission defines economic crimes to means, “the non – violent criminal and illicit activity committed with the objective of earning wealth illegally either individually or in a group or organized manner thereby violating existing legislation governing economic activities of government and its administration and includes any form of fraud, narcotic drug trafficking, money laundering, embezzlement, bribery, looting and any form of corrupt practices, illegal arms deal, smuggling, human trafficking and child labor, illegal oil bunkering and illegal mining, tax evasion, foreign exchange malpractice including counterfeiting currency, theft of intellectual property and piracy, open market abuse, dumping of toxic and prohibited goods, etc. Okolie, A.O (2006) described economic crimes as the manifestation of a criminal act done either solely or in an organized manner with or without associates or groups with an intent to earn wealth through illegal means, carrying out illicit activities which violate the laws of the land and other regulatory statutory provisions governing the economic activities of the government and administration.

2.2   HISTORY/TREND OF CORRUPTION AND ECONOMIC CRIMES IN NIGERIA The origin of corruption in Nigeria predates our political independence. The evidence of this fact derives from the allusion to the following statements. For instance, “on February 26, 1952, the Emir of Gwandu moved the following motion in the Northern House of Chiefs: “That this House, agreeing that bribery and corruption are widely prevalent in all walks of life recommends that Native Authorities should make every effort to trace and punish offenders with strict impartiality and to educate public opinion against bribery and corruption” (Adebayo, A. (1986). Eleven years later, Ronald Wealth and Edgar Simpkins (1963) were able to observe that “in Africa, corruption flourishes as luxuriantly as the bush and the weeds which it so much resembles, taking the goodness from the soil and suffocating the growth of the plants which have been carefully and expensively bred and tended. The forces ranged against it are negligence”. The corruption now prevalent in Nigeria today has grown beyond imagination and to a degree, which boggles the mind. Corruption is a common word and has become part of everyday usage. Since 1966, various dispensations (democratic or military) in Nigeria, at one time or the other, embraced one form of scheme, strategy, or program directed at curbing the menace or consequences of corruption.

2.3   TYPES OF ECONOMIC CRIMES Economic crimes are indeed a serious threat to the public sector and therefore a threat to the nation since the public sector is the heart of the nation. The existence and prosperity of a nation can be held to ransom by the activities of economic crimes perpetration. Some forms of economic crime are advance fee fraud, fraud, money laundering, and embezzlement of government funds; these are explained below. 2.3.1        ADVANCE FEE FRAUD Advance fee fraud is a criminal offense defined and punishable under section 419 of the Nigeria criminal code. Statutory section 419 of the criminal code of Nigeria provides thus any person who by any false pretense and with the intent to defraud, obtain from any other person anything capable of being stolen is guilty of felony and is liable to 3 years imprisonment. The scam popularly known as “419” was initially subsumed under the category of criminal offenses which have described as “obtained under false pretense” but now it under the EFCC Act. Syndicates as it is widely known outside our borders initiate the scam with members in different parts of the world strategically located to implement their different tasks. Though there are many variations, which are constantly been adapted to change some inherent elements of advance fee fraud in the public sector, and they are: 

 

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CORRUPTION AND ECONOMIC CRIMES IN THE PUBLIC SECTOR OF NIGERIA



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