1.1 BACKGROUND OF THE STUDY
Corruption is as old as man and equally dynamic. Corruption made it visible when the institution of the government was founded due the behaviour of people appoint or elect to manage the government institutions (Anyanwu, 2002; Idomeh, 2006). Financial corruption has been seen as worldwide phenomena. It has to do with all human races irrespective of their communal and economical standing. It's common and rampant in public sector and its basis of slow development in Nigeria public sector environment. (Mukoro, Yamusa and Faboyede, 2013) posited that financial crime includes money laundering, bribery, looting, embezzlement, fraud; tax evasion, foreign exchange malpractice and oil bunkering. Recently in Nigeria public debates is being centred on the increasing rate of corruption resulting from inappropriate public finance planning and implementation mostly in some of the developing countries, Nigeria inclusive which in turn reduce the level of economic growth in the country. Financial corruption in particular, is among the largest challenges facing the world at large today. Though, it may be difficult to qualify how much is being lost to financial corruption as a whole, it is generally believed that losses are growing steadily while annual or monthly losses are estimated to be in thousands or millions of naira. Advancement in technology has opened up many possibilities for criminal, to carry out financial crimes and corruption in new ways thereby complicating the main of the crime and corruption. Besides taking advantage of technology, weak controls in the financial system and minimal enforcement activity for financial crimes allow criminals to take advantage of the financial system. The corrupt practices and other related offences, Act (2000) says corruption “includes bribery, fraud and other related offences” while Act vision (2010) committee in its report explains corruption as “all these improper actions or transactions aimed at changing the normal course of events, judgment and position of trust.” However, corruption is a universal disease and every organisation is making effort to fight it and the fact that much corruption in organizations had affected the objectives and goals of a firm. This study will explain the general corruption practices and financial corruptions in Nigeria, the trend since before the establishment and hindrance these have constituted for the development of the firms. This Section 46 of the EFCC Act( 2004) defines the crime as follows: Economic and Financial Crimes means the non-violence criminals and illicit activity committed with the objectives of earning wealth illegally either individually or in a group or organized manner thereby violating existing legislation governing the economic activities of government and its administration. This reveals that the crime could reasonably include a wide variety of criminal offences. Financial corruption may be traceable to some of the following aspect of corruption e.g. embezzlement, theft from firm funds and abuses of public power for extortion. Financial crimes are aggravated by financial need caused by greed, gambling, debts, business reversals, poor investments or trying to maintain a lifestyle well beyond one's means. The first and most sophisticated way to carry out a financial crime in many companies is through the manipulation of financial records and accounting in government establishment. It is a recognized fact that the management of Enron-the celebrated energy company in United States of America (USA) defrauded by it top management used creative accounting to make the company look good and powerful on paper than it really was using special purpose entity. Management excluded these entities from Enron's balance sheet to hide these risky investment activities and financial loses as stated by in paper presented by Mukoro, Yamusa & Faboyede, 2013. Corruption and other financial and economic crimes are the bane of Nigerian development efforts. Corruption bestrides the lives of the citizens. The judgment of Transparency International is a reflection of what the nation has given to the world-419, money laundering, inflated contracts, scam mails, illegal oil bunkering, and disappearance of ships etc. All these crimes harm Nigerian economy in no small measure. The need to study financial corruption and economic growth in Nigeria has continued to generate passionate commentaries and academic interest due to the level of financial corruption in the country and its effect on economic growth.
1.2 STATEMENT OF THE PROBLEM
In the country today, many firms and public institutions are winding up and having issues as a results of problem of financial crimes and corruption such as embezzlement, theft of fund, inflation of contract, poor credit facilities, concealment, forgery, counterfeiting, stolen cheques and weaken of internal control system, money laundering, paper hanging and frequently changes of top management staff, etc. to the extent that it damage critical management of firms and scare away both foreign and domestic investor and expose firms to regulation and reputation risk. Globally, and in Nigeria today, financial corruption is the process by which illegitimate business are channelled into the financial system in order to conceal their true origin. Fraud perpetrated in different sector of the economy through money laundering has been a concern to the regulatory authorities and the public at large. Fraud constitutes a threat to the continued corporate existence of an organization. The growth of frauds in different sector of the economy over the years has constituted a worrisome issue to individuals and corporate individuals. There has been concern about the management of the country‘s resources, particularly oil and its revenues, has been on the operation of the excess crude account by the government because it doesn‘t comply with the relevant provisions of 1999 constitution. Section 162 of the 1999 constitution specifically stated that “Internally Generated Revenues (IGR) of the federal government of Nigeria must be paid into the federation account”, but the operation of the Excess Crude Account (ECA) by the federal government violates this provision. Apart from concerns over the mismanagement of the Excess Crude Account, there are also worries about the revenues from the sale of gases. Falana (2010) noted that facts have continued to daily on huge sums of money that have been looted, misappropriated, shared, mismanaged or committed into white elephant projects. Therefore, the study will pinpoint the ways in which problems of financial crimes and corruption jeopardize the activities of the country. The study will be able to identify further, causes, implications of financial corruption on the economic growth of Nigeria.
1.3. AIMS AND OBJECTIVES OF THE STUDY
The major aim of the study is to examine the impact of financial corruption in Nigeria economic growth. Other specific objectives are as follows;
1. To examine the extent to which financial corruption affects the Gross Domestic Product (GDP) of the Nigerian Economy.
2. To examine the extent to which financial corruption affects the Federal Government revenue of the Nigerian Economy.
3. To examine the impact of financial corruption on Nigeria economic growth.
4. To examine the extent to which financial corruption affects the Gross Fixed Capital Formation (GFCF) on the Nigerian Economy.
5. To examine the relationship between financial corruption and Nigeria economic growth.
6. To proffer solutions or suggestions on how to curb the menace and transform the Nation.
1.4. RESEARCH QUESTIONS
1. To what extent does financial corruption affects the Gross Domestic Product (GDP) of the Nigerian Economy.
2. To what extent does financial corruption affects the Federal Government revenue of the Nigerian Economy?
3. What is the impact of financial corruption on Nigeria economic growth?
4. To what extent does financial corruption affects the Gross Fixed Capital Formation (GFCF) on the Nigerian Economy?
5. What is the relationship between financial corruption and Nigeria economic growth?
6. What are the proffered solutions or suggestions on how to curb the menace and transform the Nation?
1.5. RESEARCH HYPOTHESES
H0: There is no significant impact of financial corruption in Nigeria economic growth.
H1: There is a significant impact of financial corruption in Nigeria economic growth.
H0: There is no significant relationship between financial corruption and Nigeria economic growth.
H1: There is a significant relationship between corruption and Nigeria economic growth.
1.6. SIGNIFICANCE OF THE STUDY
There is no doubt that the crime of financial corruption in government threatens the moral integrity of a nation and hampers development, this thus makes the topic of discourse significant especially looking at the global effect of financial corruption on development generally. There are a number of reasons for focusing on the scope and impact of financial corruption in Nigeria and the difficulties in dealing with it. Nigeria occupies a central place in Africa as the most populous country, with an estimated population of over 149 million. It is one of the continent's richest countries and is blessed with a huge diversity of natural and human resources. Paradoxically, it is this important natural resource that sustains financial corruption in Nigeria. The significance of this study is therefore to expose the acts of the few privileged ones who find themselves in high positions of authority and the ways at which they divert the profits gotten from these natural resources for personal uses instead of using them for public purposes and how this has hampered efforts made on development.
1.7. SCOPE OF THE STUDY
The study is restricted to the impact of financial corruption in Nigeria economic growth 1990-2018.
1.8 LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.8 DEFINITION OF TERMS
Corruption: Amuwo (2016) and Obayelu (2007) consider corruption as the exploitation of public position, resources and power for private gain. Obayelu went further to identify corruption as “efforts to secure wealth or power through illegal means for private gain at public expense; or a misuse of power for private benefit.” Corruption covers a broad spectrum of activities ranging from fraud (theft through misrepresentation), embezzlement (misappropriation of corporate or public funds) to bribery (payments made in order to gain an advantage or to avoid a disadvantage).
Economic Growth: Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.
Financial Corruption: Financial corruption, also often referred to as white collar crime, covers a wide range of criminal offences which are generally international in nature. Closely connected to cyber crime, financial corruption are often committed via the internet and have a major impact on the international banking and financial sectors-both official and alternative. Financial corruption affects private individuals, companies, organizations, and even nations and has a negative impact on the economic and social system through the considerable loss of money incurred.
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