CHAPTER ONE
1.1
BACKGROUND
TO THE STUDY
Financial malpractices are enemy to environment,
environmental protection is not effective where financial malpractices in the
public sector of an economy is pervasive and quality of life degraded. This study will give an overview of the
Nigerian’s recent experience in the context of economic reform programme. It will discuss the possible cause and effect
of financial malpractices and evaluate, such financial malpractices, which are
seen to have rocked to socio-cultural, political practice and economic
situation of the country. Corruption is
an effort to secure wealth or power through illegal means for private and
personal gain at the public expense for private benefit. Corruption as a phenomenon is a global problem
and exists in a varying degree in different countries (Agbu, 2001). Corruption practices are not issues that just
begin today but its history is as old as the world itself. (Lipset and Lenz,2010). However, the magnitude is not equal in every
society as some countries are more corrupt than others. Orwell George in the
widely read book; Animal farm: said “All animals are equal, but, some animals
are more equal than the others”.
The epileptic power supply in the economy reduces the
living standard drastically and at the same time increase the cost of
production in the country. In 2010,
President Good Luck Jonathan revealed that generating power from generator add
more than 40 percent to the cost of goods and services in Nigeria and that Nigerian
spend about N1.95trillion yearly running generator. In a recent published report by British Broadcasting
Corporation (BBC). It was said that Nigeria
lost 15Billion Dollars per year to corruption which means between 2001-2011
Nigeria has lost 150Billion Dollars in a span of 10years. In the final report of the Nigeria corruption and survey study (June, 2011)
the following institutions in
are rated based on their level of corruption.
|
RATING |
INSTITUTION |
|
1 |
Nigerian |
|
2 |
National |
|
3 |
Political |
|
4 |
Federal |
|
5 |
P.H.C.N |
Nigeria
as a nation practices a mixed economic system whereby both the government and
the private sector play an active role in the economy. However, despite the recent privatization
policy of the government, the public sectors still hold a substantial part in
the economy. A financial malpractice
which is one of the most dangerous social ill of any economy is pandemic in and has
defied all necessary medicines. (Dike,
2009). For instance, to know how
pervasive financial malpractices is, in our country the $12.4billion Gulf War
oil windfall, during IBB regime far back 90’s, in 2007, the members of National
Assembly decided to probe a contract of N23billion awarded by former President
Olusegun Obasanjo, four days to the inauguration of Alhaji Umaru Musa Yar
Adua. All this cited cases and many more
nothing is been done about it. It is all
about chop I chop game financial malpractices have been broadly defined as the
use of personal deception in the misappropriation of funds of a given entity. It is also the violation of established rules
for personal gain. (Sen,2008). Conclusively, by the end of the evaluation of
financial malpractice in the service producing companies of which
is to be carried out and discussed by this study, a lot of suggested solutions
will be given to reduce the financial malpractices and corruption at large
which is the bane of Nigerian economy.
This will also impact to the future positive change in the performance
of the private and public sector of the economy.
1.2
PROBLEM
OF THE STUDY
The problem in the evaluation of financial malpractices in
the service companies in
economy is that, corruption has eaten deeply in to the society at large. The Nigerians that are occupying the top political
positions in the country are, highly corrupt. During the inaugural, speech of the former
President Olusegun Obasanjo, He vowed, to tackle, financial malpractice, and he
established different, commissions, act and laws in that respect e.g. EFCC,
ICPC, money, laundering act e.t.c. he said “No society will achieve its
potential where it allow financial malpractices its full blown cancer as it is
in Nigeria”. (Dike,2009). Also, the
leaders of our government parastals that are, supposed to be the machinery
against the menace of financial malpractices are not only involved in it but
ranked as the 4th most corrupt in the country by the Nigerian
Corruption and survey study.
This research study will solve the problems identified as
highlighted in the background to the study.
RESEARCH QUESTIONS
These research questions are used in assessing the problem
of the research study;
i.
To what extent are financial
malpractices hindering the development in the Power Holding Company of Nigeria
(PHCN)?
ii.
Does the Nigerian Government
encourage corruption by the amount they are paying as salary to the service
company workers?
iii.
Is the low the investment
attraction in
caused by the role of corruption in the Power Holding Company of Nigeria
(PHCN)?
iv.
To what extent is the under –
development of power Holding Company of caused by injustice in the
system?
v.
Is there any basic standard
for recruiting personnel into the service companies of ?
vi.
Are the roles of financial
malpractices in Power Holding Company of development constrained by
psychological loss of faith in the government?
1.3
OBJECTIVES
OF THE STUDY
The
main objective of this research study is;
i.) To
evaluate the extent of financial malpractices in the service producing
companies of . Other specific objectives to be pursued are:
ii.) To
examine the extent of financial malpractices in the Power Holding Company of .
iii.) To
evaluate the cause and effect of financial malpractice in the service companies
of the entire economy.
iv.) To
have a rational resolution on this research study thereby assisting the
populace to develop the economy on the long run.
v.) To
make recommendation based on the research findings on the impact of financial
practice, on the service providing companies in .
1.4
STATEMENT
OF HYPOTHESES
The following hypotheses is stated for the purpose of this
research study;
I
– Hypothesis I
Null
Hypothesis, (Ho): Power Holding Company of development is constrained
by the retro-active role of financial malpractices in the public sector.
Alternative
Hypothesis (Hi): Power Holding Company of development is not
constrained by the retro-active role of financial malpractices in the public
sector.
2-
HYPOTHESIS II
Null, Hypothesis (Ho): There is a negative implication on
service companies in
caused by corrupt leaders and financial malpractices.
Alternative Hypothesis (Hi): There is no negative
implication on service companies in caused by corrupt leaders
and financial malpractices.
1.1
JUSTIFICATION
FOR THE STUDY
There are many Nigerians that have seen reasons in
embarking on this research study of evaluating financial malpractices in
different sectors, of the economy. Many
of those that carried out this researches are renowned in the country they
include Chinwa Achebe, (2005). Gain
Fawemi (2007) and the latest research carried on by SAN, Afe Babalola, (2011). The above mentioned researcher did well but
they are unable to complete some aspect of their research, this include,
privatization of PHCN, Billing system, money laundering cases, corrupt
politician cases and some outcome from litigation which are to be covered in
this study.
This study will also made known the way out of the
cankerworm of financial malpractices that are pervasive in the Nigerian
economy.
1.2
SIGNIFICANCE
OF THE STUDY
The significance of this research study cannot be over
emphasized as it analyzes the effect of financial malpractice in the service
companies. It will assist many
stakeholders in the economy like entrepreneur, students and telecommunication
companies to mention but few by reducing their cost of production; it will also
lead to increase in the public trust in government and its institution.
1.3
SCOPE
OF THE STUDY
The scope of this research study will be limited to 2001 to
2011. It will cover the happenings
within the Power Holding Company of Nigeria between 2001 – 2011, which
is a span of 10 years.
1.4
PLAN
OF THE STUDY
The chapter one cover the background of the study, problems
of the study, research questions, objectives of the study, statement of
hypothesis, justification, significance, scope and definition of terms in the
study. Chapter Two is the, literature review, where conceptual issues,
theoretical frames work and empirical evidences of the study are discussed.
Chapter three cover the research methodology that will be
used for the study. Chapter four is data
presentation and analysis while chapter five is summary, conclusion and
recommendation.
1.5
DEFINITION
OF TERMS
Economic
Reform:
This is an improvement relating to trade, industry and
money in circulation of an economy.
Economic
Growth:-
This is an increase in the size of an
economy in terms of infrastructural facilities, standard of living and industry.
Evaluation;
This is the calculation of the extent,
of something or the impact, of the issue in question.
Economy
Is the system by which a country’s
money and goods are been produced and used?
Gross
Domestic Product (GDP).
This is the value of output of goods
and services produced and provided in an economy in one year
Service
companies:-
These are the organization that
provides for basic need of the public e.g. Power Holding Company of
Malpractice:
Failure to act correctly or legally
when doing your job or responsibility assigned to you.
Menace:-
Something that is likely to cause
harm.
Phenomenon:
Something that exist and that can be felt,
especially something which is unusual or interesting.
Empirical:
Based on what is experienced or seen
rather than on theory.
Retro-active:
Law that has effect from the day it
was been approved.