ABSTRACT
Ghost workers and payroll fraud refers to all processes of employee impersonations that have salary cost implication on the concerned government.
Payroll fraud is a serious and expensive problem, and one which can pass unnoticed for long periods of time if your company doesn’t have the correct procedures in place (Davidson, 2016). Ghost workers who are inserted into the payroll through collusion are usually difficult to expose due to the fact that those who ought to stop the ghost names from entering the payroll are part of the crime. There is collaboration within the system that enhances the operation of payroll fraud (Obinna, 2013). Those employees that have been retired, dead or on transfer may be kept on the payroll if payroll managers delay in removing the names of individuals who are no longer in service (Lekubu 2013). This means that the workers are paid salary irrespective of not being present in the office as a staff and did not work and the salaries redirected by the fraudster. This, if not checked will further create loopholes in the payroll system and in the collection of salaries. With the introduction of the Bank Verification Number (BVN) details, the perpetrators are easily found out. These details are used to identify ghost workers by acting as a check on those collecting multiple salaries and any other irregular entries on the payroll. The BVN can also be used to prevent diversion of salaries to the non-BVN or inactive accounts opened by the perpetrators in order to siphon the government’s monies into their private pockets. This study intends to provide explanation to the effectiveness of Bank Verification Number (BVN) in detecting and eliminating ghost workers in the Nigerian Public Service by appraising the Integrated Payroll and Personnel Information System (IPPIS).
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Unarguably, government at all levels in Nigeria is the biggest employer of labour. However, this huge workforce is riddled with a lot of challenges amongst which are the problem of ghost workers. According to Oguzierem and Sofiri (2017), ghost workers and payroll fraud refers to all processes of employee impersonations that have salary cost implication on the concerned government. It includes all illegal, unauthorized, unqualified, fictitious and non-existing staff that makes salary claims from the government coffers. This implies that underage, overage, backdated employments, inherited employments, unqualified staff and unauthorized staffs even though they report for work daily; are categorized as part of ghost workers and payroll fraud in the public service. In most instances, these fraudulent public officeholders forge the necessary documents and authorizations to add an employee on the payroll.
McCallum and Tyler (2001), in Oguzierem and Sofiri (2017) asserted that Apart from traditional ghost workers which are fictitious and non-existing employees added to the payroll by payroll managers, there are also the non-apparent ghost workers. These categories of ghost workers’ fraud are real staff in the public sector who receives fictitious pay through payroll irregularities. They include staff who receive unearned salaries through false means; for instance, staff who have multiple jobs in the civil service, receives dual or many salaries using pseudo names, employees who earn levels of pay or allowances greater than their rank, employees on temporary absence or leave of absence but who continued to earn full salary, and employees on transfer or retirement but whose names are in the payroll. The ghost workers syndrome is not limited to the salary payroll but also to pension payroll as many of the ghost workers enumerated above naturally graduate to the pension scheme while others are added by managers of the pension payroll. The problem was so severe that the pension schemes of many of the parastatals of the government spend huge resources in trying to fish out the culprits and in some cases collapsed under the weight.
Ghost workers are a huge drain on the resources of the country as hundreds of billions of
Naira is spent paying salaries and pensions entitlements to non-existent workers and in many cases to individuals who have no reason for collecting such pay other than the fact that they knew somebody who could easily add their name to the payroll. For example, the ministry of finance recently revealed that almost 24,000 ghost workers were discovered in the payroll of the federal civil services which saved the government in excess of N2billion Naira in salaries in 2016. This is in addition to the over 60,000 ghost worker weeded out of the federal government payroll in 2014. Many reasons have been adduced for the menace of ghost workers in Nigeria and other developing countries of the world. Olken and Pande (2012) argue that fraud as a result of the ghost workers syndrome is mainly due to inadequate research/information on the phenomena. The problem has become quite pronounced and noticeable considering the present economic realities in the country. With falling prices in crude oil the major source of income of the country, the government has been known to borrow to pay salaries of workers many of whom are ghosts. Whatever the causes of the problem, the point remains that it cannot be allowed to continue. In order to find a lasting solution to the problem, the federal and state governments have over the years instituted several policies many of which has failed the yield the desired result. For example, the governments at all levels over the years have embarked on employee verification processes including bio-data capturing, head counts at work desks bank/worker ID verifications all of which have yielded varying degrees of success but has failed to bring about a lasting solution.
In an effort to curb this, the government in 2006 introduced the Integrated Payroll and Personnel Information System IPPIS to provide a reliable and comprehensive database for the public service to facilitate manpower planning, eliminate record and payroll fraud, facilitate easy storage, update and retrieve personnel records for administrative and pension processes, and facilitate convenient staff remuneration payment with minimal waste and leakage. The project which began a phased and gradual implementation in 2007 has recorded a lot of success and is seemingly promising to achieve more in the nearest future. For example, since its inception the magnitude of ghost workers discovered in the federal government payroll have never been recorded in the history of Nigeria. Therefore, the aim of this study is to examine the effectiveness of Bank Verification Number (BVN) in detecting and eliminating ghost workers in the Nigerian Public Service by appraising the Integrated Payroll and Personnel Information System (IPPIS).
1.2 Statement of the Problem
Payroll fraud is a serious and expensive problem, and one which can pass unnoticed for long periods of time if your company doesn’t have the correct procedures in place (Davidson, 2016). Ghost workers who are inserted into the payroll through collusion are usually difficult to expose due to the fact that those who ought to stop the ghost names from entering the payroll are part of the crime. There is collaboration within the system that enhances the operation of payroll fraud (Obinna, 2013). Those employees that have been retired, dead or on transfer may be kept on the payroll if payroll managers delay in removing the names of individuals who are no longer in service (Lekubu 2013). This means that the workers are paid salary irrespective of not being present in the office as a staff and did not work and the salaries redirected by the fraudster. This, if not checked will further create loopholes in the payroll system and in the collection of salaries. With the introduction of the Bank Verification Number (BVN) details, the perpetrators are easily found out. These details are used to identify ghost workers by acting as a check on those collecting multiple salaries and any other irregular entries on the payroll. The BVN can also be used to prevent diversion of salaries to the non-BVN or inactive accounts opened by the perpetrators in order to siphon the government’s monies into their private pockets. This study intends to provide explanation to the effectiveness of Bank Verification Number (BVN) in detecting and eliminating ghost workers in the Nigerian Public Service by appraising the Integrated Payroll and Personnel Information System (IPPIS).
1.3 Objectives of the Study
The objective of the study is to examine the effectiveness of bank verification number (BVN) in detecting and eliminating ghost workers in the Nigerian Public Service by critically appraising the use of Integrated Payroll and Personnel Information System (IPPIS). However, the specific objectives are:
i) To determine the impacts of ghost workers fraud on irregular payment of salaries in the Nigerian Public Service
ii) To understand the effectiveness of Integrated Payroll and Personnel Information System (IPPIS) in eliminating ghost workers in the Nigerian Public Service
iii) To highlight the effect of ghost workers fraud on poor service delivery and performance in the Nigerian Public Service
iv) To understand the role of the Economic and Financial Crimes Commission in prosecuting the culprits
1.4 Research Questions
The following research questions will be treated in the course of this study:
i) What are the impacts of ghost workers fraud on irregular payment of salaries in the Nigerian Public Service?
ii) How effective isIntegrated Payroll and Personnel Information System (IPPIS) in eliminating ghost workers in the Nigerian Public Service?
iii) What is the effect of ghost workers fraud on poor service delivery and performance in the Nigerian Public Service?
iv) What is the role of the Economic and Financial Crimes Commission in prosecuting the culprits?
1.5 Research Hypotheses
The following hypotheses shall guide this study:
i) There is a significant relationship ghost workers fraud and irregular payment of salaries and allowances in the Nigerian Public Service
ii) There is a significant difference between ghost workers fraud and poor service delivery in the Nigerian Public Service
1.6 Significance of the Study
This study on the effectiveness of bank verification number (BVN) in detecting and eliminating ghost workers in the Nigerian Public Service by critically appraising the use of Integrated Payroll and Personnel Information System (IPPIS) has several contributions to make in the Nigerian society. It does not only seek to curb corruption in our society, it is also an attempt to give Nigeria and Nigerians image abroad. In recognition of these, the study will be of great significance to security agencies, government and non-governmental organizations (NGO) and members of the public. On the side of government and security agencies, especially the police, it will help provide necessary information on corruption in the Nigeria Civil Service, its types and ways of tackling the problem. It will as well help to bring to the attention of appropriate authorities, information on how state funds are stolen by organized criminals within the civil service organization, and agitate for proper policies to be made and implemented in order to curb the problem. This work will add to the literature in this area of study for future researchers who may find it useful as reference material. It will also add new knowledge to the existing body of knowledge. Findings from the work will be significant to sociologists, criminologists, economists, legal practitioners, political scientists as well as crime monitoring and management experts.
1.7 Scope of the Study
The study on the effectiveness of bank verification number (BVN) in detecting and eliminating ghost workers in the Nigerian Public Service by critically appraising the use of Integrated Payroll and Personnel Information System (IPPIS) will be restricted to public service workers in Delta State. A total of one hundred public servants will be selected randomly from among the officers of the Nigeria Police and Public Corporations in the state.
1.8 Definition of Terms
The following terms were used in carrying out this study:
Bank Verification Number (BVN): It is a unique identification number for all bank customers especially those who make electronic and cashless transfers. It enables one person to have a single identity within the financial system irrespective of the number of accounts within multiple banks and consequently serve as a means of authenticating customers’ identity at point of transactions. In the payroll, this unique identifier is used to identify all the government workers of the Ministries using the names, account details and the BVN of each individual.
Ghost Worker: Ghost employees maybe either real or fictional individuals who are falsely paid through a company’s payroll, after information- often relating to former or dead staff - is entered into the system in order to siphon money away. In some instances, former worker’s details remain on the system once they have left the company, enabling fraudsters to simply input new bank details. However, such transactions appear to be genuine and are usually much harder to detect if robust mechanisms are not in place.
