• Monday, December 04, 2023
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Unveiling the Shadows: Employee fraud in Nigeria’s real estate industry


Employee fraud is a formidable challenge that businesses face worldwide, and Nigeria’s Real Estate Industry is not exempt. In a landscape ripe with opportunities, there exists a darker side, where dishonest practices threaten the integrity of businesses and erode trust. In this article, we delve into the intricate web of employee fraud within Nigeria’s Real Estate sector, exploring real cases, consequences, and the road to prevention.

Cases of Employee Fraud in the Real Estate Industry
Theft of Commission: Real estate is a commission-based industry, making it susceptible to commission theft. It’s not uncommon for employees to manipulate deals, diverting rightful earnings into their own pockets. The victim? Not just the company, but also honest colleagues who lose out on their rightful share.

Abusing Data Protection and Privacy: With data at the core of Real Estate transactions, employee misconduct takes on new dimensions. Private client information sometimes falls into the wrong hands, leading to unethical sharing and potential collaboration with competitors, which not only breaches trust but also violates data protection regulations.

Office Racketeering and Petty Cash Requisition: Petty cash requisition can be a breeding ground for fraud. Collusion between employees can lead to unauthorized withdrawals, creating financial discrepancies that tarnish a company’s reputation and financial health.

Collusion with Vendors for Procurement Fraud: Procurement fraud in the Real Estate Industry often stems from collusion between employees and vendors. This involves inflating costs and receiving kickbacks, compromising the Company’s financial stability and competitive edge.

Diversion of Company Inventory and Products: Physical assets are not immune to fraud. Employees may pilfer Company inventory and products for personal use, leading to financial losses and operational inefficiencies.

Influence and Collusion among Employees: Senior employee influence and exploitation. Influential senior employees sometimes exploit their position to manipulate junior staff, creating an environment ripe for fraud. This dynamic can lead to wrongful practices that permeate the entire organization.

Manipulation of Junior Staff for Personal Gain Influence extends beyond the workplace. Senior employees might induce junior staff, even drivers, to partake in fraudulent activities, such as submitting false repair and maintenance requests, enabling dishonest gains.

Consequences of Employee Fraud
Financial Losses and Erosion of Trust: Employee fraud inflicts direct financial losses, but the impact goes deeper. Trust among employees and clients erodes, damaging long-standing relationships and tarnishing the Company’s image.

Reputational Damage for Real Estate Companies: Reputation is a cornerstone of success in Real Estate. Fraudulent activities stain a company’s name, deterring potential clients and partners, and leading to significant setbacks.

Legal and Regulatory Consequences: Beyond financial repercussions, employee fraud can lead to legal actions and regulatory penalties, further endangering the business’s stability and future.

Rising Cases of Employee Fraud Across Industries
Common Trends and Patterns Employee fraud is not limited to Real Estate; it extends its reach across various industries. Common trends include technology exploitation, collusive behaviours, and abuse of power.

Impact of the Digital Age on Fraud: Advancements in technology have transformed the landscape of fraud. The digital age provides new avenues for deceit, emphasizing the need for comprehensive prevention measures.

Real-Life Case: NEM Insurance Scandal
The NEM Insurance scandal is a stark example of employee fraud. The company’s financial controller, collaborating with other employees, executed an intricate embezzlement scheme. Manipulating records, forging documents, and siphoning off funds went undetected for years. Uncovered during an internal audit, this case highlights the significance of strong internal controls, regular audits, and fostering accountability.

The Need for Proactive Prevention: As cases of employee fraud rise, businesses must adopt a proactive stance. Prevention is key, requiring a multifaceted approach that combines strong internal controls, education, and digital innovation.

Strategies for Prevention and Detection
Implementing Strong Internal Controls: Businesses must establish robust internal controls, including regular audits, segregation of duties, and clear policies that deter fraudulent activities.

Regular Audits and Monitoring: Regular audits and monitoring help uncover discrepancies and irregularities, acting as deterrents and mechanisms for early detection.

Educating Employees on Ethical Behaviour: Ethical behaviour education should be a cornerstone of company culture. When employees understand the importance of honesty, they’re less likely to engage in fraudulent practices.

Encouraging Whistleblowing and Reporting: Creating safe channels for employees to report wrongdoing without fear of retaliation fosters transparency and acts as an early warning system for potential fraud.

Recognizing warning signs is pivotal in detecting employee fraud early. Behavioural, financial, and transactional indicators can signal fraudulent activities. Training employees to identify and report suspicions, along with forming cross-functional teams dedicated to fraud prevention, enhances collective vigilance.

Oberaifo Udoh, an experienced Entrepreneur, Business Management Consultant, and a leader in ethical business practices serves as a guiding light in Nigeria’s business landscape. With a track record of ethical leadership, Udoh’s expertise extends to various sectors. As the Group Managing Director of VINES REALTY, he embodies ethical principles, fostering a culture of integrity.

Beyond his professional endeavours, Udoh’s humanitarian efforts and consultancy services reflect his commitment to an ethical and trustworthy business environment.

Role of Business Management Consultants in Mitigating Employee Fraud: Oberaifo Udoh Consults stands as a beacon of expertise in navigating the treacherous waters of employee fraud.

With a track record of guiding businesses towards ethical and innovative solutions, their consultancy services provide a tailored approach to tackling employee fraud.

Leveraging Digital Innovation for Fraud Prevention: In the age of digital innovation, Oberaifo Udoh Consults pioneers advanced techniques that incorporate technology to prevent and detect fraud. By harnessing data analytics, monitoring tools, and digital controls, they offer businesses a cutting-edge advantage against fraudulent activities.
Employee fraud casts a shadow over businesses, but it’s a challenge that can be confronted head-on.

The road to prevention begins with awareness, strong internal practices, and embracing digital innovation. As Nigeria’s Real Estate industry evolves, let us collectively champion ethical conduct and fortify our businesses against the menace of employee fraud.

Oberaifo Udoh.
Group Managing Director
Vines Realty Afrique Limited
Contact Number: 07000000123
Email Address: [email protected]