Published, New Age, 21 March 2011 (original link not working)
Norwegian Television’s big lie
Tom Heinemann, the director of the documentary broadcast on Norwegian television station which accused Muhammed Yunus of transferring aid money out of Grameen bank and using some of it to fund a telecom company appears on the cusp of securing a big scalp.
There can be little doubt that without the broadcast of this documentary in November 2010 – a revised version of which is about to be shown in Dhaka starting today - Muhammed Yunus would be safe in his position of managing director of Grameen Bank instead of now fighting to keep his job.
The film spawned the headline in the Bangladesh media, ‘Yunus “siphoned Tk 7bn aid for poor”’
It was this allegation that pushed the documentary from simply being a critique of microcredit to alleging corruption on the part of Grameen Bank and Muhammed Yunus himself.
It provided the government the perfect opportunity to make a move against Yunus.
It was also this allegation that was used by the government to justify establishing a review of Grameen Bank – with the Norwegian TV allegations as the first item in the inquiry team’s term of reference.
More recently it was this allegation that was central to the claims of widespread criminal conduct on the party of Grameen Bank and Mohammed Yunus made in a widely circulated e-mail by Sheikh Hasina’s son’s Sajeeb Wazed that tried to justify the government’s action against Yunus.
‘Approximately US $100 million in donor funds to Grameen Bank were transferred out of Grameen Bank,’ Wazed alleged. ‘$70 million was never returned,’ he claimed. The explanation given by the Norwegian government inquiry ‘left millions of dollars unaccounted for,’ he added.
These comments of Wazed’s are based directly on the documentary, or on a note put up on Norwegian Television’s website at the time the documentary was broadcast.
The journalists who worked with Heinemann certainly understand the significance of the film’s role in the removal of Yunus.
And they are full of pride at their achievement.
‘Gloating is not a dignified thing to do,’ writes Saifur Rahman a key colleague of Heinemann on his blog the day after the country’s central bank started its attempt to remove Yunus from his position.
‘Today, and in this particular case, I make an exception … I hope today that grin has been wiped off [Yunus’s] face.’
On his facebook page he states, ‘I am privileged to have been part of this doc[umentary]. So thanks Tom, and I thank my team in Bangladesh for this great result.’
Heinemann also shows no sense of remorse and states, ‘I’m the one who thanks for all your dedicated help over more than two years.’
Yet, despite the film’s incredible impact, there is no evidence to support the documentary’s central and killer allegations - that Yunus took donor money away from Grameen Bank and used it for purposes other than those permitted by the donors.
In fact the film’s very opening line – ‘Muhammad Yunus used Norwegian aid money to start a mobile company together with Telenor in Bangladesh’ – is not true.
Of course, the film deals with much more than just the use of donor money – it sets out a number of criticisms of microcredit generally.
This article, however only focuses on the allegations that became the headline news in Bangladesh and around the world and gave the government an excuse to try and bring Bangladesh’s nobel laureate to his knees.
The film was broadcast at the end of November 2010, and on the very next day bdnews24.com published the article that did Grameen Bank the damage.
The news agency’s story, at first seemed credible. The misuse of fund allegation against Yunus and Grameen Bank appeared to be based wholly on correspondence between Grameen Bank and the Norwegian government which told its own compelling story.
However, the story was complex. And as it was such a big allegation, as Editor, Special Reports for this newspaper I thought that New Age should try and make its own judgment about it.
I therefore spent quite a time reading all the documents which Tom Heinemann had made available – including getting those that were written in Norwegian translated into English.
I then read Grameen Bank’s own response published a few days later, questioned its general manager M Shahjahan first over the phone many times, then through e-mails exchange and in person. I also made copies of relevant pages of Grameen Bank’s annual reports.
Following this, I was in contact with Tom Heinemann himself and asked him for a response to some of the material that I had gathered.
Twelve days after the film was broadcast, and before Grameen Bank instructed any lawyers to assist it, I wrote an article in New Age, titled, ‘Norwegian film misunderstood Grameen financial transactions.’
My understanding of what actually happened is very different.
It is important to note that much of the story told in the NORAD correspondence is not in question
There was in 1996 a financial arrangement which resulted in the ownership of Tk 3474 million of donor money being transferred to another company Grameen Kalyan. There was an agreement that the money was to be lent back to Grameen Bank at an interest rate of about 2 per cent. It was a transfer that was done without the consent of all the donors - which included the Swedish International Development Agency, the Ford Foundation, and the German government aid agency, GTZ.
It is correct that Norad, one of the donors, was not happy when it found out about the arrangement and argued that the transaction raised principled concerns – particularly that the money would no longer be owned by Grameen shareholders and could, technically, be taken back by Grameen Kalyan at any time. It asked that the ownership of the money be transferred back to Grameen Bank.
It is also part of the record that Muhammed Yunus had tried to justify the arrangement to Norad on the basis, amongst other things, that it was intended to reduce Grameen Bank’s tax liabilities it tax exemption status was removed – but Norad was not persuaded.
And it is true that the ownership of Tk 754 million was returned to Grameen Bank with the ownership of the remaing money staying with Grameen Kalyan.
So much so good.
Yet, Heinemann’s documentary went much further than that.
It went onto say that ‘money’ had disappeared from Grameen Bank, that Yunus himself had ‘tapped’ the bank for the money. It then alleges specifically – apparently, assuming that money had physically moved out of the bank account of Grameen Account - that by the time the Norwegian government came to know about the transfer, ‘Grameen Kalyan had already transferred 50 mill NOK of the aid money to build the mobile company Grameen Phone.’
It also claims that ‘438 million kroner [of the donor money]’ - presumably the programme makers assume that the money was in Grameen Kalyan’s bank account - had ‘never [been] returned to Grameen Bank.’ The clear imputation here is that this donor money was used in a way not agreed by the donors.
Yet, not a single one of these allegations are true.
Neither the documentary, nor the material placed on NKR’s website, makes clear that the transfer was only ‘notional’; that whilst the ownership of this money changed, all the money stayed in the bank account of Grameen Bank. That is to say the transfer did not result in any of the money moving out of Grameen Bank’s bank account.
I have seen the voucher relating to this transaction, and it does not involve the physical transfer of money from one bank account of one company to the bank account of another company.
Understanding this is crucial to recognising that no money could ‘disappear’ from the bank account of Grameen Bank or as the bdnews24 story said, ‘siphoned off’.
The money not only stayed exactly where it had been before the transactions (i.e in the bank account of Grameen Bank) it continued to be used in exactly the same way as it had before the notional transfer. There is at least no evidence that it was used for any other purpose.
So there can be no truth is the film’s assertion that ‘Grameen Kalyan had … transferred 50 mill NOK of the aid money to build the mobile company Grameen Phone,’ as no aid money was infact in Grameen Kalyan’s bank account!
The only money (connected with Grameen Bank) that was physically within Grameen Kalyan’s account was a small portion of the money that Grameen Bank had internally generated from the interest that borrowers had paid back. This money – which was not donors money - was put into a fund called the social advancement fund (set up at the request of the donors) which was to be used for the welfare of borrowers and staff of Grameen Bank.
It was some of this money that was invested in Grameen Telecom – not donor money as alleged.
Yet, key people supporting the government’s general attack on Yunus continue to assume that donor money had physically moved out of Grameen Bank.
The Norwegain documentary mistakes continue.
It alleges that ‘438 million kroner’ of donor money ‘was never returned to Grameen Bank.’
Well, first of all there was no actual money to return to Grameen Bank’s bank account. And secondly the ownership of the money – assuming that this is what the documentary makers were referring to - in fact returned in 2003. This is clear from Grameen Bank’s 2003 annual report.
A big question, however, is why the documentary makers made so many critical errors. There seem to be two factors for this.
First, appears, they assumed, mistakenly, that the documents to which they had access told the whole story, and they needed no further clarification before broadcasting the film. As a result they mistakenly made a number of incorrect assumptions about the transfer.
Secondly, prior to the film’s broadcast, the filmmaker never elicited a proper explanation about the nature of the transaction from Grameen Bank.
Since the film was broadcast, Tom Heinemann has criticised the failure of Grameen Bank to engage with the film makers and give them the bank’s side of the story. Whilst, certainly there was no obligation on Yunus to agree to be interviewed, one thing I could not understand was why Grameen Bank had apparently not done this.
Last week, I asked Grameen Bank to show me the e-mails that Heinemann had sent them.
On looking at these. the reason for Grameen Bank’s failure becomes somewhat clearer
In none of these e-mails does Heinemann set out the allegations that he was planning to make in the film and ask Grameen Bank for its response to them.
From the e-mails that Grameen Bank showed me, the most substantive e-mail sent by Heinemann on this subject, states that he was ‘in possession of some confidential documents from 1997/1998 regarding your transfer of 608,5 million NOK from Grameen Bank to Grameen Kalyan.’
It goes onto say that ‘The documents also tells, that some sort of agreement was made between Grameen Bank and Norad/The embassy, but unfortunately I do not know how much money Grameen Kalyan transferred back to Grameen Bank.’
He does says that he would ‘very much like to hear opinion on these issues’ (sic).
This is pretty vague. From this, there was no reason why Grameen Bank would assume that the film was going to make allegations of missuse of funds.
Heinemann then goes onto ask two specific questions. ‘As I understand the documents you transferred the money in order to e.g. avoid taxation. Is that correct? On April 1. 1998 you also wrote a personal letter to Tove Strand from Norad. Here you ask for a meeting with her. Did you have that particular meeting and - if so - what was the outcome of it?’
Only the first question make an allegation – but it is a small one in the context of all the other calims that the programe makes in its programme.
From this e-mail – and all the others it received – Grameen Bank would have had no idea that the programme makers were going to allege that money had been transferred out of the bank account of Grameen Bank, used to fund a profit making enterprise, and most of it, to this day, not returned to Grameen Bank.
On Friday, I asked both Tom Heinman, the film’s director, and Snorre Tonset, an editor at NRK, the Norwegian Television station who was responsible for the film, to respond to the points in this article.
Neither have responded within the time I gave them.
In a much earlier e-mail exchange at the time of writing my12 December article, Heinman replied. ‘Donors had not intended the money to be transferred. There were massive implications of that transfer which is why money was demanded back. The compromise meant that Grameen Kalyan kept it. This was not how the donors had planned it. The telecom money was available as a result of the transactions, they carried out which was against donor agreements.’
Yes, agreed, donors had not intended the money to be transferred but that issue was resolved in 1997 with Norad, and the other donors did not seem to mind that their money was transferred in this way.
Yes, there may have been massive implications of that transfer – but only Norad thought that they were significant. And, significantly, none of those ‘implications’ actually happened in relation to the money that remained in the ownership of Grameen Kalyan for a further 7 years until ownership was returned in 2004.
Yes, it was not how the donors planned it, but it was resolved 15 years ago.
On the last point, though he was wrong. The telecom money has nothing to do with the transactions, and involves an entirely different pot of money – the Social Advancement Fund.
He also added in this e-mail to me in December, ‘You seem not to be focussing on the fact that Grameen broke agreements. Why is that?’
There is a good reason for not doing that. Grameen Bank did break agreements. Clearly that was wrong – and they were taken to task by Norad about that (though of course not by other donors) but it was all resolved 15 years ago to Norad’s satsisfaction.
But as Heinemann surely knows, it was not the breaking of the agreements that was the story – it was the implications that he and NRK made about how Grameen used the money. It was the sniff of corruption that catapulted this story throughout Bangladesh and into the international media
No doubt Yunus and Grameen Bank are no angels. He is human, and the organissation employs human. But this does not mean that they should be so inappropriately besmirched.
Apart from the series of allegations in this film, there have in recent months been many other allegations that have been made against Yunus and Grameen. Maybe these are true. I have not had no opportunity to look at them. But, what I can say is this, if they are as false as the ones contained in the Norwegian documentary, it is a terrible injustice and Bangladesh will be the main loser.
David Bergman is the Editor, Special Reports of New Age. He also happens to be married to a member of Muhammed Yunus’s legal team dealing with his removal from the Bank.