Norwegian Television’s big lie

Published, New Age, 21 March 2011  (original link not working)

Norwegian Television’s big lie

David Bergman

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.

PM’s son intervenes in Yunus affair

Published, New Age, 9 March 2011 (original link not working)

PM’s son intervenes in Yunus affair
Grameen Bank brushes aside allegations

David Bergman

In an intervention in the ongoing dispute between the Bangladesh government and the Grameen Bank, the son of Bangladesh’s prime minister, Sajeeb Wajed, has accused the bank of ‘fraud’, ‘theft’, ‘tax evasion’ ‘draconian’ methods of loan recovery, and other criminal offences.
In an email, which New Age has confirmed was distributed to international agencies and people of influence including human rights organizations, state department officials, and his own former class mates at the Harvard Kennedy School of Government, the prime minister’s son Sajeeb Wajed directly accuses Muhammed Yunus and his family of ‘embezzlement.’
In a detailed rebuttal, the Grameen Bank has brushed aside all the allegations, calling them ‘completely false’.’utterly misconceived,’ based on ‘inaccurate facts’ and misleading
The Friends of Yunus claimed on Tuesday that the ‘defamtory’s e-mail is ‘now exposing fully the dynamic behind the attack [on] Grameen Bank and [Professor] Yunus.’
In the e-mail Sajeeb, who lives in the United States, calls himself an ‘Advisor to Sheikh Hasina, Honorable Prime Minister of Bangladesh.
He told New Age on Sunday that ‘I was indeed the source of this e-mail,’ and said his main source of the information was two legal documents that ‘were prepared by our lawyers.’
The two documents were attached to the e-mail, which New Age received earlier this week
Sajeeb went onto tell New Age that, ‘They were vetted by relevant Ministries before being provided to me.’
Sajeeb’s comments against Yunus and Grameen Bank are in direct conflict with a briefing given only last week to diplomats and journalists by AMA Muhith, the finance minister.
‘Grameen Bank is an institution in which the government takes great pride’ Muhith said. ‘And we believe that the hard and dedicated efforts of the Grameen employees and borrowers under the able leadership of Prof Yunus has earned for the institution the place of honour that it occupies not only in Bangladesh but also abroad.’
The e-mail came at a very sensitive time with the government trying to remove Muhammed Yunus from his position as managing director of Grameen Bank, and the High Court on Tuesday upholding Bangladesh Bank’s order of dismissal.
The Bangladesh Bank wrote to the chairman of the Grameen Bank last week informing him that Muhammed Yunus ‘has been relieved of the responsibilities of managing director of Grameen Bank.’
Sajeeb told New Age immediately after the High Court decision on Tuesday, ‘Our High Court has ruled that Yunus was holding on to his post illegally and this vindicates us.’
In the e-mail, the main allegation the prime minister’s son makes against the Grameen Bank refers back to the Norwegian Television documentary that had claimed late last year that millions of dollars had ‘disappeared’ from the bank.
Sajeeb himself rejects the conclusion of Norwegian government’s inquiry which cleared the Grameen Bank of any misuse of funds, and instead claims that ‘approximately ‘$70 million’ of donor money ‘transferred out of Grameen Bank’ was ‘never returned’.
He comments that the ‘explanation’ given by the Norwegian government following its investigation ‘left millions of dollars unaccounted for.’
In a statement to New Age, the Grameen Bank said that in 2003 ‘not only NORAD’s remaining money but 100% of all donors money to the extent of Taka 3,474,501 million
was “transferred back … to Grameen Bank.’
New Age has seen the financial accounts relating to the year 2003 that note this ‘transfer’ of money.
The Grameen Bank also says that throughout this period the money had ‘always’ remained in the bank account of Grameen Bank, since the transfer of money was only
notional
Sajeeb also alleges that the Grameen Bank committed ‘fraud and theft’ as it ‘never returned’ to the borrowers ‘forced savings’ that Sajeeb claims microloan borrowers were
required to pay to the bank between 1998 and 2002
In subsequent correspondence with New Age, Sajeeb said, ‘This money was supposed to be put into a separate escrow account and paid back to the borrowers after a certain period. During that timeframe this money was not put into a separate escrow account and
was never paid back.’
In its statement, the Grameen Bank says that the claim is ‘completely false.’
'The truth is, from the beginning of Grameen Bank’s operation, members have been required to maintain a savings account containing 5% of their loan disbursement amount in order to provide for their emergency needs,’ the Grameen Bank says.‘This money is credited to the borrowers savings account, which is an interest bearing account and Grameen Bank has been giving 8.5% interest for the savings.’The Grameen Bank goes onto say that, ‘The borrowers are enjoying the benefit of their savings at their convenience and are allowed to withdraw the entire savings without leaving any balance in their accounts. There is no question of not returning the money to the account
holders.’
In a direct allegation against Yunus himself, the prime minister’s son also claims that the ‘equity’ in a number of private ventures which used donor funds were held ‘not by Grameen Bank, but by Yunus and his family members personally.’ He goes onto state that ‘This is completely illegal and constitutes embezzlement.’ 

Sajeeb told New Age directly that, ‘It is my understanding this includes the investment in Grameen Phone as well.’
In response, the Grameen Bank said that, ‘There had never been any single incident of using Grameen Bank fund for private venture with or without approval of the Grameen Bank. More importantly, none of the investments in various companies are held by Professor Yunus and his family members personally.’‘Many times in the past, we have made it very clear that Professor Muhammad Yunus does not own any share in any
company,’ the statement continues.
Sajeeb’s e-mail is also highly critical of microcredit. ‘Despite the hype’, the prime minister’s son says, ‘there is no evidence that microcredit has in fact reduced the rolls (sic) of the poor in Bangladesh.’
'Grameen Bank has been in the microcredit business for 30 years, yet Bangladesh remains one of the poorest countries in the world,’ he says.

He goes onto say that, ‘Grameen Bank charges up to 30% in interest rate on loans and up to an additional 10% in “forced savings” to the poorest sections of society.’
Again the Grameen Bank rejects this.
It points to a recent independent analysis of Grameen Bank’s interest rates by an international organisation called MicroFinance Transparency which it says found that Grameen Bank ‘charges 20% Effective Annual Rate (EAR) for its income generating loans, 8% EAR for house building loans, 5% for education loans (payable after completion of the education) and 0% for the loans granted to the struggling members.’
The statement adds that ‘Grameen Bank charges the lowest interest rate in Bangladesh for microcredit.’
The responsibility to eliminate poverty is not the responsibility of Grameen Bank alone.’
Sajeeb asks in his e-mail why Grameen Bank needs to charge ‘such high interest rates to the poor’ when it owns 35% equity in Grameen Phone which has annual revenue of over US $1 billion and profits of several hundred million dollars per year.
In response to this, Grameen Bank says that, ‘it does not in any way own any part of Grameenphone. Grameen Telecom is the company that owns 33% of Grameenphone.’
Grameen Telecom’s website states that the company’s goal, ‘Is to connect rural Bangladesh through the provision of mobile telephone service by creating micro-enterprises that can both generate individual income and provide whole villages with connectivity.’
In relation to the government’s motivation behind its action against Muhammed Yunus, Sajeeb in his email denies that it has anything to do with ‘political retribution’.
‘Nothing could be further from the truth,’ he states. ‘Politically [Yunus] is a non-entity in Bangladesh and no threat to any political leader.’
He told New Age that, ‘My purpose is simply to bring the facts to light and counter the PR campaign being conducted against the Government.’

Yunus loses court battle

 Published, New Age, 9 March 2011 (original link not working)

Yunus loses court battle

David Bergman and M Moneruzzaman

The High Court on Tuesday upheld the legality of the Bangladesh Bank order which last week removed Muhammed Yunus from his position as managing director of Grameen Bank.
In its decision, which took over an hour to read out, the court held that the 1993 staff regulations, which stipulated that the maximum age of retirement was 60, applied to Muhammed Yunus.
Rokunuddin Mahmud, representing Muhammed Yunus told New Age that he had advised his client to appeal to the appellate division, and that he had been instructed by his client to do so.
‘We will move a petition before the Judge in chambers. We will be asking for some kind of stay order,’ Mahmud said.
Muzammel Huq, the new government appointed chairman of Grameen Bank told New Age that he pland to convene a meeting of the board of directors in the next few days.
The ruling, read out by Justice Md Momtazuddin Ahmed, held that the 1999 resolution of Grameen Bank’s Board of Directors, which took place when Muhammed Yunus was approaching the age of 60, was not valid as it was inconsistent with the earlier staff regulations.
This board resolution had allowed the managing director to remain in his position beyond the age of 60, and had been relied on in court by Yunus’s lawyers.
As a result, the court said, at the point when Muhammed Yunus became 60, he ceased to be managing director.
The court’s decision means that when Muhammed Yunus received his Nobel Peace Prize, he was, in effect, unlawfully holding the position of managing director of Grameen Bank.
Also present in court was Justice Gobindra Tagore who together with Justice Ahmed had heard three days of argument.
The court also ruled that Bangladesh Bank had the power under section 45 of the Banking Companies Act 1991 to order Yunus’s dismissal, even though the Bangladesh Bank’s dismissal letter did not mention the provision or the basis upon which the power was being used.
The court decision also stated that the passage of time between 2000 when Yunus reached the age of 60 and in 2011 when the Bangladesh Bank ordered his dismissal, did not stop the operation of the law.
After the ruling was given, Mahbubey Alam, the Attorney General said it was now upto the government to decide what action to take.
‘I can announce Bangladesh Bank’s order is lawful.’ he told assembled journalists in his office building in the court premises
‘Yunus was appointed as managing director on certain conditions. It meant that if there was any variation of the terms of his employment, Grameen Bank would require permission from the Bangladesh Bank. Yunus held the position after crossing sixty years of age violating the terms and conditions of his employment.’
He went onto say, ‘The question I ask is there any institution that allows a person to hold a position for an unidentified period. Yunus became 60 in 2000, but he held the position for an unidentified period without approval.’
The Attorney General also commented that, ‘There was no connection between winning the Nobel prize and holding the office of managing director.
Yunus got the Nobel prize for his contribution to the bank, he said
The Grameen Bank’s general manager Jannat-E-Quanine, said that the bank was ‘very disappointed’ in the order and hoped that nothing would be done to ‘jeopardize the stability of Grameen Bank’.
The Friends of Grameen which is chaired by Mary Robinson the former president of Ireland and former United Nations High Commission for Human Rights said that that the court decision was ‘fundamentally groundless and political’
A UK government spokesperson told New Age that, ‘Together with the international community, we are following events concerning Prof Yunus very closely.
‘Grameen Bank is a well known and well respected development institution. We have great respect for Prof Yunus and the work he has carried out with Grameen.’
The US state department said, ‘We continue to monitor the situation and hope that an acceptable compromise can be reached.’
Sara Hossain, a member of Yunus’s legal team told a press conference that, ‘Yunus is a very respectable people as he founded the Grameen Bank which has earned the country prestige.
She said that she thought a vested quarter had moved to tarnish his image and as part of their ploy secured the Bangladesh Bank order.
None of the petitioner’s senior lawyers, Dr Kamal Hossain, Mahmudul Islam, and Rokunuddin Mahmud were present in court when the order was given.
Yunus, who had been present for all three days of legal argument, also did not attend.
Jannat-E-Quanine at a briefing in the Grameen Bank’s head office after the verdict said, ‘We have received the order and are very disappointed ..’
She said that the bank was consulting there lawyer to decide the future course of action.
‘We hope that in the meantime nothing will jeopardize the stability of the Grameen Bank,’ she added.

No wrong done to Yunus, AG tells court

Published, New Age, 8 March 2011 (original link not working)

No wrong done to Yunus, AG tells court

David Bergman and M Moneruzzaman


The Attorney General, Mahbubey Alam told the High Court on Monday that, ‘No wrong had been done’ against Muhammed Yunus when the Bangladesh Bank issued its letter relieving the managing director of Grameen Bank from his duties.
‘Getting the Nobel Peace prize is a different matter from the legal one before the court,’ he said.
‘Everyone has a lifetime as a human being, and no one is indispensible,’ the Attorney General said, asking the court not to issue a rule against Bangladesh Bank.
The court said that it would give its order on Tuesday on writ petitions filed by Muhammed Yunus and nine of the Grameen Bank’s directors that challenged the legality of Bangladesh Bank’s 2 March order which removed Muhammed Yunus from the post of managing director.
Earlier in the day, Rokanuddin Mahmud, representing Muhammed Yunus told the court, ‘His client had an apprehension that he might not obtain fair justice from the court.’
It is not the practice of the court to hold such long hearings before deciding whether to issue a rule, he said.
‘If you have any limitations, then we can go to another bench?’ Mahmud asked the judges.
Justices Mumtazuddin Ahmed and Justice Gobindra Chandra Tagore said that they would continue to hear the case.
On the third day of legal arguments, the Attorney General Mahbubey Alam said that the 1993 rules that governed the terms and conditions of employees of Grameen Bank, and required staff to retire at the age of 60, applied to Muhammed Yunus.
He argued that the term ‘kormi’ in the 1993 regulations included the managing director. ‘There cannot be any ambiguity about this,’ he said.
He went on to tell the court that because the 1993 regulations applied to all staff, the subsequent 1999 resolution passed at a meeting of Grameen Bank’s Board of Directors, which purported to allow Muhammed Yunus to remain in his post as managing director for an indefinite period, was not lawful.
‘The Board resolution is male fide, and contrary to the 1993 resolutions,’ he said.
The Attorney General also pointed out that in December 1999, the Bangladesh Bank, had informed Grameen Bank, as part of its inspection audit, that the Board resolution earlier that year needed the consent of Bangladesh Bank.
The government’s most senior lawyer argued that although Grameen Bank had written to Bangladesh Bank arguing that it was not necessary for Bangladesh Bank to provide its consent as Yunus had already been appointed in 1990, Bangladesh Bank did not accept Grameen Bank’s argument.
Reading out from minutes of a joint meeting that took place in 2003 between officers from both Bangladesh Bank and Grameen Bank, the attorney general claimed that the matter had not been resolved as had been earlier argued by the petitioner’s lawyers.
Near the end of his argument, the Attorney General pointed out that the Muhammed Yunus wanted to remain involved in the bank by any means.
He read out the letter that Yunus had sent to the finance minister AMA Muhith in which he sought to move from managing director to chairman of Grameen Bank.
Finally, Mahbubey Alam argued that the Bangladesh Bank could legitimately use the powers under section 45(1) of the Banking Companies Act to remove Yunus.
Justice Gobindra Chandra Tagore then asked the attorney general to look at section 45(2) of the legislation.
This states that, ‘Bangladesh Bank may, on representation … cancel or modify any direction issued under this subsection.’
On reading the section, the Attorney General told the court that, ‘There was an efficacious remedy available to the plaintiff,’ by appealing to the Bangladesh Bank which they have not utilized.
Earlier in the afternoon, Rokunuddin argued that Bangladesh Bank was fully aware of the 1999 Board resolution and had not objected to it.
‘Bangladesh Bank never took exception to this.’
He also claimed that although the Bangladesh Bank’s inquiry report raised concerns about the Board resolution, it was resolved at the subsequent meeting.
‘It was deemed that any objection by Bangladesh Bank had been satisfied,’ he said.
Speaking of Bangladesh Bank, Mahmud asked, ‘If you objected to me why did you do business with [Yunus]? This is crying out for an answer. Why for 12 years did you deal with [Yunus]?’

Yunus lawyers find Bangladesh Bank order arbitrary

Published, New Age, 7 March 2011 (original link not working)

Yunus lawyers find BB order arbitrary 

David Bergman and M Moneruzzaman 

Nobel laureate Muhammed Yunus’s lawyers on Sunday argued that Bangladesh Bank’s order to remove their client from his position as managing director of Grameen Bank was ‘absolutely arbitrary’ and ‘mala-fide’.
In two and half hours of tightly argued legal argument, Mahmudul Islam, a former attorney general, and Rokanuddin Mahmud, argued that Bangladesh Bank had operated beyond its legal authority in ordering Yunus’s dismissal from Grameen Bank on March 2 2011.
There were moments of rhetorical flourish when Rokanuddin made parallels between Muhammed Yunus and Nelson Mandela, whose epic struggle had brought apartheid in South Africa to an end, and emphasised how Yunus was the originator of Grameen Bank. ‘It was his concept, which he has implemented over thirty years’
In response, to this, Justice Gobinda Chandra Tagore said that ‘It is undoubted that Yunus has brought honour to the country by the bank, but we have to look into the matter whether his position was covered by law.’
Justice Momtazuddin Ahmed was also sitting in court.
The Attorney General, Mahbubey Alam, did not argue in court on Sunday but will have an opportunity on Monday to respond to the petitioner’s arguments.
Last week, the Bangladesh Bank wrote to the chairman of the Grameen Bank informing him that Muhammed Yunus ‘has been relieved of the responsibilities of managing director of Grameen Bank.’
In a crowded and noisy court room, with the lawyers struggling to make themselves heard, Mahmudul Islam argued that the Grameen Bank Ordinance 1993 gave Bangladesh Bank only a very limited role in relation to the post of managing director.
He pointed to section 14 of the ordinance and argued that Bangladesh Bank’s only role was to decide whether to give its approval to a decision already made by the Board to appoint a particular managing director.
‘Bangladesh Bank has no right to terminate,’ he said. ‘The law does not give the Bangladesh Bank the power to terminate the position of managing director.’
He also argued that the Bangladesh Bank was legally prevented from issuing the termination order since the bank had not passed the order in the eleven years after it had became aware of the Board resolution in 1999 which allowed the managing director to remain appointed past his sixty years of age.
‘The Bangladesh Bank had a duty to object. It failed to object. It can’t now object. This is what is called estoppel,’ he told the court.
‘Under the circumstances [of failing to object], one has to assume that it approved. The managing director is continuing [in his position] with the implied approval of Bangladesh Bank and the government.’
‘The Bangladesh Bank owes the court an explanation of what prompted it now to wake up and say it had not given its approval,’ Mahmudul added.
However, the Justice Tagore replied that, ‘If a man is robbed whilst he is sleeping, is it not still theft when he wakes up?’
In the afternoon, Rokanuddin Mahmud added to these arguments by saying that section 45 of the Banking Companies Act 1991 did not give the Bangladesh Bank the authority to fire Muhammed Yunus as the Attorney General had argued on Thursday.
‘There is nothing in the contents of the [Bangladesh Bank order firing Yunus] that says that the order is made through the power under section 45.’
Rokanuddin further emphasised the limited powers of the Bangladesh Bank. ‘Does it have a power to appoint the managing director. No. Does it have the power to remove [him]. No. Does it have the power to relieve him of his duties. No,’ he said.
‘Bangladesh only has one power. To approve the decision made by the board to appoint someone as managing director’.
He said that not only did Bangladesh Bank give its implied approval to allowing Yunus to remain in office beyond the age of sixty.
‘It was not just implied approval, but it was in express terms, by conduct’
Rokunuddin also criticized a point made by the attorney general on Thursday where he argued that there was no ‘universal age of retirement’.
‘There may be a universal principle of retirement, but not of age of retirement.’
He pointed that in Bangladesh there were different rules for different professions.
‘Judges have to retire at 67. Managers of private banks at 65. And bureaucrats at the age of 57.’
Yunus’s lawyer further argued that there was an important distinction between the appointment of a person and the terms and conditions of that appointment.
In the context of the case relating to Grameen Bank’s managing director, Rokanuddin said that whilst the Bangladesh Bank had a role in approving his appointment, it did not have a role in approving the terms and conditions – including the retirement age – under which he was employed.

Yunus challenges removal

Published, New Age, 4 March 2011 (original link not working)

Yunus challenges removal
Order on Sunday

David Bergman and M Moneruzzaman

Nobel peace laureate Muhammad Yunus, removed as managing director of the Grameen Bank by order of the Bangladesh Bank on Wednesday, filed a writ with the High Court on Thursday claiming that the order had no ‘lawful authority’ and was in ‘violation of his fundamental rights’.
After hearing lawyers for the petitioner and the government, the court said that it would wait till Sunday before giving its decision on whether to stay the Bangladesh Bank order.
The court, however, verbally ordered the government not to take any adverse steps against the Nobel laureate, the petitioner in the case.
The court was considering two petitions, one filed by Yunus himself and the other by nine of the 12 directors of the Grameen Bank’s board. The other three directors are government appointees, one of whom is the chair of the bank.
Yunus, along with the nine directors, all of them borrowers, were present in a packed courtroom to hear three hours of intense argument made in front of Justices Mohammed Momtazuddin Ahmed and Justice Gobinda Chanda Thakur.
With emotions running high, both Dr Kamal Hossain acting for Muhammad Yunus and Mahbubey Alam, the country’s attorney general, spoke with passion, and moments of real anger.
At one point, the attorney general accused the Grameen Bank of making a ‘fraud on the law’ while Kamal claimed that the conduct of the Bangladesh bank was ‘an insult and impertinence’ to the country’s Nobel laureate. ‘Do you just send away a person like him with a piece of paper?’ he said.
Despite differences in interpretation, much of the factual basis was not in dispute.
The original Grameen Bank Ordinance 1983 gave the government the power to appoint a managing director to the bank and in October of that year, the ministry of finance issued a notification appointing Muhammad Yunus to the position.
Seven years later, in 1990, amendments were made to the ordinance so that the power of appointment for the position of managing director was given to the board of directors.
Section 14(1) of the amended ordinance states: ‘There shall be a managing director of the bank who shall be appointed by the board with the prior approval of the Bangladesh Bank.’
Following this, in August 1990, the then chairman of the board of directors of the Grameen Bank wrote a letter to the Bangladesh Bank stating that the board had unanimously decided at a meeting that month to re-appoint Professor Mohammad Yunus as managing director and requested the Bangladesh Bank’s approval.
This approval was duly given in a letter dated August 25, 1990 and signed by Mominul Huque Khondaker, deputy general manager of the Bangladesh Bank.
The approval letter stated that the ‘Bangladesh Bank had no objection in appointing Muhammad Yunus managing director of the Grameen Bank.’
Three days later Yunus re-joined the Grameen Bank.
This was the first and only time that the Bangladesh gave it formal approval of Yunus’s appointment. At the time, Yunus was about 49 years old.
Nine years later, the 52nd meeting of Grameen Bank directors in July 1999 decided to discuss the issue of Yunus’s retirement. Yunus was by then approaching 60 years of age.
The directors decided that as the power of appointment was vested with the board, the 60-year age limit for retirement for general staff contained in the bank’s service rules established in 1993 would not apply to Yunus.
The meeting then resolved that ‘Dr Yunus would continue as managing director until the board of directors do not decide otherwise,’ and that a ‘regulation should be framed in line with the Grameen Bank’s ordinance… so that in the future there is no complication in appointing the position of managing director.’
Two years later, the 2001 Regulations Regarding the Appointment of the Managing Director of Grameen Bank was framed which stated that that there would be no age limit for the managing director of the Grameen Bank.
According to the petitioners, these regulations are not in fact relevant as they only relate to subsequent appointments of the managing director.
Soon after this, as part of auditing of Grameen Bank’s annual accounts, an inspection report was then prepared by the Bangladesh Bank where it was observed that the Bangladesh Bank had not approved the board resolution of July 1999.
The Grameen Bank responded by stating that no approval was necessary as the managing director had been appointed following the Bangladesh Bank’s approval letter in 1990.
In the next detailed inspection report by the Bangladesh Bank, no further reference was made to the previous query.
Nine years later, at the 88th meeting of the board of directors, Yunus expressed his intention to retire with effect from July 2010 as he was soon to reach the age of 70, however the board did not agree.
It was not until the board meeting in late January, around 10 years since the Bangladesh Bank inspection reports, that the Grameen Bank heard again from the Bangladesh Bank when it received, through its newly appointed chairman, a letter stating the central bank’s view that Yunus was not legally in post.
In court, the two lawyers argued over the meaning of this chronology.
Kamal emphasised that the Bangladesh Bank had given its prior approval to the Grameen Bank board’s decision to appoint his client in 1990 and there was no need to seek further approval.
The board, he said, had appropriate legal authority through the Grameen Bank Ordinance to decide in 1999 that Yunus did not need to comply with the 1993 staff rules.
He made the point that the failure of the second Bangladesh Bank inspection team to raise any further query about his client’s appointment and the lack of any other query by the Bangladesh Bank for a period of eleven years, despite annual audits by the central bank, indicated that the Bangladesh Bank also considered that no further approval of Yunus’s position was necessary.
He also argued that, in any case, the Bangladesh Bank should have given a show cause to Yunus before simply sending such an order.
The attorney general, however, stated that the approval by the Bangladesh Bank in 1990 did not mean that Yunus could be employed indefinitely without further approval.
He argued that the 1993 staff regulations applied to the bank’s managing director and the board did not have the power to countermand these rules by a board resolution.
Mahbubey stated that the 1991 regulations did not have the force of law as the board did not have the power to make such a regulation.
He argued that there was no reason for a show cause as Yunus was already over the age limit. ‘If the Bangladesh Bank wanted to remove him when he was under the age limit, then it would need to send a show cause,’ he said.
He argued that the Bangladesh Bank was the regulator of the Grameen Bank and had the power through the Banking Companies Act 1991 to issue its order sacking Yunus.
Early in the argument, Kamal emphasises that the ‘Grameen Bank is a unique institution and one which we are proud to say is owned almost wholly by poor women from across rural Bangladesh, who have changed their lives and those of their children and communities.’

Bangladesh Bank ‘sacks’ Yunus

Published by New Age, 3 March 2011 

Bangladesh Bank ‘sacks’ Yunus
Everything will be dealt with legally: Yunus

David Bergman and Abdullah Juberee 

The Bangladesh Bank has written to the chairman of the Grameen Bank informing him that Muhammed Yunus ‘has been relieved of the responsibilities of managing director of Grameen Bank.’
The Grameen Bank has, however, disputed the legality of the dismissal stating that the bank has ‘complied with the law in respect of appointment of the managing director’ and that ‘Nobel Laureate Professor Muhammad Yunus is accordingly continuing in his office.’
In a statement to New Age, the United States embassy in Bangladesh said that it was ‘deeply troubled’ by the Bangladesh Bank letter.
Concern was also expressed by the newly established group, Friends of Grameen, chaired by Mary Robinson, the former President of Ireland, who denounced the ‘new attempt of destablisation against Professor Yunus’.
In the letter, KM Abdul Wadud, the general manger of the banking regulation and policy department of the Bangladesh Bank stated that he was dismissed because the ‘reappointment of Professor Muhammad Yunus as managing director did not have prior approval of Bangladesh Bank as per Section 14(1) of the Grameen Bank Ordinance 1983.’
Section 14 (1) of the ordinance states: ‘There shall be a managing director of the bank who shall be appointed by the board with the prior approval of the Bangladesh Bank.’
The letter goes onto say that because of the lack of approval by the Bangladesh Bank, ‘Muhammad Yunus’s continuation of the discharge of his duties as managing director is not valid.’
It is not stated when the ‘reappointment’ of Muhammad Yunus by Grameen is supposed to have taken place.
Wadud says in the letter that ‘the order has been issued on approval of proper authorities’ and ends by suggesting to the chairman that he should ‘take proper action in this regard.’
On Tuesday, Wadud had told New Age, ‘The Grameen Bank Ordinance 1983 was created by the finance ministry. It is their responsibility to take action.’
Wadud’s mobile was not receiving calls on Wednesday.
In the past, the Bangladesh Bank was not involved in the regulation of the Grameen Bank but in recent years it has been slowly taking over the supervision of the bank, according to an official.
Mozammel Huq, the chair of Grameen Bank appointed by the government, told New Age that in his view there was nothing more for him to do and Yunus’s dismissal was ‘complete.’
He said that everything should now operate through due process of law.
He referred to Section 14(5) of the 1983 ordinance which states, ‘If a vacancy occurs in the office of the managing director, or if the managing director is unable to discharge the function of his office on account of absence, illness or any other cause, such officer of the bank as may be prescribed by regulations should discharge the function of the managing director until [the appointment] of a new managing director….’
He said that the senior most manager of the Grameen Bank, deputy managing director Nurjahan Begum, should now take over the position of the managing director.
‘All is defined in the law. I do not need to take any action,’ Muzammel told New Age
One of the country’s most senior lawyers, not involved in any of the current litigation involving Muhammad Yunus, questioned the bona fide intention of the Bangladesh Bank’s action.
Supreme Court lawyer M Zahir told New Age, ‘After so many years, they are coming and saying this? The Bangladesh Bank knew very well that Yunus was the managing director and now they are suddenly waking up and saying that he does not have the sanction. It is not bona fide.’
‘If the Bangladesh Bank allowed Yunus to continue as managing director all these years, why should he not have assumed that it approved of his appointment,’ he added. ‘The assumption must be that the Bangladesh Bank is satisfied with Yunus’s appointment.’
‘Why, I ask, did the Bangladesh Bank wake up so late and why against such a person as the Nobel laureate?’
Another senior lawyer who did not want to be named asked why the Bangladesh Bank did not send a ‘show cause notice’ to Muhammed Yunus before dismissing him.
In its statement, the US embassy added that it was ‘following developments closely and is waiting for clarification from the government of Bangladesh. ‘We hope that a mutually satisfactory compromise can be achieved that will ensure the Grameen Bank’s autonomy and effectiveness.’
The United States had been strongly urging the Bangladesh government against forcing Muhammed Yunus from office.
The Grameen Bank said that it is taking legal advice and examining all the legal aspects of this issue. ‘The Grameen Bank has been duly complying with all applicable laws,’ it added in its statement.
This letter sent by the Bangladesh Bank follows a similar letter that it had sent to the Grameen Bank chairman and which was presented to the Grameen Bank board meeting on Monday.
Following that letter, Jannat-E-Quanine, general manager of the Grameen Bank, had issued a statement saying, ‘There is no directive on Professor Yunus to cease functioning as managing director nor is there any suggestion of his being removed from this post.’

Govt in a fix over how to sack Yunus

New Age, 2 March 2011

Govt in a fix over how to sack Yunus

Abdullah Juberee and David Bergman

The Bangladesh Bank, the finance ministry and the law ministry are in conflict with each other about how to sack Muhammed Yunus from his position as managing director of Grameen Bank.
The finance ministry – following advice it received from the law ministry - asked Bangladesh Bank on Tuesday to use the powers set out in the Bank Company Act 1991 to force the removal of Muhammed Yunus from Grameen Bank.
‘We are not dealing with Grameen bank now. Bangladesh Bank is looking after the issue,’ Shafiqur Rahman Patwari, Secretary of Banking and Financial Institution Division, of Finance Ministry, told reporters at the ministry.
‘It has sufficient powers to take action.’
However, K. M. Abdul Wadood, the general manager of the Banking Regulation and Policy Department at Bangladesh Bank who is responsible for dealing with the current issue over Yunus’s employment, told New Age that the central bank does not have the powers to sack Grameen Bank’s managing director.
He said that the powers in the Bank Company Act 1991 which the government wants the Bangladesh Bank to use are not appropriate for dealing with employment issues of this kind.
Early on Tuesday, the finance minister, Abul Maal Abdul Muhith confirmed to journalists that his ministry had received a letter from Bangladesh Bank stating that Muhammad Yunus’s continued employment as managing director of Grameen Bank was illegal.
It was this letter which Muzammel Huq, the new chairperson of Grameen Bank, was reported to have placed before the meeting of its Board of Directors a day earlier, on Monday.
After that board meeting, Muzammel stated that, ‘By operation of law, [Yunus] has ceased to function as managing director.’
In response to this claim, Jannat-E-Quanine, general manager of Grameen Bank had issued a statement saying, ‘There is no directive on Professor Yunus to cease functioning as managing director, nor is there any suggestion of his being removed from this post.’
Muhith told reporters that, ‘The central bank does not even know about his continuation [as managing director of Grameen Bank]. Grameen Bank did not consult with [Bangladesh Bank] about the appointment. He does not exist as a [managing] director since 2001 to them.’
Under section 14 of the Grameen Bank ordinance, a managing director can only be appointed ‘with the prior approval of the Bangladesh bank’.
The decision by the finance ministry to send the matter back to Bangladesh Bank followed a meeting early on Tuesday morning between the law and finance ministry officials.
Finance ministry officials had brought to the meeting a proposal to change the law that would allow Yunus to be removed.
The law ministry officials however told their finance ministry colleagues that no legal amendments were necessary and that Bangladesh Bank could use its powers under section 45 of the Bank Company Act 1991 to force Yunus’s exit.
This section allows the Bangladesh Bank to issue any mandatory direction on any ‘banking company’ if it consider any one of four broad criteria exists.
These criteria include circumstances where the Bank considers it to be ‘in the public interest’ to issue a direction, or where it thinks that it should do so in order ‘to secure the proper management of any banking company’.
However, Wadood from the Bangladesh Bank told New Age that this section of the 1991 Act cannot be used in the way proposed by the finance ministry.
He said that it could only be used in relation to activities ‘where there is no existing regulations, laws or rules. It is not effective.’
‘The Grameen Bank Ordinance 1983 was created by the finance ministry. It is their responsibility to take action,’ he told New Age.
The government’s continued attempts to find a way to force Yunus out from Grameen Bank are occurring despite the US government ramping up its pressure on the Bangladesh government to back down.
New Age reported earlier in the week that US officials has told the prime minister Sheikh Hasina, that it would stop all high level diplomatic interaction with Bangladesh unless the government resolved the crisis amicably.
However, on Monday morning, following the normal cabinet meeting, a meeting took place at the cabinet division in the secretariat between the prime minister, Sheikh Hasina and the finance minster specifically to discuss how to force Muhammed Yunus out of Grameen Bank, senior finance ministry officials told New Age.

US asks govt not to harass Yunus

New Age, 28 Feb, 2011 

US asks govt not to harass Yunus

David Bergman 

US officials have told Sheikh Hasina that there will be no further high-level interaction between the United States and Bangladesh until the harassment of Muhammad Yunus, founder of the Grameen Bank, ends.
A senior western diplomat, with direct knowledge of these conversations, told New Age that Hasina was warned that her government must not force Yunus out of the Grameen bank and that Bangladesh’s first Nobel Peace laureate should be allowed to leave the bank gracefully and be given reasonable time to find a successor.
Mohammed Yunus has been under sustained attack from the Bangladesh government and sections of the country’s media since the broadcast of a Norwegian documentary in December 2010 alleging that Yunus had ‘quietly tapped’ the Grameen Bank for $48 million of Norwegian aid money.
Although the Norwegian government found that this allegation was false, the Bangladesh prime minister, Sheikh Hasina, described Yunus as a ‘blood sucker’ and set up a wide-ranging inquiry into the bank.
Three criminal cases involving defamation, fraud and food adulteration have also been filed against him although the High court in the past week stayed the adulteration case for six months.
Hasina was told directly by US officials that a possible visit to Bangladesh early April by the US secretary of state, Hilary Clinton, following her trip to Delhi, was contingent on a resolution of this high-profile crisis.
Hasina, who is planning to visit Washington in April to take part in the World Islamic Forum, has also been informed that she will not be given a meeting with the US president, Barack Obama, unless Yunus is personally agreeable to the terms of any compromise.
While many countries share US concerns about the Bangladesh government’s handling of the Grameen bank, no other country has been so supportive of Muhammad Yunus
The government’s attack on Yunus has already resulted in the loss of some US financial support.
The US Millennium Challenge Corporation, an independent US foreign aid agency funded by the US congress, decided in January against putting Bangladesh on its ‘threshold’ programme where countries must ‘demonstrate a commitment to just and democratic governance, investments in the people of a country, and economic freedom.’
Humayun Kabir, who until 2009 was the ambassador to the United States, told New Age, ‘Maintaining high-level contacts is important for both the countries as these are building blocks to the relationship which is a very important one for Bangladesh. United States is one of the country’s most important trading partner and a partner in security.’
Although Hasina has shown no signs of relenting, it is understood that discussions between Muhammad Yunus, the finance minister, Abul Maal Abdul Muhith, and former Grameen Bank chairperson Rehman Sobhan, took place in Delhi over the last few days where they all attended the same conference.
‘Muhith has been told what the Grameen Bank wants. It is now in the minister’s hands,’ said a person privy to the conversations.
Even if Hasina gives Yunus time to leave the organisation, a likely stumbling block to any agreement, however, concerns the position of Muzammel Huq, the new chairperson of the Grameen Bank, appointed in January by the Bangladesh government.
Formerly, the general manager of the bank, Muzammel was fired by Yunus more than 10 years ago. The New York Times recently reported that he said that Yunus had a ‘small heart’ and could not ‘give credit to anyone but himself.’
Another contentious issue is whether Yunus will be allowed to continue at the bank in some advisory or honorary role
On Monday, the Grameen Bank will hold its first board meeting under Muzammel’s new chairmanship. The board comprises three government appointees – including the chairperson - and nine others elected by the borrower-shareholders.
The western diplomat told New Age that the finance ministry was going to use the board meeting as an opportunity to send a dismissal letter to Yunus on the basis that his previous extension to his employment had not been sanctioned by the Bangladesh Bank.
However, it is understood that the government, under pressure, decided not to do this.
The government may have to come to a quick decision on whether to change tack
Yunus is due to go to the United States in early March where he is likely to meet Hilary Clinton. The western diplomat told New Age that what Yunus tells Clintion about any change in the government stance towards him and the bank will influence any plans Clinton may have about coming to Bangladesh.
The Bangladesh government is also likely to be aware that the argument over Yunus is impacting badly on the US Congress which has recently awarded Yunus a Congressional Gold Medal.
The Congress decides, each year, the level of money that the United States Agency for International Development will provide to Bangladesh. It will also ultimately consider whether Bangladesh’s apparel sector should be included in the Generalised System of Preferences that would reduce the tax on imported Bangladesh garments – a long standing demand of the country’s apparel sector.
While in the weeks after the initial press reports, civil society actors in Bangladesh showed little support for Yunus, in recent days this has changed, with increasing number of people signing statements against the government’s ‘harassment’ of Yunus.
His greatest high-level support however comes from outside Bangladesh, with Mary Robinson, the former president of Ireland, recently setting up a Friends of Grameen, which includes the former president of the World Bank James Wolfensohn.
Robinson alleged that Yunus and the Grameen Bank were the victims of a ‘campaign of misinformation.’

Dipu holds emergency meeting with diplomats on Grameen Bank

New Age, 2 February 2011

Dipu holds emergency meeting with diplomats on Grameen Bank

David Bergman 

The foreign minister, Dipu Moni, held an emergency meeting with ambassadors and senior diplomats in Dhaka to justify the Bangladesh government’s decision to hold an inquiry into the Grameen Bank, diplomats have told New Age.
The meeting at the foreign ministry was held on January 9 just over a week after Ellen Goldstein, the World Bank’s Bangladesh country representative, had sent a letter to the finance minister raising concerns on behalf of bilateral and other international donors about how the government was dealing with the Grameen Bank.
At the briefing, Dipu Moni explained to diplomats that the government considered the Grameen bank to be an ‘organ of the state’ and that there were many alleged irregularities which needed investigation.
Three days later, the government announced the formation of a five member inquiry team led by AK Monowar Uddin Ahmed of Dhaka University to look into the affairs of the Grameen Bank.
New Age can also reveal that a few days before the diplomatic briefing, Dipu Moni’s office phoned up the Asian University of Woman to inform it that the prime minister would only speak at the university’s international conference in Dhaka, which was to be held later that month, if Mohammad Yunus was removed from the programme.
Yunus had been invited by Cherie Blair, one of the university’s patrons and wife of former UK prime minister Tony Blair, to give a ‘keynote’ speech at the end of the conference.
The university has also asked him to be part of a special day of celebrations honoring 25 students who were daughters of Grameen Bank borrowers.
Following the intervention of Dipu’s office, Yunus’s agreed involvement in the conference was cancelled.
Omar Shareef, the university’s chief operating officer, denied that Yunus’s absence had anything to do with the government. ‘There was scheduling conflicts and that was the reason why Mohammed Yunus could not attend,' he said.
A Grameen Bank statement to New Age however said, ‘Professor Yunus was scheduled to preside over the closing plenary of the conference. There was also a programme planned with the AUW Muhammad Yunus’ scholars at the Grameen Bank headquarters. These programmes were set for many months. We were informed by the university authorities at the last moment that due to unavoidable circumstances these programmes could no longer take place. They were therefore cancelled.’
A spokesperson at the foreign minister’s office said that he was unable to comment as Dipu Moni, was outside the country.
On the morning of January 9, all embassies in Dhaka received a letter inviting ‘ambassadors and high commissioners’ to a briefing later that day at the foreign ministry.
‘The foreign minister started by saying that the country was facing a lot of challenges,’ one diplomat present at the meeting told New Age. ‘Dipu Moni went on to say that the government would be happy if all it had to deal with was terrorism and food prices, and the war crimes trial but sometimes things come along requiring the government to respond and Grameen Bank was one of them.’
‘Dipu Moni then said that the government was aware of the concerns from friendly countries which was why she wanted to dispel misconceptions about what kind of entity the Grameen Bank was,’ the diplomat continued, reading from contemporaneous notes taken at the meeting.
‘She then went on for 30 minutes to read out from a thick dossier she had in front of her. She mostly read out long chunks from the 1983 Grameen Bank Ordinance, but also the constitution and the 1940 lenders act.’
‘Her basic point was that the notion that the Grameen Bank is independent of the government is a complete non-starter. It is a statutory public authority and therefore an instrument of the state, she said. Sometimes she also referred to the Grameen Bank as an “organ of the state” to be governed by the government. She emphasised that the government determines everything about the bank, what work it does, the scope of capital and the authority to wind it up.’
‘The foreign minister referred a number of times to the fact that since 1990 the government has helped out Grameen when its capital had been short.’
Continuing to quote from notes taken at the meeting, the diplomat said Dipu Moni listed a number of issues that would be examined by the inquiry.
These included whether Grameen Bank was lending to people not entitled to get loans (‘not the landless poor’); whether Yunus was in office beyond his compulsory retirement age; claims that changes of the terms of employment of staff were unlawfully gazetted in the name of Mohammed Yunus; and the allegation that companies had been formed which were ‘not authorised by law.
‘She also raised questions about the guarantees that were furnished, the levels of interest rates and the methods of collection,’ the diplomat said. Other diplomats confirmed the accuracy of this diplomat’s recollection.
The meeting lasted for about half an hour.
Prof Monwar Uddin Ahmed, the chair of the review committee set up to look into Grameen Bank’s affairs told New Age that its inquiry would be objective.
It would look at the ‘Overall functioning of Grameen bank, and suggest how to improve functions of the bank in the future, and in that context look at all legal economic social dimensions of the bank,’ he said
‘There is also provision for a special audit of Grameen Bank by the Bangladesh Bank which will be a supplementary to the review. The committee has also been asked to make list of sister organisations of Grameen Bank and find out the relationship of Grameen Bank to these sister organisations, and to review all the news flashed into the media particularly about the Norwegian programe and to assess whether there was any transfer of funds to a sister organisation.’
On being asked to comment on Dipu Moni’s comment to the diplomats, the Grameen Bank firmly rejects the argument that it is a government body.
In a written statement to New Age it points out that the 1983 Grameen Bank Ordinance states that the government only ‘owns 25 per cent of the bank’ and is allowed to nominate only 3 of the 12 directors.
It states that although the bank was a ‘statutory body,’ under the provisions of the ordinance, ‘the board of the Grameen Bank is given autonomous power to manage the bank and make all policies, and rules.’
The statement goes on to say that as of 2009 the government in fact only owns 3.4 per cent of the bank. ‘The government has not put additional money in, while the poor people’s share in the bank has been going up steadily. [The poor people] are owners of the bank and share in its profits.’
In relation to the other matters raised by Dipu Moni at the meeting, Grameen Bank statement said that the ‘Grameen Bank has always operated within the law and denies all allegations of wrong doing.’
It notes that the 1983 ordinance ‘lists many objects of Grameen Bank, besides lending money to the poor.’
Specifically in relation to the allegation that Mohammed Yunus should by law have retired, the Grameen Bank statement to New Age says: ‘Sixty is the normal retirement age of the Grameen Bank’s employees… [T]he terms and conditions of the managing director are set by the board. There is no question of the managing director being past the retirement age. His tenure is decided by the board.’

Validity of charges against Grameen under question

New Age, 12 December 2010

Validity of charges against Grameen under question 

David Bergman 

Grameen Bank probably never had a worse week. A Norwegian documentary claimed that its noble peace prize winning founder had ‘quietly tapped the Grameen Bank’ for Tk 3474 million of aid money, that Norwegian assistance had ‘disappeared’ from the bank and, some aid money was diverted to fund Grameen Phone.
The allegations were then taken up by bdnews24.com – with a headline, ‘Yunus “siphoned Tk 7bn aid for poor”’ which was widely published in Bangladesh. Soon it was a truly international story with the Times in the UK saying that Yunus’s ‘reputation was under threat.’
A four page rejoinder by the bank did little to stem the allegations – with senior Awami League politicians accusing Professor Muhammad Yunus, the managing director of the bank of ‘corruption’ and even the prime minister arguing that the allegation was ‘nothing but sucking out money from the people after giving them loans.’
Yet, the tide now seems to be turning in Grameen Bank’s favour. The Norwegian government last week said that the inquiry report by Norad showed no evidence that any of this money was used for ‘unintended purposes.’ The minister stated that there was no evidence that Grameen Bank has ‘engaged in corrupt practices or embezzled funds.’
Since the controversy first started, New Age has been looking closely at these allegations.
It read all the documents released by the documentary makers (including those originally written in Norwegian), looked though Grameen Banks’ annual reports going back to 1995, and have conducted lengthy conversations with senior financial figures within the Bank.
Now, with Professor Mohammed Yunus making his first public statement on the allegations later today, New Age can reveal that our investigation shows that those suggesting that aid money was misused have failed to understand the financial transactions at the heart of the controversy.
The first misunderstanding was that the transactions not only involved donor money but also a separate fund made up of money internally generated by the Bank. As a result, the documentary claimed that money that Grameen phone had invested in Grameen Telecom had come from donor money, when it had in fact came from a separate fund within the Bank – the Social Advancement Fund.
Secondly they did not appreciate that the ‘transfer’ of donor money from Grameen Bank to another company was only a paper exercise – and the money never actually left the account of Grameen Bank. As a result, all the allegations suggesting that the transactions resulted in the ‘siphoning’ of money were completely misconstrued.
The story starts in December 1996. Amongst the 26 different funds and other money in Grameen Bank’s bank accounts that year were two particular pots of money.
One pot of money was the Tk 3474 million (NOK 608) which was given to the bank by a consortium of donors as revolving funds to be used for house and other kinds of loans.
Norad states that its contribution to this pot was Tk 754 million (NOK 170 million) - about a quarter of the total. The other donors included Swedish International Development Corporation Agency (SIDA), the Ford Foundation, and the German government aid agency, GTZ.
The second pot of money was called the Social Advancement Fund (SAF), which amounted to Tk 442 million. This had been internally generated by the Bank over a period of years by setting aside 2 per cent of the interest payments received on revenue received from borrowers paying back their loans and was to be used for the welfare and benefit of the Bank’s members and employees. The Social Advancement Fund was set up at the request of the donors themselves – and was not considered by them to be part of their money.
In December 1996, Grameen Bank set up a new company, Grameen Kalyan. In correspondence to Norad, Dr Yunus gave two main reasons for its establishment.
The first was to provide an organisation that could more efficiency distribute the Social Advancement Fund for the welfare of Grameen’s bank staff and members.
This was achieved by Grameen Bank giving Tk 198 million of this money to Grameen Kalyan - the money being physically put into Grameen Kalyan’s account in a number of separate installments completed by the end of May 1997. The remaining Tk 243 million in the Social Advancement, comprising an investment in Grameen Telecom, was also given to Grameen Kalyan.
The second reason for setting up the new company was to provide a way to protect from taxation the money that was paid into the Social Advancement Fund (the 2 per cent from the revenue received on the bank’s loans to its members). This was considered an issue, as the Bank feared it might soon lose its tax exemption status resulting in this money being treated as ‘profit’ and therefore taxed.
This second purpose was achieved by Grameen Bank giving Grameen Kalyan the Tk 3474 million (NOK 608) donor money and then immediately borrowing the money back from Grameen Kalyan on the basis that it would pay it 2 per cent interest. Since the ‘2 per cent’ was now interest on a loan – it would not be taxed if the Bank’s tax exemption was removed.
Although the May 1997 agreement between Grameen Bank and Grameen Kalyan (as well as subsequent NORAD documents) use the word ‘transfer’ to describe what happened to the donor money, this money was not – unlike the Tk 198 million SAF money - actually physically transferred to Grameen Kalyan. The change of ownership and the loan was, as the Norwegians themselves state in their documents, a ‘bookkeeping’ exercise, a notional transfer. The donor money remained in Grameen’s bank account at all times.
In February 1998, completely by chance, the Norwegian government came to know about this set of transactions when it was glancing through Grameen’s bank annual report. And it raised a number of warning lights for them.
First, the government thought that it represented a breach of their agreement to give the money since the Tk 754 million it had given Grameen Bank was now legally owned by another company. Secondly, since the money was not owned by Grameen Bank, there was a potential risk that it could be diverted for other purposes. Thirdly, it thought that even if the Bank’s tax exemption was removed, Grameen Bank should pay.
Following discussions involving the Grameen Bank and the Norwegian and Bangladesh governments, it was agreed that Grameen Kalyan would transfer back all of NORAD’s money (then sitting along with all the other donor money in Grameen’s account) into the name of Grameen Bank. This was another paper exercise, which did not involve the movement of money, and which did not effect how the money was used.
It is known from the papers obtained by the film maker that NORAD had wanted all the donors in the consortium to act together. It is therefore notable that none of the other donors – who had given three quarters of the pot of donor money - decided to join NORAD in asking for a change in the ownership of its money. This would suggest that they did not consider Norad’s concerns to be sufficiently serious.
Their foresight proved accurate. Even though Tk 2720 of the non-NORAD donor money in the Grameen Bank account continued to remain in the ownership of Grameen Kalyan – there was never any suggestion that this money was used by Grameen Bank in any way other than providing loans.
Six years later, in 2003, Grameen Bank decided, possibly on the prompting of Bangladesh Bank, to return the non-Norad donor money back to the ownership of Grameen Bank. The annual report of that year, which New Age has seen, attests to the fact that this money was returned.
Whilst people may still have questions about why Grameen Bank did not seek the consent of donors before making these transactions, and wonder why the Bank went to such great efforts to avoid paying any possible tax, the evidence does not support allegations that the aid money at the heart of the allegations was misused.
The money did not move out of Grameen Bank’s account. The money used to invest in Grameen Telecom and the money physically in the Grameen Kalyan account all came from a different source of money, the Social Advancement fund.
We asked Tom Heinemann, the maker of the documentary, to comment on these findings. ‘I never suggested that money had been misused in my documentary,’ he said. ‘We were only asking what had happened to the money. Why did Norad keep these documents secret.’
He said that those Bangladesh news media who alleged corruption had occurred were in trouble. ‘There will be a boomerang against them. I never said there was corruption’
Heinemann focused on the point that ‘Grameen Bank had broken agreements. …Donors had not intended the money to be transferred [to another company]. There were massive implications of that transfer which is why [the] money was demanded back. The compromise meant that Grameen Kalyan kept [the money]. This was not how the donors had planned it.’
He also questioned the accuracy of the Norad investigation report – stating that he still thought that there was Norwegian money accounted for. ‘I am still not clear where the money has gone,’ he said

Norway clears Grameen Bank of misusing funds

New Age, 9 December, 2010

Norway clears Grameen Bank of misusing funds
David Bergman 

The Norwegian government has cleared the Grameen Bank of misusing any of the Tk 754 million (NOK 170m) that it had given the bank between 1985 and 1996.
Erik Solheim, the Norwegian minister of the environment and international development, said in a press release on Tuesday , ‘According to the report, there is no indication that Norwegian funds have been used for unintended purposes, or that Grameen Bank has engaged in corrupt practices or embezzled funds.’
The allegation that money had been misused by the Grameen bank was first made in a documentary broadcast by the Norwegian Television station, NRK.
Made by the documentary’s director Tom Heinneman, it claimed that money had ‘disappeared’ from the bank.
Specifically, it alleged that Tk 243 million (NOK 50m) of Norwegian donations had been given to finance Grameenphone.
The allegations were then repeated by bdnews24.com under a headline stating that Yunus ‘siphoned Tk 7bn aid for poor.’
The article on the news web site, which was widely published in Bangladesh, also claimed that Yunus had taken from the Grameen Bank $70 million, two-thirds of Norad’s donations.
Norad’s inquiry report, undertaken on the request of the international development minister, finds that none of these allegations were accurate.
The report explains that Norad had given Tk 754 million (NOK 170m) to the Grameen Bank for providing loans to the poor. This was part of a bigger package of donations from other donors that totalled Tk 3472 million (NOK 540m).
In December 1997, the embassy found out that the Grameen Bank had transferred all this money to a company called Grameen Kalyan.
The report said the donor money was then loaned back to the Grameen Bank to be used ‘for the same purposes as the original intention set out in the [donor] agreement.’
The Norwegian government objected to this arrangement and remained un-persuaded by Grameen Bank arguments that it would help reduce the bank’s possible future tax liability.
The report said that after a series of discussions, ‘the Embassy secured agreement to a full return of the revolving loan funds.’ This means that all of the Norad money, Tk 754 million (NOK 170m) returned into the ownership of the Grameen Bank.
The report then quoted the statement made by Grammen: ‘Afterwards not only Norad’s money, but the 100 per cent of all donor’s money to the extent of Taka 3,474 million 501 thousand was “transferred back” from Grameen Kalyan to Grameen Bank….’
In relation to the alleged use of donor money for funding the Grameen Phone, the report said, ‘Norwegian aid funds… were not used to fund Grameen Telecom.’
Instead this money had come from a fund called the Social Advancement Fund which was created internally through the Grameen Bank.
Toufique Khalidi, chief editor of the bdnews24.com, told New Age, ‘Norad’s report neither contradicts the Norwegian TV documentary, nor does it refute anything in our report. It rather corroborates what we have reported.’
Tom Heinneman, the Danish director of the Norwegian documentary, said that he was too busy to comment on the report.

Index

Between October 2010 until the end of 2015, I worked as a reporter and editor for the Bangladesh national newspaper, The New Age.

New Age was a great place to work but its IT systems were rather primitive, and on a number of occasions it lost all its website content. Now only reports post-2015 are online.

This blog contains (or will contain as it gets updated) most of the articles that I wrote for the paper during that period. Some of the more recent articles are already available on two other blogs:

 - The first is a blog about Bangladesh politics, called Bangladesh Politico

- The second is one about Bangladesh's International Crimes Tribunal, called Bangladesh War Crimes 

Below is an index of the articles contained on this blog