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.’