Yunusgate: If you canât convince, create confusion
Dubbed the messiah of microcredit, Dr. Yunus has been (perhaps wrongly) credited with a unique innovation in banking; i.e. banking for the poor. He has received numerous awards including the Nobel Peace Prize in 2006. Hailed as the saviour of the poor and the pioneer of rural women empowerment, the praise and adulation that Yunus has received over last two and half decades by both Western and local elite dwarfs the admiration received by all other Nobel laureates combined. He has definitely made us, the Bangladeshis, extremely proud. We as a nation are forever indebted to Yunus (no pun intended) for his achievement and for giving us one of the most cherished causes of celebration in the history of Bangladesh.
Recently, a lot of controversy and confusion have been created surrounding the removal of Dr. Yunus by Bangladesh Bank from the post of managing director of Grameen Bank. In this regard Grameen Bank, Dr. Yunus, and his supporters/friends have adopted a tactic of creating confusion (which is evidently the dominant PR strategy of Dr. Yunus that this article is expected to reveal) among the citizens of the country by orchestrating an aggressive PR campaign both home and abroad. We feel itâs about time we looked through these clouds of confusion and clear things up so that we can call a spade a spade.
One thing must be cleared at the beginning; we have no issues whatsoever with Yunus being the MD of Grameen Bank, provided it is done in a way consistent with the laws. What we are aiming to achieve is to make sure an institution of Grameenâs stature is run in a transparent and accountable manner. If Dr. Yunus, Grameen Bankâs present board and Yunusâ lawyers can prove that everything is done in a transparent, accountable and legal way and the court verdicts in their favour then we would be delighted to welcome Yunus back to his rightful position. However, until proven legitimate, we have every right as citizens of Bangladesh to raise questions regarding the alleged irregularities of one of this nationâs most prized public institutions.
It should be noted that it was Dr. Yunusâ choice to establish Grameen Bank as an institution under a government ordinance as a public institution and not to go through all the struggles and pain of a private or non-governmental institution. Institutions like BRAC were formed as a private/non government entity. Unlike Dr. Yunus, Fazle Hasan Abed took all the responsibilities and went through all the troubles of building and growing an institution of BRACâs magnitude and significance all via private initiatives. As Dr. Yunus chose not go along that way, itâs not fair for him, now to expect the freedom and flexibility of a private institution while being a government institution. In no way, we deny any of the claims made by Grameen Bank board regarding Dr. Yunusâ contribution to the Grameen Bank and his role in building a positive image of our country. We salute him for his unique and priceless contribution.
Having said that, I was surprised to read a piece by Mahfuz Anam, one of the mostÂ astute defenders of democracy, free speech,Â human rights and rule of law, on the latest âcontroversyâ surrounding the removal of Yunus from the position of managing director of Grameen Bank.
In his commentary, âIs this the way to treat our Nobel laureate?â, Mahfuz Anam, echoing a similar line of argument put forward by the US ambassador and some other Western diplomats, tries to justify Dr. Yunusâ appointment as the managing director of Grameen Bank by its board for indefinite period without the approval of Bangladesh Bank, the regulatory authority of the Bank under the law that was enacted to create and operate Grameen Bank.
The crux of the argument is three folds.
First, Anam, tries to justify the allegedly illegal action of Yunus to continue as the MD of Grameen Bank by appealing to our common sense. That, its not yesterday that Dr. Yunus turned over 60, as he is now more than 70 years of age, then why this âsudden rushâ of removing him from the position after more than 10 years when it was âlegallyâ due? And he implies, in not so subtle way, that as the present government in general and the prime minister in particular do not want him to remain in the position, this âtechnicalityâ is being exploited to remove Yunus from his ârightfulâ position of Grameenâs MD.
Second, Mr. Anam wants us to believe, that in doing so, the government is tarnishing the image of the country as removing someone of Yunusâ stature from Grameen Bank, even if in a âtechnicallyâ legal manner, is not being well received by the Western world.
Finally, as Dr. Yunus has done so much, received so many international awards, loves the poor, especially poor vulnerable rural women so much, contributed to setting up of so many âsocial businessesâ, has empowered so many rural women, been the messiah of microcredit by popularising it worldwide as a viable business/banking model, and even received Nobel Prize, he should not be treated the same way as we would treat any other Tom, Dick or Shah Alam. In simple words, we should give Dr. Yunus the privilege of someone who is above the law. Period. Before we try to counter the arguments put forward by Mahfuz Anam, letâs deal first with another pressing issue.
The founderâs privilege and a letter of âalternativesâ
Another minor argument being put forward in defence of Dr. Yunus is, as founder of Grameen Bank, Yunus should be allowed the privilege to relinquish his position in a congenial manner of his liking.
As the finance minister aptly put it, âit was difficult for me to create a âcongenial environment of his likingâ. Factually, itâs not true that Dr. Yunus is the founder of Grameen Bank, The government of Bangladesh is. Even if, for argumentâs sake we accept that Yunus indeed is the founder, questions remain that whether being a founder of any organisation gives one the right to enjoy privileges beyond the law of the land.
Now, if, say, the founder of Mercantile Bank Mr. Abdul Jalil wants the same privilege or the board of directors of the bank decides to appoint him as the chairman for as long as he wishes to remain in the post, violating the banking laws, would we allow it?
The Mercantile Bank board may argue, that it was Mr. Jalil who founded the institution, conceptualised it, organised entrepreneurs, raised capital and have been the source of inspiration and beckon light of the leadership of the bank and made the bank such a huge success. They might feel if Mr. Jalil is not made the permanent/lifelong chairman of the bank, the bank may plunge into a crisis and shareholders may feel lost. Would we allow the Mercantile board to take such a decision even if that is prohibited by the law of the land?
So what is this âcongenial environment of Dr. Yunusâs likingâ?
According to a handwritten unofficial letter to the finance minister by Yunus, dated March, 15, 2010, Yunus offered two alternatives.
The tenure of the chairman of Grameen Bank which was due to expire on 26 April, 2010, can be extended till 31st December of 2010 and once he would retire, Dr. Yunus can be appointed as the chairman so that the continuity is maintained and the people who work for Grameen Bank do not get depressed by the sudden change in leadership. In that scenario, the current DMD will take over as the MD.
One of the problems with this option is, it assumes that in almost three decades, Grameen Bank has failed to build a reliable successor to Dr. Yunus to head the organisation. And if, as Yunus claims, the current DMD is a competent executive who has been with Grameen from the beginning, then why would we have to wait for nine months to promote her to become the MD?
In case Tabarak Hossain, the then chairman who was about to retire, refuses to take the responsibility through an extension offered by the governemnt, any one of the three chosen by Yunus can be made chairman for one year. Yunus even named them in a list according to his preference. His first choice was Mr. Sayeduzzaman, second Dr. Jamilur Reza Chowdhury and third Khaled Shams. When in April 2011 their tenure would end, Yunus suggested that he himself be then made the chairman.
Itâs interesting to note that in both cases, Yunus puts forward his own name as the future and ultimate chairman of Grameen to be effective at a time of his convenience. Itâs important to note that, the Grameen Bank board did not write that letter or had any meeting where these options were passed as a resolution. This letter is another example of how Yunus has been using/treating the Bank as if it was his private property, owned by him 100 percent. Say for example, the finance minister agreed with one of the options, would it not have to be approved by the Grameen Bank board? And if thatâs the case, how can Yunus be so sure that the board will agree with whatever alternatives he suggested without taking the boardâs approval/endorsement first? Does it not clearly indicate that the Grameen Bank board is a puppet/parrot body, totally under autocratic control of Yunus?
How can an employee (MD of the bank) write a personal letter to a finance minister on a matter of such importance to the Bank and show the audacity of putting forward his personal preferences of how the Bank should be governed? Is this the way a transparent and accountable public institution should be run?
And if it is the Grameen Bank board who can decide who would be the MD of the bank without prior approval of Bangladesh Bank, (though according to Section 14(1) Grameen Bank ordinance 1983, âthere should be a Managing Director of the Bank who shall be appointed by the Board with the prior approval of the Bangladesh Bank.â) then why did Yunus write that letter to the finance minister and request him to choose from one of his two alternatives?
Is this because Yunus knew that contrary to the public claims made by both Yunus and the Grameen Bank, the Grameen Bank board does not have the authority to appoint Yunus as the MD without prior approval of Bangladesh Bank?
The counter arguments
Getting back to Mr. Anamâs arguments, firstly, getting away with some illegal activity for more than 10 years does not justify the illegal action or somehow make it less illegal or punishable offence. It certainly does not exempt someone from the crime/s committed.
Second, by taking actions against the illegal activities/irregularities/unauthorised actions by Dr. Yunus and Grameen Bank board, the government in fact is enhancing the image of the country by giving out the strong message that there is zero tolerance from present government on corruption and irregularities.
In fact it is Dr. Yunus and his so-called supporters in the form of âFriends of Grameenâ or self proclaimed civil society (read elite) leadership of the country through a carefully concerted campaign, who are trying to tarnish the image of Bangladesh by presenting twisted truths and omitting important information to both local and global audience.
Take the example of the Norwegian fund controversy. Grameen Bank received a donation from Norwegian government and then transferred the fund to Grameen Kallyan. After that Grameen Bank borrowed from the same fund that was transferred to Grameen Kallyan from Grameen Bank in the first place. This is indeed a unique âbanking innovationâ where an institution which owns a certain fund can be turned into a borrower of that same fund by some âinnovativeâ, âaccountingâ procedures to earn profit (interest) for a third party organisation which has no right or legal claim over that fund.
Grameen Bank claims that the matter has been resolved with the Norwegian authorities concerned. However, it should be noted that this “transfer of funds” issue has not been resolved in terms of the law of Bangladesh. One of the matters that the review committee on Grameen Bank is, examining this transfer of funds. By Grameen Bankâs own admission they transferred funds given to Grameen Bank to Grameen Kalyan. If this is a violation of the existing laws which common sense tells us must be, then stern action should be taken against those responsible. That the matter has been resolved with the donors cannot be an excuse to exempt anyone who would violate the law of the land.
And finally, nobody is above the law
Mahfuz Anam and James Moriarty surely know and embrace this principle. They are the champions of democracy and rule of law. They must know that even the US president can be impeached and brought to face trial for his actions.
Yes, Yunus made us all proud by winning Nobel prize, but no one else made us more proud than the freedom fighters of 1971. Even in case of the freedom fighters, have we made them exception to the law of the land?Â Donât we bring them to justice in case they do anything illegal? Then why should winning a Nobel prize or working in a non-AC room sitting on a wooden chair make Yunus an exception?
If we look back at the recent history of USA, we would see that everyone â from Robert F. Kennedy Jr. to Michael Jackson, from Muhammad Ali to presidential candidate John Kerry, or even California governor ArnoldÂ Schwarzenegger â was brought to face trial for various âillegalâ acts/and or âtechnical or âproceduralâÂ irregularities.
A couple of days ago, Senator Kerry expressed his support for Dr. Yunus and called for an amicable solution for the present crisis. However, the Massachusetts Senator and former presidential candidate found a tax lien filed against his 2004 campaign for unpaid unemployment taxes to the tune of $819,848.
The Kerry camp maintained that the problem may have lied in the improper filing or missing files of employment tax returns. Kerry campaign spokeswoman Whitney Smith told reporters that the failure was on the part of the government, not the Senator.
“The IRS merely has a gap in their electronic records of the 2004 campaignâs payroll forms. We filed these forms correctly, and weâre working with the IRS to provide them any and all needed information to set the record straight.”
That did not convince IRS to withdraw their case and the matter continued in the court.
The IRS position is: “We have made a demand for payment of this liability, but it remains unpaid.” In addition, the IRS disputes the claim that the Kerry campaign filed the proper forms at all.â
Similarly, when irregularities regarding Grameen Bank surfaced, Government of Bangladesh formed a âreview committeeâ (not an âinvestigation committeeâ, so that the honour of Dr. Yunus can be maintained). Later, Bangladesh Bank took action according to the law. This is entirely a matter well within the sovereign right of the state of Bangladesh to implement its law as it may be applicable to its citizens and institutions, just as it was the right of IRS to implement US laws against alleged violation of tax laws by Senator Kerry.
In early December, we learned that a tax lien for nearly $80,000 was filed against California governor, Arnold Schwarzenegger. That was news to the actor-turned governor and his office, whose representatives say that was the first theyâd heard of it. The IRS lien â which was filed with the Los Angeles County Recorder’s office â says Schwarzenegger owes $29,047 for tax year 2004 and another $40,016 for 2005.
The governorâs spokesman, Aaron McLear, was very clear with reporters, explaining that it was not a matter of Schwarzenegger failing to pay his taxes … it was a “paperwork tracking discrepancy.” McLear added this issue was “completely unrelated to the payment of taxes, which the governor has paid in full and on time.”
A code listed on the tax lien signifies the problems arose from information returns, possibly related to payroll taxes, and appears to indicate a reporting error. A California tax attorney contacted by the San Jose Mercury News said that Schwarzenegger may be listed as one of a group of owners of a business that faced some tax issues in the past. In that case, said the attorney, each partner would be listed as a responsible person, which would explain why Schwarzenegger would be unaware of the lien.
And surely, Hillary Clinton, above all people has not forgotten about Bill Clintonâs impeachment. Bill Clinton, the then president of the United States, was impeached by the House of Representatives on charges of perjury and obstruction of justice on December 19, 1998, but acquitted by the Senate on February 12, 1999. Two other impeachment articles, a second perjury charge and a charge of abuse of power, failed in the House.
The charges arose from an investigation by Independent Counsel Kenneth Starr. In the course of the investigation, Linda Tripp provided Starr with taped phone conversations in which Monica Lewinsky, a former White House Intern, discussed having oral sex with Clinton. At the fellatio deposition, the judge ordered a precise legal definition of the term “sexual relations”  that Clinton claims to have construed to mean only vaginal intercourse. Starr obtained further evidence of Clinton’s philandering by seizing the computer hard drive and email records of Monica Lewinsky. Based on his conflicting testimony, Starr concluded that Clinton had committed perjury. Starr submitted his findings to Congress in a lengthy document (the so-called Starr Report), which dealt with the relationship between Clinton and Lewinsky, replete with lurid details of their encounters. The report and subsequent proceedings provided ample fodder for both political opponents and late-night comedians.
Critics of Starr also contend that his investigation was highly politicised because it regularly leaked titbits of information to the press, in violation of legal ethics, and because his report included lengthy pornographic descriptions which were humiliating yet irrelevant to the legal case.
The whole investigation was done in a transparent way and millions of people all over the world came to know the details of Clintonâs sexual relationship with the intern were exposed.Â It can be argued that, the procedure was not ârespectfulâ for a president, but US law allowed Starr to do so.
IfÂ that much humiliation can be directed at a US President, while Bangladesh or any other foreign country remain âuntroubledâ by it, as it was entirely a matter well within US jurisdiction, we canât understand why Moriarty is so âdeeply troubledâ by Dr. Yunus case.
As far as Hilary is concerned, it was she who had to bear all the pain and embarrassments resulted from the improper action of her husband and the unkind and ruthless investigation process and media trial that followed. Hilary was the innocent victim of the Monica affair. Still, she never questioned the US system or the right of the Independent Counsel Kenneth Starr in conducting his investigation as he found fit. So this came to us as a shock when we see Hilary is taking a position on the YUNUSGATE where she questions the sovereign right of Bangladesh State to investigate any alleged irregularities and taking actions the state considered necessary.
Oscar winning film maker Roman Polanski is still a fugitive for his alleged sexual offence to a 13-year-old girl back in 1960s. Oscar win did not place Polanski above the law. Itâs the beauty of US legal system, it’s this idea of American justice that inspires us all over the rest of the world.
So itâs a big surprise to usÂ when, Moriarty, above all peopleÂ tries to trivialise Yunusâ alleged crime by saying its a mere âproceduralâÂ matter and claims that USA is âdeeply troubledâ by Bangladesh governments action.
So what are the facts?
Grameen Bank is a statutory public authority created by the Grameen Bank Ordinance, 1983 [Ordinance No. XLVI of 1983] promulgated by military dictator General Ershad.
Under Article 152 of the Bangladesh Constitution the term “Statutory public authority” means any authority, corporation or body the activities or the principal activities of which are authorized by any Act, Ordinance, Order or instrument having the force of law in Bangladesh.”
Grameen Bank is not an independent entity which operates outside the purview of Governmental process as a State Organ.
Grameen Bank’s legal status is distinct from an association of persons such as a company, trust or cooperative which associations may be formedÂ under a law but not by the law itselfÂ and which associations of persons are not statutory public authorities and therefore not State organs/instruments of State.
Contrary to the popular view, as a State organ/instrument, Grameen Bank has not been founded by any individual person, or group of persons. Its existence, continued operations and dissolution [winding up] are dependent on the State acting through the Government although Parliament may invoke its legislative authority to repeal the statute [Ordinance] under which it was created.
The Government retains the authority to make rules for holding elections of Directors.
The central argument made by Dr. Yunusâs Lawyer
The board of Directors of Grameen, and not Bangladesh Bank is the appointing authority for the Managing Director of the bank, which is a separate specialized institution.
The Central Bank did not appoint Yunus as the MD of Grameen and the central bank cannot remove him from the office.
The board of directors of Grameen decided in 1999 and again in 2009 that Yunus may hold the office of the MD as long as he wishes.
The Bangladesh Bank had given approval to the appointment of Dr. Yunus back in 1990. Later in 1999, the Bangladesh Bank queried the issue of whether Grameen Bank had obtained further approval and as Grameen Bank responded to these queries Bangladesh Bank raised no further objection.
For 11 years Bangladesh Bank annually and regularly approved Grameen activities.
Section 36 of the Grameen Bank Ordinance 1983 is not applicable to Yunus , as there is no age limit for his retirement according to Grameen Bankâs service rules of 2001.
According to the letter of approval from Bangladesh Bank regarding the appointment of Yunus as the MD of Grameen Bank by Grameen Bank board in 1990, the central bank clearly states that, the board of directors of Grameen Bank will make regulation under section 36 of the Grameen Bank ordinance 1983 and after the regulation is published in official gadget it will be effective. However, if the terms of the regulation is changed in new regulation then in case of appointing the MD, re-approval of Bangladesh Bank must be taken.
As the terms of the regulation of the appointment of MD of Grameen Bank are changed in Grameen Bankâs service rules of 2001 where no age limit for Yunus is incorporated, it was a requirement on the board’s part to take re-approval from Bangladesh Bank to make Yunusâs reappointment as the MD of Grameen Bank to be legally valid which was never taken.
There is an interesting clause in the Grameen Bankâs service rules of 2001.
In article 7 where it is stated that in case of the MD there will be no age limit, it also states that the service rule of Grameen Bank will not be applicable to the MD.
Now, if that is the case, then according to this 2001 service rules, Dr. Yunus is beyond the scope of the very service rule that his lawyer claims gives him the right to continue as the MD beyond 60 years of age.
And how can a person be beyond the rules/regulation of an institution is beyond our comprehension. We are afraid itâs this very tendency of placing Yunus above the law that has led to this present crisis.
The fact is, as Yunus has passed 60 year age limit to continue his service as a Grameen Bank employee, it was within the rightful authority of Bangladesh Bank to take actions against him.
No board of directors can appoint anyone as MD or formulate regulations/service rules that are unlawful according to the law of the land.
The Godfather of Microcredit
While Mafuz AnamÂ was busy hailingÂ Yunus as the messiah of microcredit, others have pointed out the irregularities that Dr. Yunus has already committedÂ regarding Grameen Bankâs operation and dubbedÂ him as the Godfather of microcredit. (Mark Engler, on 19th feb, 2010 in an article published in “The independent”) One of them, Salah Uddin Shoaib Chowdhury identifies the following:
Grameen Bank is authorised to lend only to the landless poor:
Grameen Bank is authorised to provide credit and other services to landless persons in the rural areas. It is not authorised to lend money to any person [or entity] other than the landless persons including Grameen Krishi Foundation, Grameen Motsho Foundation and Bigyan Gonoshikha Kendro as indeed it is not to Packages Corporation which it has done.
Packages Corporation Limited:
Grameen Bank has undertaken a Managing Agency on behalf of Packages Corporation Limited ["Packages"], a family enterprise owned by Dr. Yunus’ father, Mr. Dula Meah and his family in which Professor Yunus and his brothers, Abdus Salam and Mohammad Ibrahim are directors. Included under the terms of the Agreement, Grameen Bank and Packages Corporation would share losses on 50- 50 basis, Grameen Bank would have access to the loans taken by Packages Corporation and Grameen Bank would lend money to Packages Corporation.
Brothers appointed in entities created:
In one of these entities, brother of Dr. Yunus, one Dr. Mohammad Ibrahim has been made Executive Director, whilst Professor Yunus assumes the position of Chairman. Another brother of the Nobel laureate, Mohammed Jahangir is generally looking after the public relations of Grameen Bank and other enterprises of Grameen Bank Group.
Furnishing Guarantees not authorised by law:
In the Bangladesh Bank Audit Report, mention is made of guarantees having been granted by Grameen Bank favouring several of the entities created by Grameen Bank. These guarantees are not authorised by law or under GB’s own Memorandum and Articles of Association.
Formation of companies without authorisation in law:
Grameen Bank is a statutory body created by an Ordinance authorised to purchase shares of anybody corporate the object of which is to provide services to landless persons in the rural areas. Grameen Bank is not authorised to sponsor, subscribe, and incorporate new companies such as it has done.
Unlawful transfer of funds to other entities formed by Grameen Bank itself:
In all cases where Grameen Bank has formed new entities, companies, for profit or not-for-profit, financial institutions without obtaining a licence from Bangladesh Bank, trusts and hybrid entities, it has transferred funds or provided guarantees against loans taken by these new entities which it is not authorised to do.
Professor Yunus’ continuance as Managing Director beyond 60 years in violation of the relevant laws:
His continuance in office as Managing Director in violation of Clause 50 (1) of the Grameen Bank Service Regulations wherein it is provided that the age limit for employees of Grameen Bank shall be 60 years. This provision read together with Bangladesh Bank’s rules regarding the appointment and reappointment of heads of Banks and non-banking financial institutions only re-affirm his unlawful continuance in office for more than 10 years.
Employment and Service Rules: whether made without authorisation:
A serious question which has been raised is that the present Service Regulations of Grameen Bank has been made without authorisation in law. Indeed, these have been gazetted, but the Rules are deficient inasmuch, contrary to law, since, asÂ delegated legislation, they are shown [i] as have been gazetted in the name of Professor Yunus who is Managing Director of Grameen Bank; [ii]. There is no reference to the parent law from which such Rule â Making authority is derived nor any reference to the lawful person/legal entity upon whose instructions Professor Yunus has gazetted the Rules of Service;[iii] Professor Yunus is not authorised to make Service Regulations for Grameen Bank. To ascertain whether any offence under this head has been committed or not it may be prudent to check the law relating to the notification in the gazette by statutory bodies.
GrameenâGonoshasthya Textiles Mills Limited:
Here, at the time of the formation of the company shares were allotted in the personal name of Professor Yunus, as indeed, all of the other subscribers of the company so formed, is self aggrandisement.
Non-payment of savings of borrowers:
This case is as unfortunate as it can get. Borrowers’ savings were put away into a fund to which they had no access. Borrowers departed without their savings between 1988 and 1992.
Retrenchment â unfairly and on the basis of non existent Rules â coercion:
The retrenchment of thousands [about 4000] of employees between 2000 and 2003, shown as voluntary retirement, was not in accordance with any valid rules of service, and constitutes a blatant case against the rights of employees of a statutory body [whose fundamental rights also appear to have been violated].
Activities: undertaking travel abroad for non-Grameen Bank purposes without authorisation from competent authorities:
It would be an issue to examine if the regulations relating to the undertaking of foreign travel by the Chief Executive of a statutory body requires the taking of permission from a competent authority and if permission was given for periods of time not consistent with pertinent rules / regulations by the competent authority for nonâGrameen Bank purposes.
We would add only three more things with this long list of irregularities by Dr. Yunus.
First, in a book, Grameen Bank At A Glance, written by Yunus and published in December, 2010,Â under the heading Grameen Network, its clearly stated, âGrameen Bank does not own any share of the following companies in Grameen Network. Nor has it given any loan or received any loan from any of these companies. They are all independent companies, registered under Companies Act of Bangladesh, with obligation to pay all the taxes, and duties, just like any other company in the country.â
Then the name of 27 such companies are given in a list which starts with Grameen Phone Ltd.
Mahfuz Anam wrote, âUnder the visionary leadership of Yunus, GB moved into innovative partnerships with global companies like Danone, Adidas, Viola, etc. to provide nutritious yogurt, cheap shoes and safe drinking water at affordable prices. Its stunningly successful partnership has been with Telenor of Norway, leading to the formation of GrameenPhone (GP), by far the most successful mobile company in the country, now the highest taxpaying company at Tk 900 crore annually.â
But according to Dr. Yunusâ own admission that none of these companies are owned by Grameen Bank. Now the 900 core taka question is, who owns the shares of say, Grameen Phone?Â Who are the individuals who are being handpicked by Yunus to own the shares of all these companies created by using Grameen brand name, goodwill, resources, networks and widely held misperception that Grameen Bank owns shares in those companies? To whom the profits go?
If Yunus was so much in toÂ his crusade against poverty then why it never occurred to him that profits from those companies should be, in part, transferred to Grameen Bank, so that it can subsidize its interest ratesÂ and offer a lower and reduced rates to its poor borrowers?
It never occurred to him as he knew, right from the beginning, though a journalist of Mafuz Anamâs stature never bothered to know, that in none of these companies Grameen Bank has any shares whatsoever. All these companies are created by Yunus by an innovative partnership with global companies like Danone, Adidas, Viola, etc and not Grameen Bank. These are companies that have nothing to do with Grameen Bank, and Yunus only used its goodwill and network.
The poor rural women, members or theoretically owners of Grameen Bank, do not have a single share in Grameen Phone. Then who own the shares?Â How are the directors chosen? By whom?
How can a misperception of this magnitude be continued for so many years that these are all Grameen Bank owned companies?
We would also like to ask how much has been paid in dividends to the Grameen Bank members/ share holders so far by the bank?
We would really like to hear what Mr. Anam has to say about this.
Grameen Bank sent us a rejoinder regarding the publication of a story in Amader Shomoy where we reported that Grameen Bank had rented out 11,000 square feet of Grameen Bank headquarters floor space to Yunus Centre for only one taka per month.
In the rejoinder, sent on a Grameen Bank letterhead, it was claimed that, on 2nd May 2007, the board of directors of the bank decided that in order to promote the philosophy and activities of Nobel winner Dr. Yunus, a nobel laureate secretariat would be formed and Grameen Bank would give a floor of Grameen Bank building consisting of 11,000 square feet to the Nobel laureate secretariat without any rent.
On 24th June 2008, the Grameen Bank board of directors in a meeting decided that the 16th floor of the Grameen Bank Building will be leased to Nobel laureate trust for 25 years.Â On 24th July, 2008, a Nobel laureate trust was formed by making the chairman of the board of directors of the bank as the chairman of the Nobel laureate trust.
(Interestingly, the trust was formed after the decision to lease them the 16th floor was taken). According to the board decision, Grameen Bank and the Nobel laureate trust signed an agreement by which the trust was given the lease of the 16th floor for 25 years. And according to another decision of that same board meeting, the Nobel laureate trust signed an agreement with Yunus Centre on August 3 and leased the 16th floor to Yunus Centre for 24 years at a yearly rent of only 1,000 taka.
Itâs clear from the rejoinder, all those things were done only to give Yunus Centre the lease of the 16th floor at a yearly rent of 1000 taka in a way that would minimize the future potential chances of corruption/nepotism charges.
Another hilarious fact stated in the rejoinder is that, the Yunus Centre has 8 (eight) (yes, you are reading it correctly, no printing mistake) employees working for it ranging from CEO to peon.
It has been claimed that Grameen Bank covers 8.4 million people. However, a number of researchers have claimed that the figure would be much lower, close to 7 million. And if we take in to account the active borrowers, it would be even less. The myth of 98 percent recovery rate is also being challenged as grossly incorrect as much of it is glossed over by dodgy accounting procedures.
Finally, much fanfare has been made regarding Social Business promoted by Yunus. We would just like to ask one thing, if the essence of social business is to doing business is non-profit then why on earth all the so called social business companies, created by Yunus in partnership with global companies, are registered under Companies Act of Bangladesh as for-profit companies and not under the same law as not-for-profit companies?
The strategy of creating confusion and making contradictory claims is evident in Dr. Yunus’s position regarding Social Business too. One such example is given below from the FAQ section on social business in the Yunus Centre website (http://www.yunuscentre.org/).
Should social business avoid making profit?
No, it does not.Â The first aim of social business is to achieve the social objective in a financially sustainable way.Â It should not give up social objective to make profit beyond sustainability.Â Making profit without sacrificing social objective is welcome.Â Social businesses do not give dividends to the investors, all the profit is reinvested in the company for expansion and improving the quality of the product or service.
If the above definition of social business is what Dr. Yunus believes, it is by no means something new or invented by Yunus. In the Companies Act of Bangladesh, under section 28 there is a provision of establishing a not-for-profit company. Those non -profit companies share similar philosophy regarding business as Yunus model of social businesses do, i.e.Â directors/shareholders would not take any dividends from the companies and the profits should be reinvested or used to meet some social cause/objective.
Can someone who started a social business decide to take profit?
Yes, a social business can be transformed into PMB if the owner wants it. Since there is no law governing the creation and termination of aÂ social business, no procedure has to be followed. When laws will be passed there will clear guidance as to the protocol of registration and termination of the status.
Here we can see how Yunus contradicts his own philosophy. On the one hand, he is saying that investors/share holders of social businesses would not take any dividends, at the same time he is saying that as there is no law forbidding them to do so, which is not true as there are laws to prevent not-for-profit company shareholders/investors from taking dividends. They can take dividends if they wish to. If that’s the case then all the other principles of social business has no relevance or meaning whatsoever. Â This is a dominant trait that can be found in most of Yunus’s activity. There is always a clause that makes all the clauses, good principles irrelevant and meaningless and gives a certain individual almost absolute power to be exercised according to his wishes. We need not mention who that particular individual in most cases turns out to be.
We would like to draw attention of our readers to another important thing. Our finance minister admitted that he is still a friend of Yunus and that the image of the country was damaged as the government removed Yunus from Grameen Bank. In this respect we would like to humbly ask the finance minister to resign from his position as, clearly, his judgment is clouded by the fact that he is a friend of Yunus. How can a finance minister say in public that removal of Yunus lawfully from a position he was illegally occupying (at least thatâs the government position in this matter) damages our country’s image? It has rather enhanced our image as we have proved no one is above the law in this country. If an exception is made in Yunusâs case by reaching an âamicableâ solution, then how can the government, the finance minister or Bangladesh Bank claim any moral authority over sanctioning punitive measures on other banks/ directors of other banks that would breach the law of the land?
We would like to appreciate the bold position taken by our foreign minister in this regard.
We would like to request Mr. Muhith to reconsider his position immediately, as there is clearly a conflict of interest here. We quote Mr. Muhith: âThere is no greatness in holding on to a postâ.
Nayeemul Islam Khan is editor of Amader Shomoy, a Bangla language national newspaper.