Monday, March 14, 2011


What lies behind the sudden spate of bad press for the Grameen Bank founder? The start of a very few bad months for Muhammad Yunus, the managing director of Grameen Bank, began in November, with the broadcast of a documentary on Norwegian Television. It was not so much the film’s criticism of micro- credit that was worrying for Grameen – microcredit has been under some sustained critical assessment for quite some time. Rather, the film made allegations directed at Yunus personally, as well as claims that the bank misused millions of dollars of donor money. The programme claimed that 15 years ago, Grameen’s Noble Peace Prize-winning founder had ‘quietly tapped Grameen Bank’ for USD 48 million of aid money. This money, it alleged, had been transferred from Grameen Bank to a separate company, Grameen Kalyan, and some money was said to have been diverted to fund Grameen Telecom, a separate company.    Made for Norwegian TV, the programme might have aroused little international interest had it not been for the English-language online Bangladesh news portal, bdnews24. com . The Dhaka-based agency quickly took up the story, publishing a long report in English, using documents given to it by the Danish filmmaker. Its editors gave the story the headline, ‘Yunus “ siphoned Tk 7 bn aid for poor”’. The following day, the allegation was republished in most of Bangladesh’s newspapers, and soon it was an international story, with The Times in London suggesting that Yunus’s ‘reputation was under threat’.   Fourteen years ago, during the current prime minister’s first term in office, Sheikh Hasina was appointed co-chair of the Micro Credit Summit Council of Heads of State and Government, held in Washington, DC. At that time, she had nothing but praise for Mohammed Yunus. ‘We in Bangladesh are proud of the outstanding work done by Professor Mohammad Yunus and the Grameen Bank he founded,’ she said in her remarks. ‘He has demonstrated to the world that the poor have the capacity to productively use even a small credit and change their fate. The success of the Grameen Bank has created optimism about the viability of banks engaged in extending micro-credit to the poor. ’   In the aftermath of the bdnews24. com story, however, Prime Minister Hasina’s attitude has been starkly different. ‘Bangladesh has set many examples,’ she told journalists in December. ‘Deceiving people by siphoning off their money is another such example. This is nothing but sucking out money from the people after giving them loans.’    Prime Minister Hasina was known to be resentful of Yunus when he received the Nobel Peace Prize, in October 2006 – Hasina is said to believe that the prize was rightfully hers. In her first term of government, between 1996 and 2001 , following the signing of a peace treaty in the Chittagong Hill Tracts, Hasina had sent emissaries around the world to lobby international statesmen, including Nelson Mandela, to nominate her for the prize. When, five years after she left power, it was Yunus who received the prize, she apparently did not take it well.    Five months later, an event took place for which Hasina evidently never forgave Yunus. In February 2007 , a month after a military- backed ‘caretaker’ government took over power, he announced the formation of a new political party. At that time, the military-backed government was reported to be trying to remove her – along with Khaleda Zia, the leader of the other main political party – from active politics. Yunus said he wanted a ‘complete emasculation of the established political parties’ in order ‘to cleanse the polity of massive corruption’. This did not go down well with Hasina, who reportedly thought Yunus was behind the strategy of removing the two leaders of the established parties from power – even though, after making these comments, he abandoned his idea of becoming active in party politics.   Time for old scores Less than a week after the film was broadcast, the Norwegian government – whose funds were the ones said to have been stolen and misused – issued a report on the allegations. Erik Solheim, the Norwegian minister of the environment and international development, stated that, 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.’   Subsequent inquiries by a local newspaper, New Age , identified that the documentary had failed to recognise that the movement of money from Grameen Bank to Grameen Kalyan was a mere ‘ paper exercise’, and did actually not leave Grameen’s account. There was therefore no question that the money has been misused. Further, the money used to buy shares in Grameen Telecom was not donor money, but came from a bank-created fund to support welfare activities of its members and staff.    One might have thought that at least the Norwegian government response would bring an end to the allegations. But not at all. Toufique Khalidi, the chief editor of bdnews24. com , was having none of it. The official report ‘neither contradicts the Norwegian TV documentary, nor does it refute anything in our report. It rather corroborates what we have reported,’ he said. (Khalidi appears to have been going by the old anti- journalistic adage, ‘Don’t let the facts get in the way of a good story.’) He refused to respond to the New Age article.   More importantly, Prime Minister Hasina appears to have read the situation as an opportunity for the government to make a sustained attack on Yunus. In the weeks after the documentary was broadcast, a slew of allegations against Yunus have been leaked to Bangladeshi newspapers. These included claims that Grameen Bank has created companies unlawfully, was acting outside the law by serving as managing director (as he was past the mandatory retirement age of 60 years), and that the bank was in fact ‘an organ of the state’. The bank has denied all illegality, including noting that the law does not apply to age limits for non- commercial banks such as Grameen.    Throughout all this, bdnews24. com has acted as a cheerleader. Intriguingly, the site’s executive editor, Khalidi, has another full- time job – as chief editor of Independent Television, a company owned by Prime Minister Hasina’s private-sector investment adviser, Beximco’s Salman Rahman. Rahman is also rumoured to be on the verge of buying a large amount of shares in the online company.    At any rate, in early January, the site published another high-profile, and highly critical, story on Yunus. This claimed that a two-decade-old contract between Grameen Bank and Yunus’s family’s printing company gave the ‘poor borrowers’ a job having nothing to do with its core business.’ It further suggested that the family company had gained financially by the arrangement, alleging, for example, that the use of Grameen staff in the printing company was ‘ to boost dividends for the family business’.   However, beyond the question that it was clearly unwise for Yunus to have entered into any contract with his family, bdnews24. com ’s two central claims in the story were patently untrue. The printing work undertaken by the Yunus family’s company assists the running of the core business of Grameen Bank – its only function is to print material for the bank. In addition, the arrangement has not, in the last 20 years, resulted in any family member receiving dividends or profits.    Whatever the truth of the matter, such coverage has helped to create a climate that has ostensibly legitimised a government decision to establish a wide-ranging enquiry into Grameen Bank, beginning in mid-January. Committee Chair Monwar Uddin Ahmed said that his committee will now look into 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. There is also provision for a special audit of Grameen Bank by the Bangladesh Bank.’ Ahmed also noted that the committee would be looking at all Grameen ‘sister organisations’ and reviewing all recent news ‘particularly about the Norwegian programme’.   Yunus has also become subject to legal harassment over three criminal cases. In January 2007 , a member of the Jatiya Somajtantrik Dal (JSD), a small left-wing party, filed a criminal defamation case against Yunus for alleging, in an interview, that Bangladeshi politics was simply about ‘the power to make money’. The JSD politician alleged that he had been defamed by this remark. For the past three years, the case had sat with a magistrate who had apparently taken no action, presumably because he realised there was no case to answer. But shortly after the new bdnews24. com report appeared, the magistrate issued a summons for Yunus to appear in court.    Some of the legal harassment seems to be clutching at straws. The other was a new case filed by a food inspector accusing Yunus of food adulteration, through a joint venture between four Grameen companies and the French food giant Danone. A food inspector is alleging that yogurt manufactured by the company was adulterated and is prosecuting a number of people, including Yunus as chairman of Grameen Danone. The legal basis for prosecution against a board member for such a matter is dubious.    Banking on…? How this battle between Yunus and Hasina will end is far from certain. Despite commitments that the government inquiry will be objective and fair, it is clear that the intentions of the government towards Yunus are far from neutral. Prime Minister Hasina is reported to have told one visiting foreign dignitary that Yunus would not be allowed to remain as head of Grameen Bank, and that ‘he should leave now.’ Friends of Yunus are convinced that the prime minister intends to do whatever it takes to destroy his good name, and to remove him from the institution he founded. There seem to be indications that the government wants to take over Grameen Bank, though Grameen has stated that the government only owns 3.4 percent of the institution. Prime Minister Hasina might be betting that both Yunus and Grameen Bank are vulnerable due to the former’s weak links with Bangladesh’s civil society. Yunus does not come from Bangladesh’s elite, and has never ingratiated himself to it; further, many question whether he deserved the Nobel Peace Prize. Yet against this, Yunus remains an international statesman, and has support not only at the highest reaches of the US government, for one, but also among civil-society elites throughout much of the world.    ‘You have to realise that, on a scale of one to ten, if Yunus is close to ten in the eyes of international statesmen, the prime minister of Bangladesh is about one and a half,’ says one former Bangladesh diplomat on condition of anonymity. ‘Yunus can get meetings with anyone; the prime minister can’t.’ This both helps to explain Hasina’s continuing resentment of Yunus, but also the difficulty the prime minister faces in her battle with the ‘banker to the poor’. It remains unclear whether Hasina is really willing to risk the inevitable international backlash that would occur if her government ends up taking anything that is perceived as spiteful action against Yunus.   --  David Bergman is the Editor, Special Reports of New Age  newspaper in Bangladesh. He also happens to be the husband of Sara Hossain who is part of Muhammad Yunus's legal team.