Muhammad Yunus works in his modest office in the Grameen Bank tower. The curtains are made of checked cotton produced by weavers his bank supports; so is the blue cotton kurta he wears. The walls are lined with books on economic theory, and he writes in longhand with a fountain pen. Beside him rest a BlackBerry and an iPhone, chiming out when messages arrive. Weak sunlight leaks in through the smog cloaking the Bangladeshi capital, and the Nobel laureate has an air of serenity. There is no hint in his genial demeanour that he is in the midst of a messy legal battle to keep control of his life's work. High on the wall above Prof. Yunus's chair hangs a portrait: a grainy, black-and-white picture of a serious, spectacled man. He is Sheikh Mujibur Rahman, known as the father of the nation, who led the fight for independence in the early 1970 s. He is also the father of Sheikh Hasina Wazed, the woman who leads Bangladesh today – and whose government now seems hell bent on using every possible instrument at its disposal to discredit its most prominent citizen. At 70 , Prof. Yunus might have expected this to be a golden period, overseeing dozens of social enterprises that now bear the Grameen name. Instead he is mired in a bitter feud with the only Bangladeshi with a story to rival his own. Asked about the cause of his current troubles, Prof. Yunus smiles wearily and ticks off all the " gossips," and runs through the conspiracy theories. And then he shrugs and lays his broad palms flat on the desk. "I don't have the slightest idea why this is happening," he says. "I was just doing my work …" Beyond the borders of Bangladesh the professor tends to be seen as a naive champion of the poor, persecuted by a jealous Prime Minister. But here in Dhaka, the story is as snarled and chaotic as the streets, alleys and canals below Prof. Yunus's windows. It's a story about what Bangladesh is today: a newly vibrant secular democracy with a booming economy – but also, it seems, a country that has not yet shed all the baggage of its messy political past. The Grameen legend goes like this: in the early 1970 s, when Mohammed Yunus was a mild- mannered professor of economics working far from the centre of things in Chittagong, he made a personal loan of $27 to 42 village families. He watched them use the tiny loan to make relatively dramatic changes in their lives, and began to experiment with providing credit to the poor. It was a revolutionary approach; the landless poor had long been considered "unbankable" with no way to obtain capital to start small businesses. Prof. Yunus's model was formalized as a bank in 1983 ; today the Grameen Bank has 8.2 million borrowers, and lends $125- million a month. Grameen lends mostly to women ( who, research shows, are more likely than men to repay, and who channel what they earn into the health and education of their families) in small groups, where peer pressure encourages repayment. That model has been exported across the developing world. The work of Grameen is seen as instrumental in sowing the seeds of greater autonomy and prosperity in Bangladesh's rural women. The 2006 Nobel Peace Prize citation said Prof. Yunus had "shown himself to be a leader who has managed to translate visions into practical action for the benefit of millions of people." But microfinance has come under critical scrutiny in recent years, while Grameen's reliance on foreign donors raised particularly pointed questions at home. Meanwhile the bank – long the most powerful civil institution in the country – has had an increasingly uncomfortable relationship with government as the country moves out of decades of dictatorship. These troubles burst into public view last fall, when a documentary on Norwegian television alleged Prof. Yunus had, in his role as managing director, improperly transferred funds loaned to the bank by the Norwegian national aid agency to Grameen Kalyan, a separate not-for-profit entity. The bank says the financial transfer was only on paper and was made for tax purposes. An investigation by the Norwegian aid agency said it violated the terms of its agreement with the bank but found no misuse of funds, which were fully repaid, and the filmmakers stressed that there are no allegations that Prof. Yunus profited. But the film received sensational coverage in Dhaka, especially from outlets whose owners are close to senior government figures. And it created an opening for those with a grudge against Grameen. In rapid succession, the government ordered a review of the bank's affairs; declared that Prof. Yunus was a "public servant" because the state owns a small share of the bank; and ruled that he was 10 years past the mandatory age of retirement (the finance minister who delivered that news is himself 77 , while Sheikh Hasina is 63). The finance minister also appointed a new chair of the board, a former Grameen employee with an open dislike of Prof. Yunus, who quickly moved to dismiss him as managing director. While Prof. Yunus will not discuss the specifics of the ongoing legal case, his lawyers point out that a year ago he wrote to the Minister of Finance asking to work with him on a succession plan at Grameen. Not only was there no response, lawyer Sara Hossein said, but the governor of the central bank and other senior government figures who sit on the bank board went on regularly dealing with Prof. Yunus on bank affairs. Prof. Yunus challenged the dismissal in the country's highest court. But he found little solace there; the rapidity, and surly language, of the court orders have many convinced Bangladesh's quasi-independent judiciary has been ordered to side with government. The Supreme Court will hear an appeal in May. The whole episode has been immensely damaging for Bangladesh, at a time when the country strives to swap an image of famine and misery for that of a growing economy and flowering pluralist society. So what's driving the attack? The first explanation starts with the complex character of the Prime Minister. Sheikh Hasina has been jailed for alleged bribery and organizing political violence; when she was in power in the 1990 s Bangladesh earned Transparency International's title of "most corrupt nation." But it's too easy to dismiss her as a crooked despot. She was thrust into politics when her father and almost all the rest of her family were assassinated in the military coup in 1975 ; she and a sister escaped only because they were on a visit to Germany. She was repeatedly jailed during her 20- year campaign for a return to civilian rule. She has survived multiple assassination attempts and is loathed by the country's powerful network of far- right Islamists for her commitment to secularism and equality. And today she heads a government that has some of the most progressive policies in the world around educating girls and improving the lives of the poor. Nevertheless, she enjoys nothing like Prof. Yunus's global stature. A decade ago, Sheikh Hasina publicly praised Grameen, but her views later soured. In December she accused it of "sucking blood from the poor." Prof. Yunus seems to have earned her ire with a fiery speech he made in 2007 accusing all the country's politicians of corruption and pledging to start a party of his own. He soon backed away from that plan and today he says he wants nothing to do with politics. But many people here believe Sheikh Hasina's mistrust and anger are unabated, and the allegations against Grameen gave her a convenient opportunity to take out a potential rival. "Remember that in 2013 the country will again have elections – this is a way to send a message not just to Yunus but to anyone else who might be considering politics," said Lamia Karim, a Bangladeshi native who teaches at the University of Oregon and has long studied Grameen. A more subtle explanation is that the government wants control of Grameen. With 8.2 million borrowers, it provides a natural political constituency; with 22 ,000 staff members, it has a "store" of jobs that could be doled out in a country where delivering jobs is critical to getting elected. And slashing its interest rates (from the roughly 20 per cent rate that the bank says it needs to be viable, to perhaps 5 per cent) would cost the government nothing and win it wild popularity – at least until the bank failed. Ironically, Prof. Yunus's troubles may in fact reflect a new political maturity in Bangladesh. The Grameen enterprises include the country's largest telecom firm and 45 other affiliates; taken together, they now form the biggest business in the country. Its reach is matched by that of BRAC, a non- governmental organization which has schools and clinics across the country and also has huge business interests, with which it funds its charities. Together BRAC, Grameen and a couple of smaller NGOs form a sort of parallel Bangladeshi state. Elected in a free, fair election by a large margin, it appears many in Sheikh Hasina's government feel it is time to cut the NGOs down to size. "Perhaps through the restructuring of Grameen Bank the government will step in and take back some of the powers that were outsourced to the NGO sector in the 80 s," Prof. Karim said. "The state is reasserting itself." But it's hard to see how the dissolution of Grameen, which increasingly seems to be the government's goal, would leave the poor any better off. The new, government-appointed chair of the bank, Muzammel Haq, is a former Grameen employee with a bitterness toward his celebrated former boss that he can barely disguise. He insists to a reporter that he should not speak on the record, then leaks venom and allegations about Prof. Yunus for more than three hours. "What are the true non-performing assets? I have to establish the financial health of the organization," he said, then added smugly, "I will try that a dignified transition will take place and he [Prof. Yunus] will play a global role." Prof. Yunus has groomed no obvious successor, and many potential candidates have left the bank in recent years on acrimonious terms. He says he cannot simply abandon the bank, though his 40- odd other social businesses demand his attention. "I have plenty to do – that's not a problem. The problem is what happens to Grameen Bank. This bank will run perfectly if I step down, as long as they [the employees] feel it's in good hands and I bless them. If I tell them I am happy and you work, they will work. They will not raise a single question. But they see now I am being pushed away and everybody gets tense." A three-week adjournment in the court case may give moderate elements in government time to broker some sort of settlement. But it will not be easy. "Prof. Yunus is a modern-day King Lear, in his arrogance and hubris, his unwillingness to see the faults: since the 1990 s the critique of Grameen has been ongoing …," Prof. Karim said. "I think Prof. Yunus forgot that Nobel Prize or not – he has to live in Bangladesh and by the codes of Bangladesh society."