Grameen Bank’s independence endangered… Professor Yunus continues to fight poverty.
Over the last months, a political campaign of destabilization has unfolded against Professor Yunus, a campaign based on rumors, lies, and legal manipulations. The situation reached a climax in May 2011 when Professor Yunus was removed from his position of Managing Director of the bank he founded decades ago. Professor Yunus’s future remains uncertain and continues to raise concerns all around the world. Defending the integrity of Professor Yunus, and fighting for him to remain involved in the Grameen Bank, is crucial in order to preserve the independence of this unique model which has helped lift 8 million people out of poverty in Bangladesh.
Another priority is to support Professor Yunus in his commitment to fighting poverty through the innovative, efficient and ethical business model that is “social business”. Far away from being discouraged, and despite our disappointment, the current situation is a challenge for Professor Yunus and his thousands of supporters around the world.
This is a pivotal time for us to accelerate the development of social business, a model that became a reality in 2005 with the creation of the Grameen-Danone joint venture. This model is based on a simple vision: to meet a fundamental need of the poorest in society and adopt a very clear principle: no losses, no dividends. An impressive number of multinational corporations, such as Adidas, BASF, Veolia, followed suit and teamed up with Grameen to create social businesses ventures with the aim of addressing society’s most pressing needs.
Most recent developments
August 16th
- Mohammad Shahjahan, a deputy managing director of Grameen Bank, took over as the acting managing director of Grameen Bank. He replaced Nurjahan Begum, who went into leave preparatory to retirement. Bangladeshi newspapers have reported that “a source at the Grameen Bank said on condition of anonymity that a member of the board proposed extending Nurjahan’s tenure in the post as acting managing director but the government-sponsored chairman did not endorse the idea”.
August 11th
- Professor Yunus met US Secretary of State Hillary Clinton to discuss microcredit and social business as tools to fight poverty. Secretary Clinton was pleased to hear about the good progress of Grameen America and was invited by Professor Yunus to attend the Global Social Business Summit of Vienna.
July 29th
Interviewed by the Guardian, Professor Yunus reiterated its commitment to fighting poverty through social business. He declared: “I have been over years spending more and more time on promoting social business, setting up social business, bringing social business to courses at universities, helping design social business institutes and universities… answering questions related with social business. This is what I will continue to devote time to. Because now social business is spreading in many more countries […] this will take up a lot of my time”.
May 12th
- Following reports of torture inflicted upon the Chairman of the Grameen Bank Employee Association, and multiple attempts to intimidate and bribe the director ladies on the Board, Professor Yunus has decided to resign from his post of Managing Director, without waiting for the official and effective outcome of the legal procedures.
- In a statement, Professor Yunus explained: “I am taking this step in order to prevent undue disruption of the activities of Grameen Bank and to ensure my colleagues and our 8 million members and owners of the bank, are not subjected to any difficulties in discharging their responsibilities”.
Resigned letter of Professor Yunus
May 5th
- The Supreme Court confirmed a High Court verdict upholding the removal of Professor Yunus from the post of managing director of the bank he had founded three decades ago. In a statement issued after the verdict, Professor Yunus explains the reasons for going to court and his concerns about the future of Grameen Bank and other social initiatives in Bangladesh. Professor Yunus will continue to be managing director of Grameen Bank until the bank’s board of directors appoints a new MD.
Statement of Professor Yunus regarding his removal from Grameen Bank
May 3rd
- Grameen Bank issued a rejoinder to Review Committee report. It contains very clear responses to the various issues raised in the Bangladesh Bank’s Review Committee report as reported in the press. According to Grameen Bank, “even though the Report recognized the positive impact of the work of Grameen Bank, it is clear that the Committee did not have an accurate and clear understing of the information presented to them. This has resulted in a number if issues that have not been presented correctly in the Report”. Please follow the link below to read the responses to the inaccuracies presented in the Review Committee Report:
Grameen Bank rejoinder to Review Committee report
April 28th
- Bangladeshi Finance Minister AMA Muhith clears Grameen Bank of misuse of funds ahead of publication of the Review Committee Report.
- Special envoy of French President Nicolas Sarkozy, Martin Hirsch, holds press conference in Dhaka.
- French Minister of Economic Affairs, Finances and Industry, Christine Lagarde meets Professor Yunus in Paris.
April 25th
- Press agencies revealed that the review committee appointed by the government of Bangladesh had cleared Professor Yunus of misappropriating Norwegian aid money at the Grameen Bank. It confirms the Norwegian government’s decision of December 2010.
- Finance Minister A.M.A. Muhith also said that the government-appointed committee found no truth to allegations Grameen Bank charged excessive interest rates on loans to the poor. ”Grameen Bank’s interest rate is the best among all the microfinance institutions”, he added.
- The full report has not yet been released.
April 13th
- German Foreign Minister Guido Westerwelle made a statement supporting Professor Yunus. He said the Grameen Bank is a symbol for the fight against poverty and thanked him for his ideas and dedication to the million of people who have been able to free themselves from harshest poverty. Mr. Westerwelle stated that he hopes Professor Yunus will be allowed to pursur his pioneering work.
April 6th
April 5th
April 3rd
April 2nd
- Soraya Rodríguez, Spanish Secretary of State for International Cooperation, expressed her government’s concern, months before Yunus is to preside over the Global Microcredit Summit, held in Valladolid from 14th to 17th November 2011. She said: “We hope that this undesired and complicated situation can come to a satisfactory conclusion for this important institution […] and that the episode will be a part of the past when we are celebrating the Global Microcredit Summit in Valladolid”.
April 1st
- Friends of Grameen welcome Esther Duflo and Salman Khan as members of Executive Committee.
- Leading economist Esther Duflo, joined the Executive Committee of Friends of Grameen as Vice President. Specialized in Development economics, she is currently the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at the Massachusetts Institute of Technology in Boston, USA. In 2010, she received the John Bates Clark Medal for economists under the age of forty who are judged to have made the most significant contribution to economic thought and knowledge.
- Salman Khan, founder of the Khan Academy, also joins Friends of Grameen as Vice President of the Executive Committee. The Khan Academy is a not-for-profit educational organization with the stated mission of “providing a high quality education to anyone”. Its website supplies a free online collection of over 2,200 micro lectures via video tutorials teaching mathematics, history, finance, physics, chemistry, biology, astronomy, and economics.
- The Los Angeles Bangladeshi community came together in front of the Bangladesh Consulate, forming a human chain and asking for Justice. They later entered the building to deliver a signed petition to the Consulate General, and stressed that the “international reputation of Bangladesh was being ruined by this farcical political posturing by (our) government and it’s spokespeople”.
March 30:
- French Foreign Affairs Minister Alain Juppé voiced the strong support of France for Muhammad Yunus and its concern over the independence of Grameen Bank. “France would like to ensure a fair trial for Muhammad Yunus”, Alain Juppé said at the Parliament.
- Two eminent French personalities, Jacques Chirac and Michel Rocard, expressed their strong support for Professor Yunus and Grameen by joining Friends of Grameen.
March 25:
- In Italy, Hon. Mario Baccini MP together with Professor Luisa Brunori of Bologna University, Sam Daley-Harris, Director of the Mirocredit Summit Campaign, and European Member of Parliament Sylvia Costa issued the following statement: “Professor Muhammad Yunus and Grameen Bank have made an important contribution to social development in Bangladesh through microfinance. Prof. Yunus and Grameen Bank are leading actors in the fight against poverty. This is why we express deep solidarity with Professor Yunus with the wish that there can be a solution to the situation”.
March 24:
- Professor Yunus was interviewed by the Wall Street Journal. He reiterated that his only concern was to ensure ” the future of Grameen Bank’s 8.3 million borrowers, almost all of whom are low-income rural women”
March 20:
- US Assistant Secretary for South and Central Asian Affairs had meetings with some Bangladeshi officials, including Prime Minister Sheikh Hasina. He said he believes that “a comprmise is possible” and encouraged “dialogue between the parties to find a mutually acceptable solution”.
March 17 :
- 6 US Senators urge Bangladesh Prime Minister Sheikh Hasina to treat Professor Yunus with respect and express their strong concern over the current situation
March 15 :
- Supreme Court of Bangladesh postpones hearing on Professor Yunus
- 26 members of US Congress defend the independence of Grameen Bank
- 5 French personalities, including former Prime Minister Michel Rocard, express support for Grameen Bank and microcredit in Bangladesh
- Author Paulo Coelho writes in support of Professor Yunus
Overview of the campaign developed against Grameen Bank
and Professor Yunus since end of 2010
Some alarming events have unfolded over the last days. This reached a climax on March 8th when the High Court of Bangladesh upheld the Central Bank’s decision to remove Professor Yunus from his post as Managing Director of the Grameen Bank, which he founded over three decades ago.
Professor Yunus’ lawyers have announced that they shall now appeal to the Supreme Court, as the High Court decision is blatantly politically oriented and without legal grounds. On March 29th, the Supreme Court adjourned the hearing until April 4th.
However, Professor Yunus will remain in post during the proceedings.
The High Court decision followed a letter issued on February 27th, 2011 by Central Bank of Bangladesh stated an opinion that it is not valid for Professor Yunus to continue holding the post of Managing Director of Grameen Bank. Another letter dated March 2nd, 2011, also issued by Central Bank, announced that Professor Yunus was relieved from the position of Managing Director of Grameen Bank. This letter has received the support of the government of Bangladesh. Finance Minister AMA Muhith said “this is a legal issue” and that there was “nothing to be said in this regard at the moment” (see article in New Nation).
As a consequence, Professor Muhammad Yunus’ lawyers filed a petition on March 3rd, 2011, before the High Court of Bangladesh on the following basis:
- Both letters are without lawful authority and in violation of Professor Yunus’ fundamental rights under Articles 27, 31 and 40 of the Constitution of Bangladesh.
- Professor Yunus was appointed MD of Grameen Bank in 1983, in full accordance with the Ordinance that created Grameen Bank, and with the full agreement of the Central Bank.
- In 1999, when Professor Yunus was about to reach the age of 60 (the age limit as contained in the Service Regulations of Grameen Bank of 1993 for Grameen Bank employees), the Board unanimously decided that this limit should not apply to the Managing Director.
- Questions raised by Central Bank on these matters were answered satisfactorily by Grameen Bank and, since 2001, the matter of appointment of MD had not been discussed anymore.
A second writ of petition was submitted before the same Court by nine of the directors of Grameen Bank to challenge the validity of the Central Bank’s authority to remove Professor Yunus from his position.
Before these recent events, Professor Yunus and the Grameen Bank had clearly been the target of a violent destabilization campaign.
On 12th January 2011, the Government of Bangladesh, following the approval of its Prime Minister, formed a committee to investigate the Grameen Bank and its founder Professor Muhammad Yunus. Earlier, the Government, exercising its right under the Grameen Bank charter, appointed a former aggrieved employee Muzammel Huq, as chairman of the board of the Bank. Mr. Huq has been a vocal critic of Mr. Yunus, and the promotion of a former underling has been taken as a sure sign that the government seeks to oust the bank’s founder. In a recent article published in the New York Times, he said of Mr. Yunus, “I think he is a good man with a small heart. He cannot give credit to anyone but himself”.
The goal of this site is to explain the roots of this destabilization sketch out the possible ramifications and illustrate the growing worldwide mobilization.
1. Some explanations for the attacks
A political will to take over the Grameen bank and a deep rooted animosity against Professor Yunus
The main reason for the current attacks from the Prime Minister is a blatant attempt to take control over a highly successful bank where the Government’s equity has dwindled to barely 3% (despite this, it still prevails on the Board because of the governance structure of the institution). This campaign could be also viewed as a deep rooted animosity. Speculations range from petty jealousy over the Nobel Prize and the international fame of Muhammad Yunus to grievances against Yunus for his brief foray in Bangladeshi politics.
The Bangladesh Prime Minister, speaking in the Parliament, has famously accused the Nobel Peace Prize-winner of “bloodsucking the poor”. The trigger for the Prime Minister’s outburst was an unfounded report in a Norwegian TV channel broadcast on 30th November 2010 claiming that a misallocation of a Norwegian Government grant dating back to 1996.
This report was quickly refuted by the Government of Norway which declared on the official website of its Ministry of Foreign affairs “… 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.”
One would have thought that the Norwegian declaration of a clean bill for Grameen Bank would have been the logical conclusion of a matter raised and addressed. The allegations appear even more surprising as Grameen Bank is audited annually by Bangladesh’s Central Bank as well as one of the “Big Four” accounting firms as the outside auditor.
2. Various ways of destabilizing Prof Yunus and Grameen bank: a never-ending process
However, what could have been seen as a “non event” became the starting point of a violent campaign of destabilization. Indeed, the government has unleashed force on multiple fronts:
A virulent campaign through a number of affiliated media outlets
On 25th December, new rumours emerged in the Bengali press that Professor Yunus has resigned from the Grameen Bank’s Board, and that the resignation letter had been signed by Finance Minister Mr Muhith. These were immediately denied by the Minister and dismissed by Professor Yunus as “baseless, false and ill-motivated” by Professor Yunus. Some articles suggested abuse of public trust and thereby raising, at least in the more credulous sections of society, questions about the integrity of Prof. Yunus.
On Tuesday 25th January 2011, new allegations surfaced in the Bangladeshi media, all of which are false.
Accusations against Professor Yunus and Grameen Bank:
- Dr. Yunus is serving as Managing Director although he is above 60.
- Dr. Yunus has fired 4000 employees of GB to reduce costs.
- Dr. Yunus travels abroad that doesn’t have anything to do with GB and without the permission of the concerned authority.
- Creation of Grameen companies by the Bank without proper license from the Bangladesh bank and Grameen Bank created different companies without Government permission.
- Grameen Bank interest rate is not only non-transparent but very high according to the current rules.
Orchestrated legal actions in relation to unfounded and weak cases
On the 20th December, it was announced that a Mymensingh court had summoned Professor Mohammad Yunus in a defamation case. According to the case details, in an interview given to AFP on 17th January 2007, Professor Yunus had claimed: “Politicians in Bangladesh only work for money. There is no ideology here.” The case was filed on 21 January 2007 for derogatory comments made against politicians. Professor Yunus was summoned to appear in court on 18th January 2011 where he appeared for ten minutes. The court has granted Yunus bail and allowed a nominee to appear at the next hearing, which has been set by the judge for 20th February 2011.
One of the cases is against a joint venture between Grameen and the French multinational Danone which has been engaged in a social business aimed at producing high nutrient yoghurts for children nutrition in rural areas. The latter action is by the local sanitary authorities charging Grameen Danone of producing “sub standard” products and asking Yunus to personally appear in court to defend the charges. Prof. Yunus appeared in court on 27th January and was granted bail.
The latest one is dealing with bloated telephone bills sent to a Grameen village phone subscriber. A former manager of Grameen Bank Ganguhati centre filed the case alleging that Palli Phone, owned by Grameen Telecom had sent ghost bills to a telephone subscriber. Professor Yunus will appear in court on April 18th.
On 28th January, a devastating fire erupted in the three-storey factory of Grameen Knitwear at Dhaka Export Processing Zone (DEPZ) at Ashulia, in the outskirts of the capital (see article in the Financial Express). At least seven people, including a fireman, were injured; the factory management estimated the loss of the entire stock and the damage to industrial equipment due to the fire at Tk 150 million.
Attempts of internal destabilizations
On 24th December, 2010, the Chairman of the standing committee of the Finance Ministry A N H Mostafa Kamal confirmed that a “high-powered committee” had been formed to investigate the operations of the Grameen Bank, though the names of the people on the panel have not been revealed.
On 28th December, the same Finance Minister called Professor Yunus and asked him to resign within 48 hours.
On 9th January, 2011, the Ministry called Prof Yunus again and delivered him the notice of the appointment of the new Chairman of the Board (a clearly unsympathetic and aggrieved former employee) and the launch of the investigation, and then asked he step aside from his role as Managing Director during the investigation.
On 1st February, Professor Yunus was summoned to a meeting with the Minister of Finance, and, once again, was asked to resign to enable the investigation committee “to work in peace”. Whilst the Minister claimed he was given these instructions, Professor Yunus refused. The Minister then added: “You have no idea of the anger that will fall on you from the top”.
More recently, the statements made by Sajeeb A. Wazed, the son of Sheikh Hasina, who lives in the USA, are particularly alarming. He wrote and signed an open letter on March 5th in his capacity of “Advisor to Sheikh Hasina, Honorable Prime Minister of Bangladesh”, claiming that he was representing the official view of the Government of Bangladesh on the matter, in troubling and defamatory terms. “Here are the facts from the Bangladesh Government’s side on Mohammad Yunus and Grameen Bank issue”, starts the email. It continues: “Last year Norwegian television uncovered documents revealing massive financial improprieties at Grameen Bank under Mohammed Yunus”. Commenting on the fact that the Government of Norway has totally cleared this issue, he says “no doubt Yunus lobbied the Norwegian Government”. Even more alarming, Mr. Sajeeb Wazid goes on by saying: “Contrary to the popular perception, Yunus did not found Grameen Bank. The Government of Bangladesh did”.
3. A collective and worldwide reaction against attacks
U.S. “troubled” by the High Courtdecision
It is reported that US Secretary of State Hillary Clinton had a phone call with Professor Yunus after the announcement of High Court’s decision (see Reuters).
In addition to that, Mrs. Clinton spokesman, Philip Crowley said, on March 8th, he was hoping “that a mutually satisfactory compromise can be achieved that will ensure Grameen Bank’s autonomy and effectiveness” (see AFP).
US Ambassador in Bangladesh reacted to the government’s move to remove Professor Yunus from Grameen Bank. He said the United States is deeply troubled by the government attitude and termed it “an unusual way to handle a Nobel Laureate”. The US ambassador also announced that Professor Yunus will meet with Secretary of State Hillary R. Clinton on March 8th in New York (see article in Daily Star).
World Bank defends the Grameen Bank
On 23rd December, the Local Consultative Group meeting of key representatives of key donor countries and international financial institutions held an extraordinary meeting in Dhaka. This meeting was attended by the World Bank, the US Embassy, USAID and others.
During this meeting, the World Bank conveyed in very strong terms that the independence of the Grameen Bank was paramount for the World Bank and that any interference would affect its policy towards Bangladesh. The head of the World Bank in Bangladesh wrote in a letter to the Finance Minister dated December 31, 2010 that “…I speak for many of Bangladesh’s long-standing development partners in expressing concern over recent events that may cast a shadow over the microfinance sector and the activities of non-governmental and quasi-non-governmental organizations (NGOs) in Bangladesh.” It went on to say “…the decisions related to Grameen Bank — given its size and global reach–send far-reaching signals within Bangladesh and abroad about the country’s pluralistic approach to development and poverty reduction.”
There is also active outreach in diplomatic circles as well; the US diplomatic service is particularly active.
Norwegian Nobel Committee reasserts support for Professor Yunus
On 28th January, the Norwegian Nobel committee issued a letter of support of Professor Yunus, in the light of the allegations made in documentary, but also “in various forms in Bangladesh”. The letter signed by Geir Lundestad, Secretary of the Committee explains that the “vetting process for Professor Yunus (when he was jointly awarded the Nobel Peace prize with the Grameen Bank) was actually more thorough than it is normally the case. The committee consulted several top international and Norwegian experts on Yunus and the Grameen Bank. When a bank has 7-8 million borrowers, it is easy to find isolated negative examples. It was only when the Committee had pieced this larger and very positive picture together that the Committee came to the conclusion it did”.
International and local media concern
Since the announcement of Professor Yunus’ removal from his post, there has been large media coverage around the world. Many international newspapers (The Economist, Financial Times…) have covered this issue and have expressed their concerns over the real intentions of the Bangladeshi government.Nicholas Kristof of the New York Times sent out an early warning: “Is Bangladesh Trying to Take Over Grameen Bank?” The Economist wrote a paper on the same story. And more international media are now expected to report on the situation, despite the fact that Prof. Yunus has deliberately chosen a low media profile to minimize the risk of further antagonizing the local situation.
More recently, on 30th January, Lydia Polgreen published an opinion paper in the New York Times “Microcredit Pioneer faces an enquiry in Bangladesh”. She explains that “microfinance experts worry that a government takeover of Grameen Bank may turn it into a tool of political patronage and destroy it”. A retired senior government official, who worked closely with Ms. Hasina, is anonymously quoted in the article, and explains that the Prime minister “is afraid that another military government will come and try to use Yunus as its face. She wants to tarnish his image so that he becomes less of a threat.”
Mahfuz Anam, editor of The Daily Star, is also quoted in the article, commenting on Professor Yunus: “This man has done so much for the country; he does not deserve to be treated this way because of dirty politics.”
Local newspaper The Daily Star also published a very positive opinion piece, “Evaluating the Grameen Bank and Professor Yunus”, by Nasreen Khundker (Professor of Economics at the University of Dhakha), Board member of the Institute of Micro Finance, an institute for research into micro finance and other issues. She explains that in 1993, she was a member of the Phase IV evaluation mission of Grameen Bank, financed by NORAD, CIDA, USAID and a few other donors. Specifically, her task was to evaluate the socioeconomic impact of Grameen Bank on its members, and she warns that “action cannot be based simply on prejudice.”
The Bangladeshi business newspaper Financial Express published an opinion piece “Chicken-hearted man and transformational leadership,” by Mamun Rashid, a banker and economic analyst. He explains he “was intrigued to read the statement of the newly appointed Grameen Bank Chairman in the New York Times, where he mentioned Professor Yunus […] as a chicken-hearted man”. Comparing Professor Yunus’ leadership to the principles carried by Mahatma Gandhi, M. Rashid states that Professor Yunus’ leadership is unquestionable and has been efficient to improve the living conditions of many Bangladeshi people.
Clearly, all those in Bangladesh speaking to the media in favour of Professor Yunus are now doing so anonymously, for fear of reprisals from the Government. However, it is interesting to note that more and more people are doing so, and that even members of the Government and the Awami League have raised the alarm over this ongoing harassment.
“Friends of Grameen” initiative
The AFP published a story dealing with the creation of Friends of Grameen on February the 16th.
Friends of Grameen are deeply committed to support Professor Yunus and Grameen Bank. Several press releases were recently sent to dozens of journalists. According to Michel Camdessus, member of the Honorary Committee, “Grameen Bank is an asset for Bangladesh, and so is Professor Yunus”. In another press release sent on March 3rd, Friends of Grameen said they “condemn the relentless bullying of the Government of Bangladesh and support case filed at the High Court by Grameen Bank against removal of Professor Yunus”.
Online “grassroots initiative”
A Facebook page, entitled “Support Yunus” was created to give Professor Yunus a collective and strong support. On March 4th, 1 343 people are members of this group. The group continues to grow.
This initiative came after an online petition circulated online, calling for support of professor Yunus: “International pressure will make a difference as no one in Bangladesh has stood up openly to defend Professor Yunus against the unfair attacks from Prime Minister Hasina. Perhaps they are afraid to disagree with her.”
In addition, it should be remembered that:
Governance of Grameen Bank → The Government is the largest individual shareholder, with a theoretical 25% of equity → The Government has been appointing the Chairman of Grameen Bank since its inception in 1983 → The Government has 3 seats on the Board, and have approved all the minutes and the necessary steps for key actions → The MD has been confirmed in his position at least twice since its first appointment, always with approval of Central Bank Transparency of Grameen Bank →All accounts are audited by the local affiliate of KPMG every year, and approved by the board and sent to Central Bank →The only evidence the Government was able to provide for its legitimacy to take action and launch the investigation committee was a baseless paper circulated to diplomats, which only serves to justify the political and personal motivations behind these actions Impact of microcredit → The Microcredit Summit Campaign has published a compelling new report in the impact of microcredit in Bangladesh |
