Central Bank issues letter to Grameen Bank; Grameen terms it a legal issue, insists the Nobel hero still holds office
Dr Muhammad Yunus, the man who brought a Nobel Prize for Bangladesh, and the most celebrated living Bangladeshi around the globe, was unceremoniously relieved of his duties at Grameen Bank yesterday through a Bangladesh Bank letter.The central bank said Yunus failed to seek its approval when he was reappointed as the managing director in 2000, violating one of the statutes of the partly state-owned (25 percent) Grameen Bank. Now 11 years later the central bank suddenly woke up to the issue and hurried to “remedy” the situation.
But his removal was disputed by Grameen, which said his position was legal. And the matter now seems set to roll into the courtroom as a statement of the Grameen Bank indicated yesterday.
It said, “This [removal] is a legal issue. Grameen Bank is taking legal advice. The Hon’ble Finance Minister has himself stated yesterday [Tuesday] that it is a legal issue. Grameen Bank has been duly complying with all applicable laws. It has also complied with the law in respect of appointment of the Managing Director. According to the Bank’s Legal Advisors, the founder of Grameen Bank, Nobel Laureate Professor Muhammad Yunus, is accordingly continuing in his office.”
With his forced exit, the microfinance institution’s journey of over 30 years enters a different stage. Yunus had started his lone campaign to provide loans to the poor, who had always been overlooked by the traditional banks, from his home village of Jobra in Chittagong. Defeating all sceptics, he not only proved that the poor are bankable, but he could turn it into an international movement. Countries across the world, including the USA, China, and India embraced his model of microfinance.
With his sheer energy, international repute and style, Yunus managed to raise Grameen, that started with two staff, to a level where it now has 20,000 employees and 83.5 lakh borrowers. It has distributed Tk 60,400 crore in loans as of January, and has also created 18 other affiliated social concerns.
Of late, Yunus had a different vision of the world where poverty would cease to exist, and businesses would embrace a new model after the failing of the profit-and-profit-only capitalist architecture. He then innovated the notion of social business, at the centrepiece of which lays the idea that people would invest not for profit but for social cause. The equity holders would not take profit out of ventures, but reinvest it for greater social cause. Grameen’s social business partnerships with global brands such as Adidas and Danone, have secured employment for more than 30,000 people.
Yunus was in the thick of the heat with the sudden broadcast of a documentary film on a Norwegian TV channel which alleged that Grameen had transferred donor’s money, given to Grameen Bank, to another sister organisation. The allegation was widely circulated in Bangladesh on the day the documentary was broadcast, through an online news portal. Later, Norway refuted the allegations saying no irregularities or corruption had taken place.
It is now believed that an orchestrated campaign started against Yunus with a section of the media publishing fabricated stories one after another. At the same time, political heat was fanned with politicians belonging to Awami League making flaring comments.
The smear campaign reached its zenith when Prime Minister Sheikh Hasina, on her return from the United Nations, said microfinanciers “suck blood out of the poor in the name of eradicating poverty”.
“We cannot allow use of the poor people as guinea pigs,” she said.
Many observers say Yunus attracted the ire of Awami League and other political parties when he made a failed attempt to float a political party during the military-backed caretaker government, at a time when political leaders were being arrested wholesale and put in jail. Many think Awami League still holds Yunus as a potential political rival.
But the way the government tried to disgrace Yunus, stunned many — both at home and abroad. The international community soon rallied behind the man who many consider as the capitalists’ new hero.
Former Irish president Mary Robinson who launched a platform, Friends of Grameen, said there is a campaign of politically orchestrated attacks on the Nobel laureate.
“Some highly visible private microcredit experiences turned themselves into financially lucrative enterprises, in countries like Mexico and others. Professor Yunus and Grameen Bank paved the way more than 30 years ago for a sustainable model, with very transparent and reasonable interest rates, and making borrowers the owners of their bank,” Robinson said.
The US and UK governments also made it clear to the Bangladesh government that they do not want to see the Nobel Peace Prize winner disgraced.
The Bangladesh government denied claims of a political vendetta, but what is beyond doubt is the ferocity, and at times personal nature of the attacks.
In her statements which set the ball rolling against Yunus, Hasina said, “I think there must be an extensive probe into the matter, to find out if there was any unauthorised fund transfer by him [Yunus].”
She said it is time to know what has been going on in the name of poverty alleviation, and improving the fate of the poor.
“What happened in the Grameen Bank was just a trick, and this was done to evade tax, nothing else. Bangladesh sometimes sets examples in different fields. You can think of this also as an example. Nobody can hide the truth for long … Truth will definitely come out,” Hasina went on.
She said microfinanciers nurse poverty to make quick money, which is a bad luck of the poor people. She said the government has a 25 percent stake in Grameen, but it seems that this bank is solely owned by one person.
Whatever might have been the reasons for the castigation of the father of microcredit, it is for sure that Bangladesh’s image abroad will be deeply dented through this action of disgraceful removal of Yunus.
After all, Yunus not only brought a Nobel Prize for Bangladesh, but also received almost all the most known prestigious recognitions, including the US Presidential Medal of Freedom, the King Abdul Aziz Medal, and the Ramon Magsaysay Award.
And he was given the rare honour of delivering a lecture at the joint meeting of the members of Lok Sabha, and Rajya Sabha in the Indian parliament in 2009.
The House of Representatives of the US government unanimously passed a bill in 2010 to award Yunus the Congressional Gold Medal.
Several universities around the world set up microfinance departments, and Yunus Centres.
What the letter says
As prior approval was not obtained from Bangladesh Bank under Section 14(1) of the Grameen Bank Ordinance 1983 while reappointing Prof Muhammad Yunus as the managing director of Grameen Bank, it is not legal for him to stay in the post and carry out his duties. Prof Yunus has been relieved of his duties as Grameen Bank’s managing director because of the legal breach.
The letter was sent to Grameen Chairman Khondoker Muzammel Huq.