THE FOREIGN minister, Dipu Moni, held an emergency meeting with ambassadors and senior diplomats in Dhaka to justify the Bangladesh government’s decision to hold an inquiry into the Grameen Bank, diplomats have told New Age.
The meeting at the foreign ministry was held on January 9 just over a week after Ellen Goldstein, the World Bank’s Bangladesh country representative, had sent a letter to the finance minister raising concerns on behalf of bilateral and other international donors about how the government was dealing with the Grameen Bank.
At the briefing, Dipu Moni explained to diplomats that the government considered the Grameen bank to be an ‘organ of the state’ and that there were many alleged irregularities which needed investigation.
Three days later, the government announced the formation of a five member inquiry team led by AK Monowar Uddin Ahmed of Dhaka University to look into the affairs of the Grameen Bank.
New Age can also reveal that a few days before the diplomatic briefing, Dipu Moni’s office phoned up the Asian University of Woman to inform it that the prime minister would only speak at the university’s international conference in Dhaka, which was to be held later that month, if Muhammad Yunus was removed from the programme.
Yunus had been invited by Cherie Blair, one of the university’s patrons and wife of former UK prime minister Tony Blair, to give a ‘keynote’ speech at the end of the conference.
The university has also asked him to be part of a special day of celebrations honoring 25 students who were daughters of Grameen Bank borrowers.
Following the intervention of Dipu’s office, Yunus’s agreed involvement in the conference was cancelled.
Omar Shareef, the university’s chief operating officer, denied that Yunus’s absence had anything to do with the government. ‘There was scheduling conflicts and that was the reason why Muhammed Yunus could not attend,’ he said.
A Grameen Bank statement to New Age however said, ‘Professor Yunus was scheduled to preside over the closing plenary of the conference. There was also a programme planned with the AUW Muhammad Yunus’ scholars at the Grameen Bank headquarters. These programmes were set for many months. We were informed by the university authorities at the last moment that due to unavoidable circumstances these programmes could no longer take place. They were therefore cancelled.’
A spokesperson at the foreign minister’s office said that he was unable to comment as Dipu Moni, was outside the country.
On the morning of January 9, all embassies in Dhaka received a letter inviting ‘ambassadors and high commissioners’ to a briefing later that day at the foreign ministry.
‘The foreign minister started by saying that the country was facing a lot of challenges,’ one diplomat present at the meeting told New Age. ‘Dipu Moni went on to say that the government would be happy if all it had to deal with was terrorism and food prices, and the war crimes trial but sometimes things come along requiring the government to respond and Grameen Bank was one of them.’
‘Dipu Moni then said that the government was aware of the concerns from friendly countries which was why she wanted to dispel misconceptions about what kind of entity the Grameen Bank was,’ the diplomat continued, reading from contemporaneous notes taken at the meeting.
‘She then went on for 30 minutes to read out from a thick dossier she had in front of her. She mostly read out long chunks from the 1983 Grameen Bank Ordinance, but also the constitution and the 1940 lenders act.’
‘Her basic point was that the notion that the Grameen Bank is independent of the government is a complete non-starter. It is a statutory public authority and therefore an instrument of the state, she said. Sometimes she also referred to the Grameen Bank as an “organ of the state” to be governed by the government. She emphasised that the government determines everything about the bank, what work it does, the scope of capital and the authority to wind it up.’
‘The foreign minister referred a number of times to the fact that since 1990 the government has helped out Grameen when its capital had been short.’
Continuing to quote from notes taken at the meeting, the diplomat said Dipu Moni listed a number of issues that would be examined by the inquiry.
These included whether Grameen Bank was lending to people not entitled to get loans (‘not the landless poor’); whether Yunus was in office beyond his compulsory retirement age; claims that changes of the terms of employment of staff were unlawfully gazetted in the name of Muhammed Yunus; and the allegation that companies had been formed which were ‘not authorised by law.
‘She also raised questions about the guarantees that were furnished, the levels of interest rates and the methods of collection,’ the diplomat said.
Other diplomats confirmed the accuracy of this diplomat’s recollection.
The meeting lasted for about half an hour.
Monowar Uddin Ahmed, the chair of the review committee set up to look into the Grameen Bank’s affairs, told New Age that its inquiry would be objective.
It would look at the ‘overall functioning of the 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,’ he said
‘There is also a provision for a special audit of the Grameen Bank by the Bangladesh Bank which will be a supplementary to the review. The committee has also been asked to make s list of sister organisations of the Grameen Bank and find out the relationship of the Grameen Bank to these sister organisations and to review all the news flashed into the media particularly about the Norwegian programme and to assess whether there was any transfer of funds to a sister organisation.’
On being asked to comment on Dipu Moni’s comment to the diplomats, the Grameen Bank firmly rejects the argument that it is a government body.
In a written statement to New Age it points out that the 1983 Grameen Bank Ordinance states that the government only ‘owns 25 per cent of the bank’ and is allowed to nominate only 3 of the 12 directors.
It states that although the bank was a ‘statutory body,’ under the provisions of the ordinance, ‘the board of the Grameen Bank is given autonomous power to manage the bank and make all policies, and rules.’
The statement goes on to say that as of 2009 the government in fact only owns 3.4 per cent of the bank. ‘The government has not put additional money in, while the poor people’s share in the bank has been going up steadily. [The poor people] are owners of the bank and share in its profits.’
In relation to the other matters raised by Dipu Moni at the meeting, Grameen Bank statement said that the ‘Grameen Bank has always operated within the law and denies all allegations of wrong doing.’
It notes that the 1983 ordinance ‘lists many objects of Grameen Bank, besides lending money to the poor.’
Specifically in relation to the allegation that Muhammad Yunus should by law have retired, the Grameen Bank statement to New Age says: ‘Sixty is the normal retirement age of the Grameen Bank’s employees… [T]he terms and conditions of the managing director are set by the board. There is no question of the managing director being past the retirement age. His tenure is decided by the board.’ #
First published in New Age, Dhaka, Bangladesh, February 02, 2011
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