Grameen Bank yesterday said it took prior permission from Bangladesh Bank for appointing Dr Muhammad Yunus as its managing director, rejecting Finance Minister AMA Muhith’s claims that it had not.
The microlender also described Muhith’s comments on Yunus as incorrect and said it did not disobey the law in appointment of the Nobel laureate.
Grameen insisted that Yunus had long been looking for a respectable way to leave his post and ensure a sustainable
future for the organisation at the same time.
Grameen’s response came a day after Muhith explained his government’s stance with diplomats and representatives of development partners at a meeting at Bangladesh Secretariat on Thursday. Grameen said the minister’s comments did not reflect the real situation. Here is Grameen’s full response.
1. In a written statement, the honourable finance minister mentioned that Grameen Bank is not a nongovernmental organisation, but a government institution. His statement is not totally correct. Because, according to the Grameen Bank Ordinance, 75 percent of the ownership of the bank belongs to the landless members of the bank while the rest belongs to the government. In fact, the capital provided by the government is only 3.5 percent. Besides, the finance minister himself has said in his written speech that Grameen Bank was established in 1983 through an ordinance with some unique characteristics. Grameen Bank is a unique bank. The closest example in nature is Asian University for Women.
2. The finance minister told diplomats that Prof Muhammad Yunus was formally requested to hand over the charge of the managing director to the deputy managing director during the review [of Grameen activities]. In an answer, Prof Muhammad Yunus had told the finance minister that his presence was important for the sake of the review work. He is the chief of the bank and has been working as its chief executive since its birth. He holds a big part of the memories of the organisation. It would not be proper to exclude him [from the organisation] during the review.
3. The finance minister has also said actions need to be taken to remedy the situation as Prof Yunus has been occupying the post illegally. Professor Yunus has always said that he obeys law and is holding the post of managing director in line with the law.
4. The finance minister said, “According to the Grameen Bank Ordinance, the bank’s board of directors can appoint its managing director after taking prior approval from Bangladesh Bank. In this case, it was not followed. It was mentioned several times in Bangladesh Bank’s audit report.”
In fact, according to the ordinance, the board of directors of Grameen Bank had appointed Prof Yunus as the managing director after getting prior approval from Bangladesh Bank. The ordinance was not disobeyed in that case. Besides, the statement that “it was mentioned in Bangladesh Bank’s audit report several times” was not true. In fact, Bangladesh Bank started auditing on the basis of 1997 accounts and continued it every year. Only once — in 1999 — the Bangladesh Bank team has raised an objection about the appointment of the managing director. For this, Grameen Bank sent a compliance report to Bangladesh Bank and it [BB] was happy with the report. Since then, Bangladesh Bank has never raised any question about the appointment of the managing director.
5. The honourable finance minister at the meeting said there was no proper evaluation of Grameen Bank’s activities for 27 years. He also mentioned that Bangladesh Bank did not attach proper importance to the organisation’s activities. In fact, Grameen Bank is, perhaps, the most intensely evaluated organisation among local organisations. The World Bank, research organisations, universities and individuals have conducted valuable researches [into Grameen Bank), and findings were published in books.
6. The remark made by the finance minister that Bangladesh Bank did not give much importance to the organisation’s activities is not true either. Grameen Bank has been audited by Bangladesh Bank almost every year. Moreover, in recent years, representatives from Bangladesh Bank have participated in Grameen Bank’s board meetings for reviewing the audit reports. The audit and compliance reports have been thoroughly reviewed in the presence of high officials of Bangladesh Bank. Besides, Grameen Bank has regularly been sending reports on compliance and management activities of the bank [to the central bank] willingly or being advised.
7. After Thursday’s meeting, the finance minister said: “We had long been trying to find a respectable way of bringing changes to the management of Grameen Bank. When I informed Dr Yunus about the issue, he said the organisation will collapse without him.” This statement of the finance minister is not correct. He only raised the issue in connection with the review committee. Before that, he had never raised the issue. In respect of the review, he proposed that Dr Yunus stay aside temporarily. Prof Yunus said a sudden decision like this would leave an adverse impact on the bank. Anything that may create panic among depositors and borrowers of Grameen Bank must not be done. Moreover, he did not feel it was necessary.
On March 15, 2010, Prof Yunus handwrote a letter to the minister mentioning a smooth transition. He also read and explained the whole letter to him. It was indicated that the minister liked the process. Now there should not be the slightest scope to doubt Prof Yunus’ intention of handing over his responsibilities in a congenial environment (so that uncertainty is not created), ensuring a sustainable future for the organisation. As he approached 60 and 70 years of his age, he wished to leave, but it was opposed within Grameen Bank. So, he handed over his hand-written letter to the minister without telling anybody this time. He was waiting for the minister to initiate a process in order to prepare his colleagues mentally.
As the finance minister did not take any step to this effect, Prof Yunus first telephoned the secretary of the banking division of the finance ministry, requesting him to appoint somebody as chairman to Grameen Bank. On September 14, 2010, he sent a letter to the secretary for the same purpose, but the ministry did not respond. Later on December 19, 2010, another letter was sent with a request for an appointment of chairman/acting chairman to Grameen Bank’s board of directors. No step was taken in 2010 to appoint a chairman.
8. After the meeting, the finance minister told journalists that Prof Yunus crossed 60 years in 1999, but Grameen Bank gave no response to this effect. This comment of the finance minister is not correct at all. It has already been mentioned that only once, in 1999, a question was raised in an audit report regarding the appointment of managing director, but the issue was settled after a response from Grameen Bank. Since then, Bangladesh Bank had never raised questions about it in its audit reports or any other letter.
YUNUS’ LETTER TO MUHITH
Below is the full text of Prof Yunus’ March 15 letter to Finance Minister AMA Muhith:
15 March, 2010
Dear Muhith Bhai,
Grameen Bank was created at your own initiative. Now is the time for the bank to move to its next phase. I will have to step down from the post of managing director of Grameen Bank. I’ll hand over the responsibilities of this organisation to the second generation. But the handover process must be smooth. I am really fortunate that the responsibility of overseeing this transition has fallen on you.
The transition process may begin in the following way:
The tenure of the present chairman of Grameen Bank board, Mr. Tabarak Hossain, will end on 26 April, 2010. We can begin the transition process keeping this date in mind.
We can fill the position of chairman in one of the following ways:
Option I:
The tenure of Mr. Tabarak Hossain, the present chairman of Grameen Bank board, may be extended up to 31 December, 2010. At that time, I can step down from my post of managing director. I may be appointed as the chairman of Grameen Bank board on 1 January, 2011. This will ensure the continuity in the Bank remains. The staff and borrowers will not get scared by the suddenness of my departure.
In the past, I have tried on several occasions to step down. Each time I tried, it created a wave of panic everywhere within Grameen Bank.
Present deputy managing director of Grameen Bank may take over the responsibilities of managing director. Ms Nurjahan Begum is the present deputy managing director of Grameen Bank. She is an efficient and competent administrator and she has been with Grameen Bank since its birth.
Option II:
If there is any objection to extending Mr. Tabarak Hussain’s tenure, one of the following persons mentioned below may be appointed as the chairman for one year. I present below the names of the proposed persons in order of my preference.
1) Mr. Syeduzzaman
2) Dr. Jamilur Reza Chowdhury
3) Mr. Khalid Shams
When their term ends in April, 2011, I can be made chairman. Nurjahan Begum can take over the responsibility of managing director.
I am looking for an opportunity to meet you to discuss this matter. Grameen Bank has grown over years with its own norms. The bank is directly linked with the lives of 40 million people. It is a big responsibility for us to ensure that there is a smooth and proper transition in this institution. I hope that with your cooperation we shall be able to carry out this responsibility in a befitting way.
Please accept my best wishes.
Yours truly,
Muhammad Yunus
Courtesy of The Daily Star
