Saturday, July 20, 2024

Govt in a fix over how to sack Yunus

Govt in a fix over how to sack Yunus
David Bergman and Abdullah Juberee
The Bangladesh Bank, the finance ministry and the law ministry are in disagreement with each other about how to sack Muhammad Yunus from his position as managing director of the Grameen Bank.
The finance ministry, following advice it received from the law ministry, asked the Bangladesh Bank on Tuesday to use the powers set out in the Banking Companies Act 1991 to force the removal of Muhammed Yunus from the Grameen Bank.
‘We are not dealing with the Grameen Bank now. The Bangladesh Bank is looking after the issue,’ Shafiqur Rahman Patwari, secretary of the banking and financial institution division, of the finance ministry, told reporters at the ministry.
‘It has sufficient powers to take action.’
KM Abdul Wadood, the general manager of the banking regulation and policy department at the Bangladesh Bank responsible for dealing with the current issue of Yunus’s employment, however, told New Age that the central bank does not have the powers to sack the Grameen Bank’s managing director.
He said that the powers in the Banking Companies Act 1991 which the government wants the Bangladesh Bank to use to force Yunus out of office are not appropriate for dealing with employment issues of this kind.
Early on Tuesday, the finance minister, Abul Maal Abdul Muhith, confirmed to journalists that his ministry had received a letter from the Bangladesh Bank stating that Muhammad Yunus’s continued employment as managing director of the Grameen Bank was illegal.
It was this letter which Muzammel Huq, the new government appointed chairperson of the Grameen Bank, is reported to have placed before the meeting of its board of directors a day earlier on Monday.
After that board meeting, Muzammel stated, ‘By operation of law, [Yunus] has ceased to function as managing director.’
In response to this claim, Jannat-E-Quanine, general manager of the Grameen Bank, had issued a statement saying, ‘There is no directive on Professor Yunus to cease functioning as managing director nor is there any suggestion of his being removed from this post.’
Muhith told reporters on Tuesday, ‘The central bank does not even know about his continuation [as managing director of the Grameen Bank]. The Grameen Bank did not consult with [Bangladesh Bank] about the appointment. He does not exist as a [managing] director since 2001 to them.’
Under Section 14 of the Grameen Bank Ordinance, a managing director can only be appointed ‘with the prior approval of the Bangladesh bank.’
The decision by the finance ministry to send the matter back to the Bangladesh Bank followed a meeting early on Tuesday morning between the law and finance ministry officials.
Finance ministry officials had brought to the meeting a proposal to change the law that would allow Yunus to be removed.
The law ministry officials, however, told their finance ministry colleagues that no legal amendments were necessary and that the Bangladesh Bank could use its powers under Section 45 of the Banking Companies Act 1991 to force Yunus’s exit.
This section allows the Bangladesh Bank to issue any mandatory direction on any ‘banking company’ if it considers any one of four broad criteria exists.
These criteria include circumstances where the bank considers it to be ‘in the public interest’ to issue a direction, or where it thinks that it should do so in order ‘to secure the proper management of any banking company.’
Wadood from the Bangladesh Bank, however, told New Age that this section of the 1991 act cannot be used in the way as proposed by the finance ministry.
He said that it could only be used in relation to activities ‘where there is no existing regulations, laws or rules. It is not effective for this.’
‘The Grameen Bank Ordinance 1983 was created by the finance ministry. It is their responsibility to take action,’ he told New Age.
The government’s continued attempts to find a way to force Yunus out of the Grameen Bank are occurring despite the US government ramping up its pressure on the Bangladesh government to back down.
New Age reported earlier in the week that US officials has told the prime minister Sheikh Hasina, that they would stop all high-level diplomatic interactions with Bangladesh unless the government resolved the crisis amicably.
However on Monday morning, following the normal cabinet meeting, a meeting took place at the cabinet division in the secretariat between the prime minister and the finance minster specifically to discuss how to force Muhammad Yunus out of the Grameen Bank, senior finance ministry officials told New Age.

In the report headlined ‘US asks Govt not to Harass Yunus,’ published on in the February 28, 2011 issue of New Age, it was inadvertently stated that Muzammel Huq, the current chairman of the Grameen Bank, had been ‘fired’ from the post of general manager at the bank. This is not correct.
Muzammel Huq has informed the paper that ‘in accordance with the Grameen Bank Service Rules on completion of 60 years of age and 22 years of service, I went on leave preparatory to retirement with effect from December 10, 2003 and retired from the Grameen Bank on December 11, 2004.’ The paper stands corrected and apologies for the error.


Courtesy of New Age

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