Thursday, July 18, 2024

Grameen Bank on Joy’s letter

Sajeeb Wajed Joy, son of Prime Minister Sheikh Hasina, has riddled Grameen Bank with allegations of tax evasion, fraud and illegal activities under its founder Muhammad Yunus, prompting the microlender to issue a firm rebuttal.
In a statement yesterday, the “Bank for the Poor” disputed Joy’s letter, published in a section of the press and said the “news contains a number of inaccurate facts and appears to be misconceived”.
Joy, who lives in the US, has written and signed an open letter full of rants against the Nobel-winning organisation. In the letter initially circulated by email, Joy has identified himself as an adviser to the prime minister.
“Last year Norwegian Television uncovered documents revealing massive financial improprieties at Grameen Bank under Muhammad Yunus. Approximately $100 million in donor funds to Grameen Bank were transferred out of Grameen Bank to a private corporation, Grameen Kalyan set up by Yunus,” Joy said.
“The government of Norway raised this as a major concern and as a compromise $30 million was returned. The remaining approximately $70 million was never returned. All correspondence in this regard was from Yunus himself,” he said.
“Just as international lobbying and media is being used in this recent incident, no doubt Yunus lobbied the Norwegian government as well. However, their explanation left millions of dollars unaccounted for.”
Joy said this became a major issue in Bangladesh and the government was forced to form an independent committee to investigate. “Yunus personally gave a press statement (no questions were allowed) where he announced that he undertook these transfers to avoid taxes, which constitutes tax evasion.”
“However, this makes no sense since Grameen was at the time a non-profit and paid no taxes. What is clear is that this transfer is completely illegal and constitutes a criminal offence of ‘conversion’ under Bangladesh law.”
“Further investigation uncovered other fraud, improprieties and illegal activity at Grameen Bank under Yunus.”
Joy said, between 1998 and 2002 all microloan borrowers were forced to pay an additional amount labelled “forced savings” which they were supposed to be paid back. “However, this money was never returned to the borrowers, who are among the poorest of society! This is fraud and theft.”
He alleged that donor funds were used to invest in a variety of private-for-profit ventures, all without approval from either the donors or the government, which owns 25 percent of Grameen Bank.
“In several cases, the equity in these private ventures was held not by Grameen Bank, but by Yunus and his family members personally. This is completely illegal and constitutes embezzlement,” Joy claimed.
He said loans were made by Grameen Bank to some of these corporations, which is completely illegal since Grameen Bank is not a regular bank. “It is lending donor funds and is only allowed to loan to microcredit borrowers.”
Joy also claimed Grameen charges up to 30 percent interest rate on loans and up to an additional 10 percent in “forced savings” to the poorest sections of society. “Their collection methods are draconian and collection officers who fail to collect payment have the uncollected amounts deducted from their pay.”
“There are many documented cases which constitute abuse and the criminal offence of ‘molestation’ under Bangladesh law,” Joy wrote in the letter.
He claimed the government, not Yunus, founded Grameen Bank. “Contrary to the popular perception, Yunus did not found Grameen Bank. The government of Bangladesh did. Initially the government owned 65 percent of Grameen Bank, which was whittled down over the years by Yunus. The government still owns 25 percent of Grameen Bank and retains the right to veto management appointees.”
Joy said there is little evidence that showed a link between microcredit and reduction of poor people. “Despite the hype, there is no evidence that microcredit has in fact reduced the rolls of the poor in Bangladesh. Grameen Bank has been in the microcredit business for 30 years, yet Bangladesh remains one of the poorest countries in the world.”
“Furthermore, the private sector investments made using Grameen Bank money have become quite profitable. Grameen Phone is by far the largest telecommunications operator in Bangladesh with a subscriber base of 28 million, annual revenue of over $1 billion and profits of several hundred million dollars per year. Grameen Bank owns 35 percent equity in Grameen Phone, so why do they have to charge such high interest rates to the poor?”
Joy also said the government had tried to retain the respect of Yunus. “Given his stature as a Nobel Prize winner, the government of Bangladesh requested that Yunus step down quietly from the post of managing director of Grameen Bank. He refused and has engaged in an international lobbying campaign accusing our government and in particular, Prime Minister Sheikh Hasina of engaging in political retribution.”
“Nothing could be further from the truth. Yunus has no political stature in Bangladesh. During the brief military regime from 2007-08, under a state of emergency with all political activity banned and most political leaders behind bars, even with the help of the military he was unable to put together a political party and garner any public support. Politically he is a non-entity in Bangladesh and no threat to any political leader,” Joy said.
GRAMEEN BANK’S REPLY
Grameen Bank responded to each issue in Joy’s letter. It referred to one of his allegations that “approximately $100 million in donor funds were transferred out of Grameen Bank to a private corporation, Grameen Kalyan set up by Yunus”. The microlender insisted that Grameen Kalyan is not a private corporation set up by Prof Yunus.
“Grameen Kalyan was created by the board of directors of Grameen Bank [Board Decision 42.8, dated April 25, 1996] for the benefit of Grameen borrowers and employees [90 percent of whom come from low income families],” Grameen said.
“Empowered by a board decision and executing an agreement between Grameen Bank and Grameen Kalyan, an endowment to the extent of around Tk 3,917 million was created by simultaneous notional ‘transfer’ of fund. Grameen Kalyan was never given the control and possession of the funds,” the microlender said.
Grameen said Joy’s claim that the government was “forced” to create an “independent investigation committee” was highly misleading, as the government appointed a “review committee” to look into the operations of Grameen and its associated companies.
According to Grameen, Joy’s claim about tax exemption does not take into account the tax exemption practice prevailing at that time. “There are perfectly legal ways to minimise tax liabilities. They do not constitute ‘evasion’,” it said.
The claim that “Grameen was, at the time, non-profit and paid no taxes” is simply not true, the microfinance institution insisted. “Grameen Bank was never a non-profit organisation. Following the expiry of Grameen Bank’s tax-exempt status on December 31, 1996, it did not receive notice of tax-exempt status until 2000, when the government retroactively issued tax-exempt status to Grameen Bank from 1997 onwards,” it said.
Grameen brushed aside Joy’s claim that from 1998 to 2002, “forced savings” were taken in members’ names and not returned to them.
“From the beginning of Grameen Bank’s operation, members have been required to maintain a savings account containing five percent of their loan disbursement amount in order to provide for their emergency needs,” Grameen said.
“This money is credited to the borrowers’ savings account, which is an interest bearing account and Grameen Bank has been giving 8.5 percent interest for the savings. The borrowers are enjoying the benefit of their savings at their convenience and are allowed to withdraw the entire savings without leaving any balance in their accounts. There is no question of not returning the money to the account holders,” Grameen added.
According to Grameen, the allegation of using donors’ funds for private ventures without approval from either the donors or the Grameen Bank is completely false and baseless. “There had never been any single incident of using Grameen Bank fund for private venture with or without approval of the Grameen Bank,” it said.
Grameen also refuted a claim that it had charged a high interest rate. “Grameen Bank charges the lowest interest rate in Bangladesh for microcredit,” the microfinance organisation said.
Joy’s letter, according to ‘Friends of Grameen’, has exposed the very dynamics behind the attacks on Yunus and Grameen Bank.
On March 15, a full bench of Supreme Court will hear an appeal filed by the Nobel laureate against a High Court verdict that upheld a central bank order removing Keep on reading

Related News

Internet likely to face disruption for 12 hours today

News Desk : dhakamirror.com Internet connectivity in Bangladesh will face partial disruption for 12 hours from this morning because of maintenance of 1st submarine cable, said Bangladesh Submarine Cables PLC (BSCPLC) in a press release. The statement said from 6:01 am to 6:00 pm, the consortium has scheduled maintenance for a land cable fault near ... Read more

Chess Grandmaster Ziaur Rahman passes away

News Desk : dhakamirror.com Bangladesh Grandmaster Ziaur Rahman passed away at a hospital in the city after suffering a heart attack during the 12th round game of the ongoing National Chess Championship at the Chess Federation on Friday. Zia bhai is no more. He breathed his last at around 6:00pm at Ibrahim Cardiac Hospital,’ confirmed ... Read more

Ending GPA-5 era, SSC results to be published with English letter grades

News Desk : dhakamirror.com The Secondary School Certificate (SSC) exams will no longer be evaluated under the Grade Point Average 1-5 scale but rather be graded with English letters. A meeting of the National Curriculum Coordination Committee with the Education Minister Mohibul Hasan Chowdhury approved the new evaluation framework on Monday (1 July). “There are ... Read more

Over 1.04 crore animals sacrificed on Eid-ul-Adha this year

News Desk : dhakamirror.com A total of 1,04,08,918 animals were sacrificed across the country on the occasion of the holy Eid-ul-Azha this year. As many as 3, 67, 106 more animals were slaughtered this year compared to previous year, the Ministry of Fisheries and Livestock said in a press release on Tuesday. This year the ... Read more

9am-5pm office time to resume from Wednesday

News Desk : dhakamirror.com The public offices across Bangladesh are set to go back to old office timing from 9:00am to 5:00pm with Fridays and Saturdays being the weekly holidays as usual from Wednesday. The cabinet in its weekly meeting on June 3 decided restoring the old office timing between 9:00am and 5:00pm on weekdays ... Read more

5 magnitude earthquake jolts parts of Bangladesh

News Desk : dhakamirror.com A magnitude 5 earthquake jolted a large part of the country on Sunday (2 June) afternoon., including Dhaka. The quake struck at 2:44pm from a depth of about 110km, according to the Bangladesh Meteorological Department, and was centred in the Mawlaik area of Myanmar, 441 km southeast of Dhaka. The quake ... Read more

Over 2cr to be fed as daylong Vitamin ‘A’ plus campaign begins

News Desk : dhakamirror.com The National Vitamin A-plus campaign is being conducted with a target to feed the capsules to over 2.22 crore children, aged between six months and 59 months. The campaign started at 8am on Saturday (June 1) and will continue till 4pm. Feeding Vitamin A capsules prevents blindness in children, ensures normal ... Read more

Postponed notice fake, HSC exams on June 30 as per schedule

News Desk : dhakamirror.com The Higher Secondary Certificate (HSC) and equivalent exams will be held on time as per previous announcement, beginning on 30 June. The routine deferring the exams for a month that is making rounds in social media, is fake, the Board of Intermediate and Secondary Education, Dhaka said on Saturday. A circular ... Read more

3 month-long ban on fishing, tourism in Sundarbans begins

News Desk : dhakamirror.com The forest department has imposed this three-month ban on fishing and tourism in the Sundarbans. Local communities, including fishermen, wood and honey collectors, who depend on the Sundarbans for their livelihoods, are concerned about a three-month ban on all activities in the forest starting Saturday. The restriction applies to visitors, including ... Read more

Appellate Division upholds HC verdict on DU teacher Samia’s demotion

News Desk : dhakamirror.com The Appellate Division today (26 May) upheld the judgement of the High Court which declared illegal the demotion order of Dhaka University faculty Samia Rahman on charges of plagiarism. A four-member appellate bench headed by senior judge M Enayetur Rahim of the Appellate Division rejected the appeal of DU as invalid. ... Read more

3.2 million children at risk as Cyclone Remal hits Bangladesh coasts: UNICEF

News Desk : dhakamirror.com As Cyclone Remal hit the coastal areas of Bangladesh, over 8.4 million people, including 3.2 million children, are at high health, nutrition, sanitation, and safety risks, according to UNICEF. ‘Our thoughts go out to the children and their families at this critical moment as they endure the storm’s impact,’ said UNICEF ... Read more

Classes suspended at coastal area schools due to cyclone

News Desk : dhakamirror.com No classes will be held at schools in the coastal areas due to Cyclone Remal, said State Minister for Disaster Management and Relief Mohibur Rahman. He said this after a meeting of the inter-ministerial disaster management coordination committee at the Secretariat on Sunday. According to a bulletin of the Met Office, ... Read more

Cyclone Remal forms over Bay, signal 7 at Payra and Mongla

News Desk : dhakamirror.com The deep depression over the east and west central Bay of Bengal intensified into a cyclonic storm “Remal” at around 9:00 pm today and is expected to hit the country’s coasts between 6pm and 11:59pm tomorrow, according to the Bangladesh Meteorological Department (BMD). The Met Office asked the Payra and Mongla ... Read more

Admissions for Class XI start tomorrow

News Desk : dhakamirror.com The first phase of applications for Class XI admission for the 2024–2025 academic year will begin tomorrow, May 26, and run through June 11th. According to the XI class admission circular 2024-25, the online application system is divided into three phases with designated application windows, result announcements, and confirmation periods. Students ... Read more

Exam will not be postponed for Cyclone Remal: NU

News Desk : dhakamirror.com The National University has decided not to postpone the Introduction to Government Policy exam for 4th-year Political Science honours students for the academic year 2022, despite the warning for the approaching Cyclone Remal. The exam is scheduled to be held on Sunday (26 May) at 1:00pm, the same day that the ... Read more

Gold price cut by Tk 1,084 per bhori

News Desk : dhakamirror.com The prices of gold in the country’s local market witnessed a fall on Thursday as the Bangladesh Jewellers’ Association (Bajus) slashed the price of 22-carat gold by Tk 1,084 per bhori (11.664 grammes). The new rate for the precious metal will come into effect on Friday, BAJUS said in a press ... Read more

Don’t pay anyone for visas, or work permits: Italian envoy

News Desk : dhakamirror.com Italian Ambassador to Bangladesh, Antonio Alessandro, advised visa-seekers not to pay anyone for visas, emphasising that the embassy only charges small taxes and processing fees. “Our services are free except for these official fees,” he said today (21 May) following a meeting with Shofiqur Rahman Choudhury, the State Minister for Expatriates’ ... Read more

Bangladeshi mountaineer Babar Ali conquers Everest

News Desk : dhakamirror.com Babar Ali from Chattogram has summited Mount Everest and raised the red and green flag on the world’s highest peak. He reached the summit at 8:30am local time (8:45am Bangladesh time) on Sunday, proudly raising the red and green flag of Bangladesh. He began his journey on 1 April, after necessary ... Read more

Price of gold increases by Tk1,178 per bhori

The new rate will be effective from Sunday (19 May) News Desk : dhakamirror.com The Bangladesh Jewellers Association (Bajus) today (18 May) increased the price of gold by Tk1,178 per bhori, followed by a price hike in the local bullion market. According to a Bajus statement, 22-carat gold will now cost Tk1,18,460 per bhori (11.664 ... Read more

9 Bangladeshis named in Forbes “30 Under 30 Asia” list

News Desk : dhakamirror.com Nine Bangladeshis have been named in Forbes “30 Under 30 Asia” list for their contributions across various industries. Forbes announced its prestigious “30 Under 30 Asia” list for the ninth consecutive year yesterday (15 May), showcasing 300 exceptional young individuals under the age of 30 who are making significant strides across ... Read more