Wednesday, February 21, 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 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

bKash communications chief Mahfuz Sadique dies at 40

News Desk : Mahfuz Sadique, chief communications officer of mobile financial services firm bKash, passed away in Bangladesh capital Dhaka Friday morning. He was 40. Mahfuz died around 9:00am while undergoing treatment at a hospital in the capital, bKash said in a statement. Mahfuz, who began his career as a journalist at New Age, ... Read more

Prices for potatoes increase by 229% from the previous year

Prices for potatoes varied from Tk16 to Tk22 per kg at this time last year. News Desk : Despite the presence of both new and old potatoes in the market, potato prices have soared by 229% compared to late December last year. According to the Trading Corporation of Bangladesh (TCB), the selling price for ... Read more

LGED engineer dead, UNO among 3 injured in Panchagarh car crash

News Desk : An engineer of the Local Government Engineering Department (LGED) was killed and three other government officials were injured when the vehicle of a UNO hit a roadside tree in Panchagarh Sadar upazila early today. The deceased was identified as Abu Sayed, 33, upazila engineer of LGED from Pirganj upazila of Thakurgaon. ... Read more

UNHCR calls for rescue of Rohingyas stranded in Andaman Sea

News Desk : The United Nations (UN) Refugee Agency, UNHCR, has made an urgent appeal to all countries in the region, particularly those in the area surrounding the Andaman Sea, to swiftly deploy their full search and rescue capacities in response to reported vessels in distress with hundreds of Rohingya at risk of perishing. ... Read more

Over 200 RMG workers injured in Comilla while evacuating factory during earthquake

News Desk : Over two hundred garment workers in Cumilla’s Chauddagram have been injured while trying to evacuate the factory building of Amir Shirt Garment Limited during today’s earthquake. A 5.5 magnitude earthquake at a depth of 10km jolted Dhaka, and parts of the country at 9:35am today (2 December). The epicentre of the ... Read more

Daughter hacked father to death in Chattogram

News Desk : A father was hacked to death by his own daughter during an altercation over a trivial matter at Lohagara upazila in Chattogram on Friday (1 December). The deceased was identified as Abdur Rahman, 50, of Putibila Sarai village under the upazila. Police have detained the daughter, Humaira Begum, 23, soon after ... Read more

HSC results: Dhaka has most GPA-5 achievers, while Barishal has highest pass rate

News Desk : Dhaka had the highest number of GPA-5 recipients in the HSC exams, while Barishal Education Board had the highest pass rate among nine educational boards. Education Minister Dipu Moni announced today that the overall pass rate in the nine general boards is 75.90 percent. In terms of pass rates, Barishal ranked ... Read more

PSC postpones 45th BCS written tests

News Desk : The Bangladesh Public Service Commission (PSC) has decided to postpone the written tests for the 45th Bangladesh Civil Service examination, which was scheduled to be held on 27 November. The announcement came through a notification signed by Ananda Kumar Biswas, the exam controller of PSC, issued on Friday. PSC held a ... Read more

After stabbing younger sister to death woman ‘kills herself’ in Hazaribagh

News Desk : A woman reportedly killed herself after stabbing her younger sister to death in the capital’s Hazaribagh area today. Police said the incident took place in the Kalunagar area at around 12am on Monday (13 November). The deceased have been identified as Jasmine Akhtar, 44, and her younger sister Nasreen Akhtar, 30. ... Read more

Oman stops issuing new visas to citizens of Bangladesh

News Desk : The Sultanate of Oman has suspended the issuance of visas across all categories for Bangladeshi nationals, the Royal Oman Police (ROP) said on Tuesday. The decision was effective from Tuesday, reported Oman-based English newspaper the Times of Oman referring to the Royal Oman Police. The report said that the ROP confirmed ... Read more

Dhaka girl Nupur takes over as chairman of Unilever for a day

News Desk : Seventeen-year-old Nupur from Dhaka, had the opportunity to take over Unilever’s chairman position for one day on Thursday. There, she symbolically carried out the roles and responsibilities of Zaved Akhtar, the chairman and managing director of Unilever Bangladesh, said a press release. Nupur being an active youth club member, works for ... Read more

Hospitals must follow guidelines, orders HC

News Desk : The High Court on Thursday asked the government to take steps to make it compulsory to follow the relevant guidelines for the prevention of performing unnecessary caesarean section surgery at government and private hospitals and clinics. The court has also directed the government to widely circulate the guidelines within six months. ... Read more

Woman delivers birth to five babies at DMCH

News Desk : A woman has given birth to five premature babies. The quintuplets were born at the Dhaka Medical College Hospital (DMCH) at 10am on Thursday to Mansura Begum, 22, the wife of CNG driver Md Mamun from Bandardia village in Shibpur upazila of Narsingdi district. One of the newborns, however, died shortly ... Read more

Tk8.44 cr fine imposed to Kazi Farms, 3.44 crore to Suguna Food

News Desk : The Bangladesh Competition Commission has fined Kazi Farms Group and Saguna Food and Feeds on charges of market manipulation causing abnormal rise in broiler chicken prices. BCC officials said that the companies must deposit the fine amount to the BCC within 10 working days. If they fail to deposit the fine ... Read more

Heritage volunteers visit national museum

News Desk : The heritage volunteers participating in UNESCO World Heritage Volunteers Programme 2023 visited national museum in Dhaka on Sunday. The ten-day workshop programme organised by Nagar Upakhyan-Perceive started on October 1, said a press release. The Heritage volunteers’ team visited national museum which is on the UNESCO World Heritage tentative list on ... Read more

Fare for Bangladesh-India trains to increase from November 10

News Desk : Ticket prices of three inter-country trains on Bangladesh-India routes are going to be hiked from November 10. The fares are going to increase due to high exchange rate of US dollar and rising travel tax, according to the Bangladesh Railway officials. The trains are – Maitree Express on Dhaka-Kolkata, Bandhan Express ... Read more

Man, nephew killed by lightning

News Desk : A man and his nephew were struck by lightning in Satarbari village of Longair union under Gafargaon upazila of Mymensingh yesterday. The deceased were identified as Sohel Mondol, 40, a trader of pharmaceutical drugs, and his nephew Razib Mondol, 35 a rice trader in the village. Quoting locals, Raju Ahmed, officer-in-charge ... Read more

TV sales decline despite World Cup: Is streaming to blame?

News Desk : The ICC Cricket World Cup 2023 captures the attention of sports enthusiasts across the world and an intriguing trend is emerging in Bangladesh’s television market. While events of this magnitude have traditionally led to an increase in TV sales, recent figures from September show a 30% decline compared to the same ... Read more

Heritage volunteers visit Paharpur archaeological museum

News Desk : The heritage volunteers participating in UNESCO World Heritage Volunteers Programme 2023 visited Paharpur archaeological museum in Naogaon on Friday. The ten-day workshop programme organised by Nagar Upakhyan-Perceive started on October 1, said a press release. The Heritage volunteers’ team visited Paharpur archaeological museum which is on the UNESCO World Heritage tentative ... Read more

Child among three dead as mud walls collapsed in rain in Gazipur

News Desk : Three people including an eight-year-old child died in separate incidents of mud walls collapsing during heavy rain in Sadar and Kaliakoir upazilas of Gazipur. The deceased are Faridul Islam, 8, son of Matiur Rahmon of Konabari Baimile under Sadar upazila, and Imarat Hossain, 65, and his wife Achia Begum, 56, of ... Read more