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

Bangladesh hikes power price again in just 3 weeks

News Desk : dhakamirror.com The government has increased the retail power price again — by 5 per cent — along with an increase in the bulk price by over 8 per cent just 18 days after it had hiked the retail price on January 12 this year. The new retail prices and charges, announced for ... Read more

Achol Foundation reported 585 student suicides in 2022

News Desk : dhakamirror.com A survey by the Achol Foundation found that 585 students from schools, colleges, universities, and madrasas died by suicide in 2016. Among them, 340 were in school, 106 were in college, 85 were in university, and 54 were in a madrasa. The foundation revealed the information through a press release sent ... Read more

Mother, kid reunited by cop’s brave act

News Desk : dhakamirror.com A mother sold her two-month-old infant for Tk 30,000 to pay off debts. A police team reunited the mother and kid yesterday, three days after the terrible tragedy. The mother, Lima Hanufa, said her husband hasn’t worked in five years since a road accident incapacitated him. Lima, her family’s sole breadwinner, ... Read more

Taslima Nasreen claims she became a big victim of medical crime

News Desk : dhakamirror.com Exiled Bangladeshi writer Taslima Nasrin has accused a hospital in India of committing a “medical crime” by providing wrong treatment to her after she reportedly broke a bone in her leg. She claimed that doctors at the hospital conducted a total hip replacement surgery on her even though the X-ray report ... Read more

Boy found in the cargo container calls himself Fahim

News Desk : dhakamirror.com The boy found in a cargo container in Port Klang of Malaysia on January 17 calls himself Fahim and he could be Bangladeshi or Rohingya. A video clip of the boy, aged between 11 and 15, being rescued from the empty container went viral and in several clips the boy calls ... Read more

Sreemangal became cool at 5.6 degrees Celsius

News Desk : dhakamirror.com Sreemangal of Moulvibazar ha the lowest temperature of the season at 5.6 degrees Celsius in the 24 hours preceding friday morning. Mujibur Rahman, a Srimangal weather monitoring station officer, told UNB that the lowest temperature at Sreemangal was 2.8 degrees Celsius on February 4, 1968. Sreemangal is struggling with severe cold, ... Read more

Liver transplant: Sister saves brother

News Desk : dhakamirror.com Bogura resident 53-year-old Monetzar Rahman received a liver transplant from Bangabandhu Sheikh Mujib Medical University (BSMMU) physicians. At a press conference yesterday, BSMMU officials stated Montezar’s sister Shamima Akter, 43, gave 60% of her liver to save her brother. The Prime Minister’s Relief and Welfare Fund paid for surgery. BSMMU surgeons ... Read more

Biswa Ijtema first phase concludes with peace prayers

News Desk : dhakamirror.com The first phase of the Biswa Ijtema concluded today with the Akheri Munajat (final prayers), seeking peace on earth and prosperity for the Muslim Ummah. Thousands of devotees of all ages gathered at the Ijtema ground on the Turag banks and on the roads adjacent to the Ijtema venue during the ... Read more

Women use mobile phones more than men

News Desk : dhakamirror.com The latest survey from the Bangladesh Bureau of Statistics (BBS) shows that more women than men in the country have access to mobile phones. The proportion of mobile phone use of the male and female in the last 3-month is 89.9 percent and 90 percent respectively, said the report. The BBS ... Read more

What does a ride on the metro cost?

News Desk : dhakamirror.com The Uttara-Agargaon section of the country’s first metro rail will be inaugurated tomorrow. Dhaka Transport Coordination Authority (DTCA), the government agency responsible for fixing metro rail fare, has published the full list of metro rail fares. The minimum fare was fixed at Tk 20 and the maximum fare for travelling from ... Read more

DGHS advises taking booster and using mask amid rising COVID-19 cases

News Desk : dhakamirror.com Health officials told people today to be careful, such as by getting booster shots and wearing masks in crowded places. This comes after a warning from the National Advisory Committee about a possible new variant that has already spread through China and been found in India. Because of a highly contagious ... Read more

Met Office warns of fog

News Desk : dhakamirror.com A light to thick blanket of fog is likely to envelope large parts of Bangladesh for up to 12 hours from midnight. Moderate to thick fog may occur over the river basins and northern part of the country and light to moderate fog elsewhere over the country from midnight to morning, ... Read more

Bangladesh celebrates Victory Day

Nahid Riyasad The nation celebrates 52nd Victory Day on Friday commemorating the freedom fighters whose supreme sacrifice freed the country from Pakistani occupation force in 1971. Thousands of people from all walks of life started gathering at the National Memorial in Savar to pay tribute to the 1971 martyrs from the morning after the president ... Read more

Bangladesh’s Saleemul Huq among Nature’s top 10 scientists

News Desk : dhakamirror.com The scholarly publication Nature has presented a selection of ten individuals who were instrumental in shaping the most significant scientific stories in 2022. Saleemul Huq, a Bangladeshi scientist, has made it onto the list for his work to get wealthier nations to pay for the losses and damages caused by climate ... Read more

Martyred Intellectuals Day: People paying homage to martyred intellectuals

News Desk : dhakamirror.com People from all walks of life have been paying tributes to the martyred intellectuals by placing wreaths at the Martyred Intellectuals Memorial in Rayerbazar this morning, marking the Martyred Intellectuals Day. Most of the people, including teachers and students from different educational institutions, were wearing black clothes, a symbol of mourning. ... Read more

Stakeholders can deal with Evaly on own accord

News Desk : dhakamirror.com HC says in full text of order The High Court in the full text of an order has cleared the way for banks and other stakeholders to deal with beleaguered e-commerce platform Evaly on their own accord. “Since this court has never passed any order to halt the activities of Evaly, ... Read more

Argentina plans embassy in Bangladesh

News Desk : dhakamirror.com Argentina wants to open a diplomatic mission in Bangladesh. South Atlantic News Agency Merco Press says that the decision may have been helped by the fact that Bangladesh cheered for Lionel Messi’s team at the World Cup in Qatar. Bangladesh has always had a lot of die-hard Argentina fans, but during ... Read more

BBC’s 100 Women list includes Bangladeshi student

News Desk : dhakamirror.com The BBC placed Bangladeshi student Sanjida Islam Choya on its list of the world’s 100 most influential women for 2022 because of her work to stop child marriage. The BBC says that Sanjida has stopped at least 50 child marriages in Bangladesh. When she was in school, she saw a presentation ... Read more

HSC enrollment starts Dec 8, classes start Feb 1

News Desk : dhakamirror.com Enrollment for the following academic year’s Higher Secondary Certificate (HSC) courses will open on December 8 using an online registration system. Prof. Tapan Kumar Sarker, head of the Inter-Education Board Coordination Committee, said applicants can apply through December 15. He added the admission process will be posted on education boards’ and ... Read more

Umrah e-visa requires biometric data.

Elderly pilgrims may be affected, according to HAAB. News Desk : dhakamirror.com In order to receive their Umrah e-visas, pilgrims from Bangladesh and four other countries must submit biometric data, including “fingerprints,” to the Saudi authorities. According to a report citing an announcement by the Saudi Ministry of Hajj and Umrah, the other nations include ... Read more