Conflict over Bangladeshi Micro-lender is ‘Political’, Some Say

BY Larisa Epatko  March 8, 2011 at 1:01 PM EDT


Muhammad Yunus in Dhaka on March 7. Photo by Munir Uz Zaman/AFP/Getty Images

A Bangladeshi court has upheld the removal of Nobel laureate Muhammad Yunus as head of the micro-lending Grameen Bank he founded, in a move his supporters are calling politically motivated.

On March 2, the bank’s chairman told reporters that Yunus was no longer managing director because at age 70 he was beyond the retirement age of 60. Yunus brought a legal challenge, but the court ruled Tuesday that the action was legal.

Yunus’ removal came after a documentary aired last year that described an investigation into Grameen transferring ownership of Norwegian aid funds from one entity to another in the 1990s in order to preserve the bank’s tax-exempt status. The Norwegian government asked the bank to retain ownership of the funds. It complied in 1998, and the probe uncovered no evidence of fraud.

But the bad blood between Yunus and Bangladesh’s Prime Minister Sheikh Hasina of the ruling Awami League started before that in 2007, when Yunus considered starting a political party at the beginning of an interim military government, said David Roodman, a senior fellow at the Center for Global Development. Yunus later backed off the idea, but the resentment might have lingered.

“Politics in Bangladesh is a pretty brutal affair,” said Roodman. The government has three of the 12 seats on Grameen’s board, including the chairmanship, he said.

If Hasina or another official from her party becomes head of the bank, it’s unclear what they would do, but if they began canceling borrowers’ debts in order to curry favor for their political party, it could hurt the institution to lose that stream of revenue, he added.

Thirty years ago, Yunus founded Grameen Bank, which provides small loans to the poor without requiring collateral. Since then, he and his organization have received international recognition, including a Nobel Peace Prize in 2006.

Hasina reportedly thought she deserved the prize for signing the Chittagong Hill Tracts treaty in 1997, which ended nearly two decades of fighting between the Bangladeshi government and a dissident militia group, Roodman said.

Yunus also received the Presidential Medal of Freedom from President Obama in August 2009.

NewsHour special correspondent Fred de Sam Lazaro profiled Yunus and Grameen Bank in a 2001 report from Bangladesh. And economics correspondent Paul Solman talked to Yunus in 2006 about the impact of the bank’s micro-lending activities. The bank now has approximately 8 million borrowers.

Prior to Tuesday’s court ruling Yunus said he was ready to leave his post, but under different terms: “I had been telling the board of directors that I want to go, as I am old. But they insisted I stay on…I wanted to leave in a prestigious, nice way and hoped the board would keep running the bank efficiently. This is not my institution but of the people.”

Yunus’ lawyers told Agence France-Presse that they were hoping to appeal the verdict to the Supreme Court.

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