Insider Update on Grameen Bank

November 29, 2011

I recently received an update on the Grameen Bank and the other Grameen organizations. The sender clearly has a point of view and asked to remain anonymous. But the text contains enough that is (for me) novel, factual, documented, and important that I think it worth sharing. Beyond the links provided, I cannot in general vouch for the accuracy of the text:

First and foremost, this matter needs to be put in the perspective of the overall crisis in Bangladesh, where the government is attacking civil society directly and indirectly, through intimidation, corruption, just-approved changes to the constitution (most notably the elimination of the caretaker government provision to ensure fair elections along with other changes, some of which symbolically or structurally will further concentrate the power of the current government), threatened changes to the law governing the activities of NGOs which would mandate government approval of NGO board members required (among other troubling ideas), insider trading and illegal profiteering by people close to the government amidst a collapsing stock market, ongoing harassment of Transparency International Bangladesh and other good governance groups, and much more….

For a summary of the issues as they related to Grameen and its founder, Professor Muhammad Yunus, through mid-October, please visit here. Since then, things have gotten worse….

Recent developments include:

1. At a recent gathering of the members of the Grameen Bank board of directors who are not appointed by the government (they are Grameen Bank borrowers who are elected by their peers), they were physically harassed and intimidated by representatives of the government and the ruling party.
2. The government has illegally overturned the near-unanimous (11-1) decision of the Grameen Bank board to form a CEO search committee headed by Prof. Yunus (and with the remaining member being highly qualified individuals), and appointed its own committee instead and made it clear that the Grameen Bank board must accept its nominee or face “consequences.”
3. With apparent support from the government, about 100 dismissed employees of Grameen Bank recently invaded the Grameen campus, took up a microphone and spent hours disrupting the work environment by demanding that the interim CEO resign, that Professor Yunus and [acting director] Nurjahan Begum leave the campus, that all 54 Grameen companies be consolidated under Grameen Bank (despite there being no justification under local law that this take place), and that they all receive their jobs back. The police did not intervene.
4. Public (and widely reported) accusations by the Prime Minister and others that Grameen Bank founder Professor Yunus was behind the World Bank’s suspension of disbursement of its $1 billion loan for the Padma Bridge Project due to corruption, despite the fact that the country’s Finance Minister has said there is no evidence Prof. Yunus played any role. [... at least until the Prime Minister apparently forced him to eat his words.--DR]
5. Most recently, the government has convened a committee to begin the process of consolidating (which is to say, taking over given their other plans) the 54 Grameen companies under Grameen Bank. As has been widely reported in the media, the roughly $1 billion in shares of GrameenPhone that Grameen Telecom owns is clearly of interest to the government, particularly as it contemplates its re-election campaign. In an article just published in the local media, the government claims that Grameen Bank is charging 27% interest despite independent verification that it is charging 20% (or less) on all loans, and uses this as a basis to amend the Grameen Bank ordinance (despite the Finance Minister’s recent public statement that this would not happen) and consolidate the various Grameen companies.

At a recent microfinance meeting held in Spain, some 50 Bangladeshi attendees met with Professor Yunus and many reported that they were afraid to meet him inside Bangladesh, as would certainly be noted by the intelligence services and lead to them being harassed.

Possibly Related Posts

• 14-point Grameen Bank Takeover Plan
• Leaked Findings of Grameen Bank Investigative Committee
• Finance Minister: Bangladesh Government Will Not Take Ownership Control of Grameen Bank

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1. Auren Kaplan Says:
   November 29th, 2011 at 12:36 pm

   These developments are deeply troubling, what are outside institutions doing to take action on this?

2. David Roodman Says:
   November 29th, 2011 at 2:08 pm

   Auren, it is a good question, for which I don’t have a lot of answers. The Friends of Grameen appears to be a hub for information, coordination, and pressure. In the U.S., the Grameen Foundation has also been doing what it can. I know that world leaders such as Hillary Clinton and Nicolas Sarkozy pressured the government of Bangladesh during the process that led to Yunus’s removal.

   I suppose there is an even larger context, which is the complex pattern of cooperation and competition between India, China, and the U.S. in Asia. I assume China is not so bothered by Hasina’s turn toward autocracy. Having a powerful friend like that may reduce Hasina’s need to worry about what the democracies think. But I’m out of my depth here…

3. Lamia Karim Says:
   November 30th, 2011 at 12:15 am

   Unfortunately, this takeover of Grameen has nothing to do with improving the lives of poor women in Bangladesh. It has to do with the venal political culture of Bangladesh, and the next elections–resources and votes from NGO members. If the govt. was interested in protecting the lives of poor borrowers, why not regulate the whole microfinance industry? What about BRAC and ASA?

   Why should foreign powers decide what can or cannot happen within Bangladesh? The people of Bangladesh should speak on these issues, not Hilary Clinton or Sarkozy! That smacks of colonialism in the guise of “poverty alleviation.”

   In 1994, there was a conflict between NGOs and the Bangladeshi state. In that round, the NGO camp won with support from their Western donors. This time, the govt. is winning. What has changed in the last 15 years? Bangladesh is now less dependent on aid. It has a robust garments industry and trade with China.

   Unfortunately, neither the MFIs’ nor the govt’s actions help the poor people of Bangladesh.

4. David Roodman Says:
   November 30th, 2011 at 10:09 am

   Lamia, I agree with much of your comment. But I don’t understand how a) you can equate foreigners speaking on these matters with colonialism; nor why b) it is wrong for foreigners to say what they think. How different is for you, as an American professor, to criticize the “venal political culture of Bangladesh” than for Hillary Clinton to do so, or for her to say that she’d rather not donate U.S. taxpayer’s money to a government that behaves this way? This does not seem wrong to me nor comparable with the definition of colonialism as “the subjugation of one people to another.” As you point out, what Sarkozy and Clinton say is hardly subjugating Hasina.
   –David

5. Alex Counts Says:
   December 3rd, 2011 at 2:43 pm

   David, Your commentary on the two posts in response to your blog are right on. Certainly one doesn’t consider British criticism of American economic policy (which happens occasionally) “neo-colonialism”. Anyway, Grameen Foundation and a few like-minded organizations like RESULTS, Grameen America and the Microcredit Summit Campaign have been publicly working to shape the international response to the sad developments in Bangladesh. Others have assisted more quietly, perhaps afraid of how the Bangladesh government will respond to their efforts to show solidarity with the clients and employees of Grameen Bank. Your coverage has been accurate, hard-hitting and useful — so thank you! GF has taken the lead in drafting concise updates including factual critiques of some of the wild/wrong charges that have made about Grameen and this is posted and revised frequently on the Friends of Grameen website. It is just two pages with lots of links to third party reporting/research. It can be found at http://www.friendsofgrameen.co.....ct2011.pdf.
   –Alex Counts