imperfect | world | 2010

Archive for the ‘Regulation’ Category

Dec 8,2010


It seems that 608 million (the documented 540 million aid NOK from NORAD and
other donors) were transferred WITHOUT INFORMING THE DONORS to Grameen Kalyan,
which had a completely different purpose than the Grameen Bank (among
other things, to create joint ventures, invest in other companies,
invest capital in shares, etc).

- 50 million had already been transferred to Grameen Telecom /
Grameenphone when the embassy raised the alarm.

- Embassy / NORAD originally demanded that all the Norwegian funds
would be returned and asked for a total amount of around 275

- Embassy / Norad agreed to a compromise of 170 million, which meant
that not all of the Norwegian funds Embassy / Norad at the time
believed was transferred was returned to the Grameen

- There is no evidence to show that Grameen Kalyan has returned rest of
the aid funds provided by other countries / institutions, as they
claim. Swedish aid agencies (SIDA) has provided evidence to us which
shows that Sweden gave 190 million Swedish kronor, which was
transferred from the Grameen Bank Grameen Kalyan. But they concluded
that they would not join in the Norway’s demand for repatriation of
funds because they did not want to damage the Grameen Bank’s good name and



Here is what Norway is saying. The Ministry of Foreign Affairs have however spectacularly failed to coordinate their story with Grameen’s response. There is a very definite disconnection between the two accounts.

The Norwegian Foreign Ministry states that their Embassy in Bangladesh “reacted immediately” and

“Following negotiations, it was agreed in May 1998 that NOK 170 million was to be transferred back from Grameen Kalyan to Grameen Bank.”

They also state that

“Norad’s report shows that Grameen Bank transferred a total of NOK 608.5 million to its sister company Grameen Kalyan in 1996″

IT IS CLEAR THAT A TRANSFER WAS MADE WITHOUT ANYONE BEING INFORMED. We also know from a letter dated May 27, 1998 that The Nowegian Embassy in Dhaka wrote a letter  to  Yunus where the embassy confirmed that they will accept the compromise proposal. It is that 170 million is returned from Grameen Kalyan to Grameen Bank. The remaining approximately 130 million kroner ( UPDATE ABOUT 105 MILLION) of Norway’s total support to the Grameen Bank could  in accordance with the compromise remain in Grameen Kalyan.

Total Norad money is not 170. It is 300 million. (UPDATE CIRCA NOK 275 MILLION NOT 300 ).  And what happened to the NOK 438.5 million? Quite clearly they insisted on the money going back but they didn’t manage to persuade Yunus to return all of it.

Grameen Bank’s response says:

“Afterwards not only Norad’s money, but the 100% of all donor’s money to the extent of Taka 3,474 million 501 thousand was “transferred back”, from Grameen Kalyan to Grameen Bank, although money was always in the Grameen Bank’s account.”

Very different stories there. 100 percent is not the same as the compromised NOK 170 million. And we know further that part of the money went to the profit making outfits Grameen Telecom/Grameen Phone from the embassy letter dated 10 February 1998 where it is stated:

“…..Grameen Kalyan has been able to pull funds out of the Grameen Bank and using them for purposes
other than they have been allocated by donors, and for other purposes than the Grameen Bank has the opportunity to provide loans. Grameen Kalyan has already granted BDT 300 million (approximately NOK 50
million) from these funds (SAF funds) to partially finance the project to the cellular Grameen Telecom / GrameenPhone.”

Are we surprised? Norway is the country which did not even set up an independent evaluation of the huge money that they gave to Grameen. Even after the transfers were detected, there was no evaluation of any sort after 1999. The attitude is one of condescension and aloofness - “lets just give these brown folk of Bangladesh the money and let them do what they want. We will have done our bit by throwing money at poor people. And that is all that counts.” That seems to be the vibe that is coming over like a bad smell.

Dec 7,2010

The transaction was NOT NEUTRAL as Grameen have portrayed it but
rather very significant.  We  have to consider the following important issues:

Grameen Bank shareholders had a hugely reduced stake suddenly WITHOUT
COMPENSATION. Indeed MORE THAN THAT they were burdened with debt by a
massive amount.


The Embassy were very concerned about the lack of safeguards:

“There is nothing in Grameen Kalyan statutes or the agreement between
the Grameen Bank and Grameen Kalyan, ensuring a certain level of the
funds in the future are available for the Grameen Bank or the members
of the Grameen Bank for home loan. The Grameen Bank’s letter dated
01/08/1998 stated however that the money be lent back to the Grameen
Bank will be used for the same purpose as when the assets were in a
rolling fund. However, Grameen Kalyan may require repayment of the
loan, and there is nothing in the agreement that such refunds should
be temporary. There is also no provision in the agreement that ensures
that the Grameen Bank are entitled to be reimbursed funds from Grameen
Kalyan under the original loan amount, if and when the Grameen Bank
has a need for this. This would, even though the provision was
included, it might be impossible to meet if Grameen Kalyan funds
invest long term, as it is intended for multiple purposes of
paragraphs.” ( Document date 10 Feb 1998. Royal Norwegian Embassy Dhaka)


In a letter dated 08.01.1998, Grameen Bank states that is working to
incorporate the date for the repayment of the loan into the contract
with Grameen Kalyan. So first the equity is transferred. Then loaned
back. Then interest paid on it and then it is paid back? And surely
that constitutes a double whammy?


A reason given was and is that the deal could reduce Grameen’s tax
liability. But according to an Norwegian embassy official, Yunus first
emphasized this rationale, then deemphasized it months later. And the
Bank disowned the rationale in a letter to Tom Heinemann in  August

Whatever the tax implications, this is a significant matter. NORAD’s
aid remit is to create economic development or  economic surpluses, if
you like, which can be taxed so that the state can use it for social
welfare etc. The agreement with Kalyan was a tool to regulate away ALL
THE SUPRLUS in the accounts of Grameen Bank.


The transaction which took place without any consultation basically
meant that management of the Grameen Bank has considered the funds had
been released from the conditions of the donors, and could be freely
managed by the Board.

This is moving money around as if it is in your own pockets.


Grameen’s response to the Ambassador’s concern amounted to what the
ambassador termed “untrustworthy.” Grameen Bank wrote to the
ambassador saying that by transferring the money Grameen would be
|”more responsible in handling it” ( page 2 of response to
Ambassador). And as the officials at the time speculated - were
the board members even informed of the details surrounding the
transaction? And if the Grameen Board included three government
representatives, as the Grameen Bank response says it did,  is it not
curious that the ERD originally indicated they found a breach of
agreement? They demanded that the money be returned to its original
status ( a grant and not a loan). Were the government representatives
on the board kept in the dark?

This is what David Roodman writes:

This Bank, entrusted with the serious responsibility of using foreign
funds to help the poor, would not entrust itself with the basic
function of a bank: holding money safely.  Or—more likely—the Bank was
and is lying.

This is moving money around as if it is in your own pockets.


It is worth bearing in mind that the report was not an independent
study. We know from Arne Disch, the Chairman of the 1999 report, that
there was concern about the composition of the team.

Norway never followed up with any further reports despite donating
such large sums of money. There seems to have been no responsibility
towards the Norwegian tax payer or indeed the poor people they were
claiming to help.


It is fully understood that poor people need financial services. Who
doesn’t? The documentary program only shows that such credit programs do not
necessarily solve poverty. They are not a panacea as some people want you
to believe.

In fact for many people it can push them in to further poverty. Giving
someone some money does not automatically mean they become successful
entrepreneurs. A lot of this money is not used productively. But most
importantly Tom Heinemann’s program shows that poor people also need consumer
rights. Rights to avoid becoming over-indebted. Rights of legal redress.
Rights against harrassment. And what the financial scandal shows is
their rights at the institutional level were infringed. The
microcredit market needs diligent regulation.

Dhallywood Posters

Jan 21,2008

Dhaliwood posters

click picture to see more!

Peculiar graphic design, buxom wenches, explicit action, wanton violence - yes this caretaker government has had an impact on all of these! Dhallywood has been facing some serious restructuring with so-called “obscene” films finding it more and more difficult to surface. But as always there is a peculiar history…..the state’s involvement in both the production of such films in the first place and then their censorship is often overlooked! I will be discussing this more and more this coming year. So here is a little taster from my modest poster collection ( standing at about 500 now….!). I have uploaded a miserly eight for your delectatation and edification. No particular reason behind the choice - they are the first that came to hand. And they are by no means the best..nudge, nudge, wink, wink. Follow the link HERE.

Md. Arifur Rahman

Oct 1,2007

Md Arifur Rahman TI

The cartoon says “Save me!” It depicts Bangladesh as a tree shot through with parasites ( corruption). The irony is that the cartoonist who created the above cartoon is in need of saving himself from the corrupt polity that is Bangladesh. Old Arif - he is only 20 - is in jail for insulting the sentiments of a certain very toxic special interest group.

In case you are wondering, I did not tag on the Md. at the beginning of his name. It seems he used to use it in 2005 when he won a prize for this cartoon in a competition organised by Transparency International. Head over to Rezwan’s page to get the low down.

Jul 23,2007

“If it looks like a fraud, sounds like a fraud and quacks like a fraud, it is a fraud.”

That is what Paul Farelly MP had to say about the First Solutions matter in parliament. The story has finally been taken up by the mainstream press. There was a report on Channel 4 News the other day too. Money laundering has a “terror dimension” and so it is surprising it has taken so long for editors to pick up this story.

Justice for Sheika Hasina (sic) and Bangladesh Petition

Not only has the petition got her spelling wrong but there seem to be other odd things about this petition. ipetitions - the online petitions hosting service - is notoriously insecure. It does not check your IP address and prevent you from voting twice. It does not check your email to prevent duplicate voting. It does not seem to use cookies to prevent you voting easily in quick succession. In fact its a vote stuffer’s dream site. The redirection to a donations page and then paypal is indicative of the main thrust of ipetitions - to make as much money as possible out of the genuine and sincere people who go on to the site to register their petition.

Anyway, I was not suprised to find the petition signed by “Fred the vote stuffer” at no 65 ( at 0216 hours British time). That was preceded by Fred and Fred2. Come on AL, lets have a bit of finesse here.

Counterfeiting Luxury report

And how does one give one’s report the best chance of being picked up by the media? Link it to terror, stupid! So law firm Daventport Lyons ( these bloody lawyers….) have studied social attitudes to owning fake goods. And they say they have unearthed “a deeply concerning shift in consumer behaviour” because up to two thirds of people find it acceptable to have fake luxury goods (clothing, watches, bags). The purchase of fake goods apparently could fuel terrorism! Yes folks- bling fuels terror! And the magic word “terror,” I suspect, was enough for BBC online to publish the story So there you are, if you can’t afford the real thing, you must be supporting terrorism.

May 17,2006

In Bangladesh, NGOs (non-governmental organisations) can be multi-headed creatures. They can be schools, banks, universities, telecoms companies - you name it, you will find an NGO doing it. It turns out NGOs have been exploiting certain regulatory loop holes to do their stuff. The World Bank has put together a much needed review of the NGO sector in Bangladesh. One aspect of the report deals with the commerical operations of non-governmental organisations and suggests that they should stop exploiting their not-for-profit status to subsidise their commercial operations and also be subjected to taxes for their for-profit business ventures.

They (NGOs) should not be allowed to use subsidised capital to enter or operate businesses, and that they should pay taxes on their for-profit activities at the same rate as other businesses.

The lack of taxes and financial accountability has no doubt helped this sector enormously. I wonder how Grameen and BRAC - the two market leaders - will respond to issues of accountability, taxation and indeed this matter of a level playing field?

Another old issue which has come under attention is the involvement of NGOs in outright political activity as opposed to advocacy. Mr Yunus you have your work cut out.