Yunus’ supporters have tried to create a smokescreen so that the recent exposures appear as malicious and politically motivated. It is about time they took a more detached approach and seriously address the much needed restructuring that Grameen warrants. Why are they concerned about protecting Yunus and not the poor?

Here is an outline of issues to be addressed

  1. Grameen Bank is authorised to lend only to the landless poor

Grameen Bank is authorised to provide credit and other services to landless persons in the rural areas. It is not authorised to lend money to any person (or entity) other than the landless persons including Grameen Krishi Foundation, Grameen Motsho Foundation and Bigyan Gonoshikha Kendro as indeed it is not to Packages Corporation which it has done.

  1. Packages Corporation Limited.

Grameen Bank has undertaken a Managing Agency on behalf of Packages Corporation Limited (“Packages”), a family enterprise owned by his father, Mr. Dula Meah and his family in which Professor Yunus and his brothers, Abdus Salam and Mohammad Ibrahim are directors. Included under the terms of the Agreement, Grameen Bank and Packages Corporation would share losses on 50- 50 basis, Grameen Bank would have access to the loans taken by Packages Corporation and Grameen bank would lend money to Packages Corporation,

  1. Brothers appointed in entities created :

In one of these entities, his brother, one Dr. Mohammad Ibrahim has been made Executive Director, whilst Professor Yunus assumes the position of Chairman

  1. Furnishing Guarantees not authorised by law

In the Bangladesh Bank Audit Report, mention is made of guarantees having been granted by Grameen Bank favouring several of the entities created by Grameen Bank. These guarantees are not authorised by law or under GB’s own Memorandum and Articles of Association.

  1. Formation of companies without authorisation in law

Grameen Bank is a statutory body created by an Ordinance authorised to purchase shares of any body corporate the object of which is to provide services to landless persons in the rural areas. Grameen Bank is not authorised to sponsor, subscribe, incorporate new companies such as it has done.

  1. Unlawful transfer of funds to other entities formed by Grameen Bank itself

In all cases where Grameen Bank has formed new entities, companies, for profit or not - for -profit, financial institutions without obtaining a licence from Bangladesh Bank, trusts and hybrid  entities, it has transferred funds or provided guarantees against loans taken by these new entities  which it is not authorised to do.

  1. Professor Yunus’ continuance as Managing Director beyond 60 years in violation of the relevant laws

His continuance in office as Managing Director in violation of Clause 50 (1) of the Grameen Bank Service Regulations wherein it is provided that the age limit for employees of Grameen Bank shall be 60 years. This provision read together with Bangladesh Bank’s rules regarding the appointment and reappointment of heads of Banks and non-banking financial institutions only re-affirm his unlawful continuance in office for more than 10 years..

  1. Employment and Service Rules: whether made without authorisation

A serious question which has been raised is that the present Service Regulations of Grameen Bank has been made without authorisation in law. Indeed, these have been gazetted, but the Rules are deficient inasmuch, contrary to law, since, as delegated legislation, they are shown (i) as have been gazetted in the name of Professor Yunus who is Managing Director of Grameen Bank; (ii). there is no reference to the parent law from which such Rule – Making authority is derived nor any reference to the lawful person / legal entity upon whose instructions Professor Yunus has gazetted the Rules of Service;(iii) Professor Yunus is not authorised  to make Service Regulations for Grameen Bank. To ascertain whether any offence under this head has been committed or not it may be prudent to check the law relating to the notification in the gazette by statutory bodies.

  1. Usury/ Illegal interest rates

The basic case against the interest rates charged by Grameen Bank is that these interest rates are usurious (“excessive” or “illegal”) interest rates under the various laws relating to the charging of interest rates by Money Lenders. The principal legislation among these being the Usurious loans Act, 1918, the Money Lenders Act, 1933 and the Money Lenders Act, 1940; further, the jurisprudence of higher courts in the Sub-continent on “ usury’ under the said law or similar laws and in other similar jurisdictions clearly show that the interest rates charged upon landless persons in the rural areas is not only usurious but constitutes a violation of their fundamental rights as contemplated under the equality clauses embodied in  Articles, 27 and 31 of the Constitution. It cannot be a valid case to say that Grameen Bank’s rates are lower than the interest rates charged by other micro-credit agencies.

  1. Method of recovery

The method of recovery of loans practised by Grameen Bank is not authorised under the Grameen Bank Ordinance, 1983 (as amended to date, the last amendment having been made on 31 July, 1990) even upon rendering inapplicable certain provisions of the Public Demands Recovery Act, 1913. Further, the method of recovery practised by Grameen Bank is directly in conflict with the applicable law relating to recovery set out under the Money Lenders Act, 1940 under Section 41 (1) the effect of which violation has been defined as “molestation” of the borrower by the lender.

  1. Grameen – Gonoshasthya Textiles Mills Limited

Here, at the time of the formation of the company shares were allotted in the personal name of Professor Yunus, as indeed, all of the other subscribers of the company so formed, is self aggrandisement.

  1. Non-payment of savings of borrowers

This case is as unfortunate as it can get. Borrowers’ savings were put away into a fund to which they had no access. Borrowers departed without their savings between 1988 and 1992.

  1. Retrenchment – unfairly and on the basis of non existent Rules – coercion

The retrenchment of thousands (about 4000) of employees between 2000 and 2003, shown as voluntary retirement,  was not in accordance with any valid rules of service, and constitutes a blatant case against the rights of employees of a statutory body (whose fundamental rights also appear to have been violated).

  1. Loans from Banks taken by the companies created by Grameen Bank has been without authorisation in law.

The Ordinance / Statute does not provide for purported companies created by Grameen Bank to take loans from banks as these companies have done (take loans) for purposes which Grameen Bank itself cannot undertake, that is, undertake company activities other than providing credit and other services for landless persons in rural areas. In other words, can purported companies created by Grameen Bank do indirectly what Grameen bank itself cannot do, the said purported companies being born of Grameen Bank (validly or invalidly even!)?

  1. Activities: undertaking travel abroad for non-Grameen Bank purposes without authorisation from competent authorities.

It would be an issue to examine if the regulations relating to the undertaking of foreign travel by the Chief Executive of a statutory body requires the taking of permission from a competent authority and if permission was given for periods of time not consistent with pertinent rules / regulations by the competent authority for non – Grameen Bank purposes

  1. Grameen Kalyan

There was transfer of funds received by Grameen Bank from NORAD without prior authorisation of the Government and other regulatory bodies. The offences arising are multiple in nature: (i)“conversion” in criminal law; (ii) avoidance of tax payment (per Grameen Bank’s Reply to Bangladesh Bank’s Audit Report); (iii) elements of fraud upon  Grameen Bank itself, the NBR, the Government, the shareholders of Grameen Bank, the laws of Bangladesh and the people of Bangladesh.
In this unauthorised transaction the status of the parties, namely, (i) Grameen Bank, as recipient of a donation, was converted to become a borrower; (ii) the donor, NORAD’s role was converted to funding an activity not approved by the Government; (iii) ERD, which had permitted housing loans to be extended by Grameen Bank; (iiii) the new lender, Grameen Kalyan, was caused to undertake unauthorised lending since it had no licence from Bangladesh Bank to function as a financial institution. (See Grameen Kalyan’s Memorandum and Articles for the requirement of obtaining license from Bangladesh Bank to undertake lending activities which it had not done!)

  1. Grameen Telecom:

Apart from the issue of whether Grameen Bank has the legal capacity to incorporate a company which does not provide for the rural landless poor, the issue which arises is the status of the income earned by Grameen Telecom. Is Grameen Bank or Grameen Telecom entitled to hold such income in separate funds and accounts that have no nexus with the Grameen Bank’s statutory function to provide loans to landless persons in the rural areas?

  1. There are several other issues arising from a regime created without authorisation in law. This regime functions extra statutorily, extra constitutionally and in disregard of the obligations of a statutory body, association of persons or any other valid entity created under the law. The length and breadth of this regime extends to at least the equivalent of 20 ministries of the Government.