By Sumon K. Chakrabarti / New Delhi
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The clock started ticking for Nobel Peace laureate Professor Muhammad
Yunus in 2007. That was the year the celebrated economist and
microcredit guru made a brief foray into Bangladeshi politics. Two
squabbling political parties have run the country throughout its
history, but in 2007 a military caretaker government was in charge.
Yunus launched the "Citizens' Power" party, billing itself as a clean,
efficient alternative to political unrest. Instead, the move opened the
door to political attacks. In March 2007, Awami League politician A.M.A.
Muhith told a reporter for the Christian Science Monitor: "The fact that
Yunus is being able to carry on political activities when all the other
parties are straitjacketed by the state of emergency implies a tacit
endorsement by the current regime."
His party never took off. In 2009 elections, the Awami League won
national elections, returning its leader, Sheik Hasina, to power and
putting Yunus and the Grameen Bank, the microlending bank that he
founded in 1983, back under scrutiny. In November 2010, a Norwegian
television documentary accused Yunus and Grameen of improperly moving
funds donated by the Norwegian government. The Nobel laureate was
subsequently vilified in the Bangladeshi media and faced an
investigation in Norway. Oslo cleared Yunus and Grameen of any financial
impropriety, but the damage was done. Prime Minister Sheikh Hasina
branded Yunus a "blood-sucker of the poor" and pushed for his removal
from the helm of Grameen. Muhith, who is now finance minister, has
called for him to "stay away" from the bank. On Wednesday afternoon, the
government fired the 70-year-old Yunus from the institution he'd founded.
(See pictures of Yunus' career.)
"Muhammad Yunus has been removed from the post of managing director of
Grameen Bank," A F M Asaduzzaman, deputy general manager of the
country's central bank, told reporters in Dhaka. The central bank
declared that Yunus had violated the country's retirement laws by
staying on as Grameen's head long past the mandatory retirement age of 60.
But the real drama began an hour later, when Jannat-E-Quanine, the
spokesperson for Grameen Bank, stoutly defended its founder, announcing
that Yunus will remain in charge and denying that he has violated any
laws. The bank said in a statement: "Grameen Bank has been duly
complying with all applicable laws. It has also complied with the law in
respect of appointment of the Managing Director." A spokesperson for
Yunus said he declined to make any further comment about the charges
against him.
(Watch "10 Questions for Muhammad Yunus.")
But Khondaker Muzammel Huq, the government-appointed chairman of Grameen
Bank, told TIME that Yunus had been relieved of his duties for failing
to get the mandatory clearance from the central bank when he was
appointed managing director in 1999. "In the by-laws of Grameen Bank, it
is clearly stated that the managing director should be appointed by the
board with the prior approval of the Bangladesh Bank," Huq said. "That
was not done. So he has been relinquished of his duties. We have sent a
letter accordingly to Grameen bank."
Sheikh Hasina's government, meanwhile, is working overtime to convince
the international community that their move was not illegal. On Monday,
U.S. Ambassador James F. Moriarty met Muhith to express his concerns.
Muhith is expected to meet ambassadors of various countries and
representatives of World Bank, International Monetary Fund and Asian
Development Bank to clarify the government's decision on Yunus today. He
told AFP, "We'll deal with it gracefully."
(Comment on this story.)
The Friends of Grameen, a group of charities led by former Irish
President Mary Robinson, last month alleged that Yunus was being
subjected to "politically orchestrated vilification." Yunus, too, has
called the charges against him politically motivated in the past. But
his widespread support abroad has fueled criticism of him at home as
someone caught up in his own fame. "The government seems to be legally
right, but this is surely a politically incorrect move, now that some
international celebrities, whose credibility you probably cannot
question, are campaigning for Muhammad Yunus," says Toufique Imroze
Khalidi, editor-in-chief of BDNEWS24. Khalidi says the government's role
in helping to start Grameen Bank, in which it holds a small minority
stake, has been ignored. "Professor Yunus simply outsmarts the
government internationally with his superb PR skills."
The government in Dhaka has also capitalized on a wider disaffection
with microfinance. The Grameen bank's micro-credit model is a
"death-trap for the poor," says Professor Anu Mohammed, a leading
Bangladeshi economist. "Their programs are such that do not reduce but
reproduce poverty." Those same criticisms have hit microfinance lenders
from Latin America to Africa to India, and Bangladesh is no exception. A
five-member review committee on Grameen Bank was constituted on Jan. 11
to conduct a special audit of the bank, focusing on the rates of
interest at which it borrows money and then lends to the poor. Defenders
of microcredit acknowledge that the model cannot do much to help the
poorest of the poor, but says it does serve an important function. As an
editorial in the Financial Times put it: "Microfinance may not on its
own lift people out of poverty, but it does enhance financial inclusion,
letting poor borrowers smooth their incomes so they can cope with
illness or other temporary shocks."
Grameen, too, has begun to expand its model beyond just microfinance,
into savings programs and "social businesses" that might do more to
directly ease poverty. But for now, those efforts will be on hold. Yunus
will likely be spending much of his time in court in the coming months,
fighting what looks set to be a long legal battle.
Sumon K Chakrabarti is the Chief National Correspondent of CNN-IBN
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