BANGLADESH

Parliament on Tuesday passed the amended Grameen Bank Ordinance that changes the provision for picking the bank's Managing Director.

The government says the amendment aims to make the process of appointing Managing Director more transparent and remove complexities in the recruitment..

But its founding MD Muhammad Yunus alleges that the government is eyeing a full takeover.

The bill titled 'Grameen Bank (Amendment) Bill-2012' was passed by voice vote after Planning Minister AK Khandker tabled it in the absence of Finance Minister AMA Muhith.

The Treasury MPs earlier rejected through voice vote the proposals to test public opinion on the Ordinance , send it to a committee for scrutiny and make further changes.

"The bank's Chairman should be changed first," independent MP Fazlul Azim said opposing the bill.

The bill was placed on Sep 11.

The bill states that the office of Managing Director of the statutory body remained vacant for long due to complexities in the appointment and this amendment has been made to urgently resolve the issue.

It proposes the Chairman in consultation with the Board of Directors will constitute a Selection Committee of not less than three and not more than five members to select a candidate for appointment of Managing Director.

The Selection Committee will then recommend a panel of three candidates for appointment as Managing Director and preference will be given to persons having knowledge and experience in rural economy and finance or in the field of microfinance.

The government promulgated the ordinance on Aug 23.

The Nobel-winning organisation has been running without a Managing Director for over one and a half years when Muhammad Yunus resigned in May last year after losing court battles to stay in the office.

The Cabinet on Aug 2 decided to alter the way the bank appoints the chief executive and asked the revenue board for a report on whether he brought in any money from abroad as a wage earner and if so, if he was allowed to do so and whether he got any tax waiver on the amount.

The immediate past acting managing director of the Grameen Bank yesterday refuted the claims that the microcredit lender has never paid dividends to its shareholders.
Dividends were paid to all the shareholders, said Nurjahan Begum who had taken over the charge of acting managing director of the Grameen Bank after Dr Muhammad Yunus stepped down from the bank in May last year.
The bank gave 100 percent dividend in 2006 and 20 percent in 2007 and 30 percent in 2008, 2009 and 2010, she said in a statement.
Nurjahan, who also retired last year, had been with the bank for 35 years since its inception.
Her comments came a day after Law Minister Shafique Ahmed said Grameen Bank founder and Nobel laureate Prof Yunus did not pay dividends to its shareholders.Of the 84 lakh borrowers of the bank, 55 lakh borrowers have so far bought shares of the bank, Nurjahan said.
The borrowers bought shares of Tk 55 crore to become owners of 97 percent shares of the Grameen Bank, whereas the government owns the rest 3 percent as it bought shares worth Tk 1.80 crore.
The Grameen Bank has so far paid Tk 2.52 crore to the government as dividends and Tk 63 lakh each to Sonali Bank and Bangladesh Krishi Bank.
Nurjahan said the Grameen Bank could not pay dividend until 1996 as it did not earn enough profit to do so.
She said dividend could not be given between 1997 and 2005 to meet the government’s conditions.
To obtain income tax waiver, all profits were deposited in the rehabilitation fund as per government condition. As a result, the board did not give any dividend.

The United States on Sunday said it was 'deeply concerned' about the decision of the Bangladesh government 'to give the government-appointed chairman of the Grameen Bank Board control over the selection of the bank's new managing director.'

"This move would diminish the role the largely female borrower-shareholders play in shaping the direction of an institution that has made a difference to millions of impoverished women in Bangladesh, and indeed around the world," said a press statement released by the Press Relations Office of the US Department of State.

The statement also referred to the visit the Secretary of State Hillary Clinton made to Bangladesh in May, urging "Prime Minister Sheikh Hasina and Foreign Minister Dipu Moni to take no actions that would undermine Grameen Bank."

"We are concerned that the latest actions by the government could threaten the future of the bank, which was founded by Nobel Peace Prize Laureate Professor Muhammad Yunus," said the statement issued by Acting Deputy Spokesperson of the Office of Press Relations Patrick Ventrell.

"We call on the Government of Bangladesh to respect the integrity, effectiveness, and independence of Grameen Bank.

"We urge the Bangladeshi Government to ensure transparency in the selection of a new managing director who has unquestioned integrity, competence, and dedication to preserving Grameen Bank, its unique governance structure, and its effectiveness in bringing development and hope to 8.3 million of Bangladesh's most vulnerable citizens, mostly women," read the statement.

The statement came after the Cabinet led by Prime Minister Sheikh Hasina on Aug 2 approved a draft of 'Grameen Bank Ordinance (Amendment) 2012' to change the legal provision for appointing Managing Director.

The government move is seen as an attempt to tighten its control over Grameen Bank by expanding the power of the government-appointed chairman to choose its Managing Director. Currently, that power resides with the bank's board of directors, which is made up of Yunus supporters.

The Cabinet also decided to investigate whether Yunus had enjoyed tax exemption in his stint as chief executive and how much money he made in salaries and allowances after he turned 60.

The central bank said in the past that he had violated retirement laws by failing to relinquish control at 60 but an official government enquiry cleared him of any wrongdoing.

Since the bank was founded in 1983 through a martial law ordinance, Yunus had been its Managing Director. In 2006, he shared Nobel Peace Prize with the bank, prompting Bangladeshis, Hasina among them, to hail him despite criticisms over the loan recovery process of the bank through weekly instalments.

When a TV documentary showed in December 2010 that he had channelled Tk 7 billion aid meant for the Grameen Bank to a sister concern of the bank without informing the donor, Prime Minister Sheikh Hasina had called Yunus a 'bloodsucker of the poor'.

The 72-year old, who made an abortive foray into politics during the emergency rule and has been an outspoken government critic, made an appeal to the people to save the microlending institution after the Cabinet decision.

"I have been expressing my apprehension beforehand. Now my fear is becoming real. I'm very sad we couldn't succeed to stop the process," he said in a statement.

Yunus was questioned by the central bank for continuing in his job far beyond the retirement age for any executive in any such institution in Bangladesh. Yunus was nearly 71 when the Bangladesh Bank gave the notice in March 2011.

He went to the court and lost a series of legal battles, finally in the Supreme Court, eventually losing his hold on the institution.

Following his removal, the government refused to bow down to pressure from US and international donor organisations to reappoint Yunus. It also ruled out a proposal to form a committee, led by Yunus, to look for a new Managing Director.

In February this year, opposition BNP said Hasina ridiculed Yunus by proposing him as the World Bank chief in a meeting with a delegation of European MPs in Dhaka.

Yunus, who counts Hillary, former US President Bill Clinton, former French President Nicolas Sarkozy and former Ireland President Mary Robinson, among his many friends, refused the idea.

Speaking on BBC's HARDtalk last week, Hasina denied allegations that her government had forced Yunus out of his role in Grameen Bank after he tried to float an independent political party in 2007.

Her claim that the bank charged 30-45 percent interest was contested by the bank on Jul 31. The Bank said it charged 7 percentage points less interest than the government-fixed ceiling and that her remark was 'inconsistent with actual figures'.

Nobel laureate Muhammad Yunus has questioned the necessity of forming a probe commission to look into Grameen Bank's activities since its birth.

In a statement, Yunus on Wednesday said he was afraid that the bank's future would be at stake if the government exerted more influence on the bank.

"I believe without doubt that Grameen Bank's future will be endangered if the government reinforces its role in the bank affairs by changing its legal structure," he said in the statement.

"Has Grameen Bank done any major misdeed that needed (the government) to initiate this probe?" he asked. "I am saddened at hearing the news."

The government on May 16 formed the commission to review the ownership of Grameen Bank and 54 related social businesses that Yunus still heads, 14 months after Yunus was removed as its Managing Director.

The Bank and Financial Institutions Division of the Ministry of Finance in a circular announced the institution of the panel under 'The Commission of Inquiry Act, 1956' .

The committee will look into changing the structure of the profitable network of ventures that include Grameen Bank's stakes in Bangladesh's biggest mobile-phone company Grameenphone and recommend ways to ensure good governance, transparency and accountability of the microcredit NGO and how to bring it within the reach of state regulatory agencies.

The commission will identify the institutional strengths, weaknesses and constraints in the Grameen Bank's operation and review the purposes, legal status and operations of the institutions, companies and enterprises established by it.

The commission will also comment on the microcredit NGO's ownership and composition of its Board of Directors specifying qualifications for such membership. It will report to the government in three months.

Yunus added: "I am now enormously worried about the possibility of Grameen Bank being put under government control. I fear even to anticipate the course that Grameen Bank will take if it is made a government institution."