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Bangla jibes follow US concerns over Yunus and microfinance

Aug 13, 2012

A leading politician of Bangladesh's ruling party has reacted sharply well over a week after the United States voiced its concern about the Bangladeshi government's expanding role in Grameen Bank and urged officials to ensure the microfinance institution's independence.

"The United States is deeply concerned about recent actions the government of Bangladesh has taken to give the government-appointed chairman of the Grameen Bank Board control over the selection of the bank's new managing director," Patrick Ventrell, acting deputy State Department spokesman, said in a statement.

"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," he added, saying, "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."

Yunus and microfinance have come under fierce attack from Bangladeshi Prime Minister, Sheikh Hasina, since Danish documentary maker, Tom Heinemann's film portrayed that significant money received by Grameen from the Norwegian government as development aid, was being unaccounted for. Though Heinemann 2010 film did not point to any corruption, it managed to raise inconvenient questions about microcredit, castigating  donors for their naivety in their enthusiasm for microfinance.

Prime Minister, Sheikh Hasina had then called for an in-depth investigation of the micro-credit sector, that she said, "does not lift people from poverty". "Is there any other business that forces people to pay 30 to 40 per cent as interest on loans?" Sheikh Hasina had once asked, describing Grameen's transfer of Norwegian and other European aid money in 1996 to avoid tax as a financial "trick".

On another occassion, the Prime Minister had discribed microfinance groups as using her country's people as guinea pigs and said that microfinance institutions in Bangladesh had raised millions of dollars of aid by cynically "showcasing" the poor but had failed to improve people's lives.

Following the film, the Norwegian government, a staunch supporter of Yunus and his model of microfinance, ordered an inquiry into how its money was spent. The government of Norway, one of Yunus' biggest supporters did not find any wrong-doing by Yunus' Grameen Bank. Yunus was dismissed from his position in the Bank, a decision he challenged in the country's Supreme Court, which refused to entertain his grievance on his removal from office.

What is interesting is the time gap since the statement made in Washington over a week ago. Many are looking why the Bangladesh government reacted so belatedly to Washington's statement on its treatment of one of its most globally-admired figures.

As the United States expressed its concern over what it describes as the Bangladeshi government's intrusion in the functioning of the Grameen Bank, Awami League leader Mahbub-ul Alam Hanif told reporters Sunday that Bangladesh would not tolerate any foreign interference in the country's internal affairs.

"Grameen Bank and Nobel Laureate Dr Yunus are our internal matter," the political leader, known for his proximity to the country's prime minister, Sheikh Hasina, said, adding, "we would not tolerate any foreign interference in this issue," Hanif said. "Are the Nobel Prize Winners above the law," he asked. "So far I know two Nobel laureates were sentenced to imprisonment," he added.

Grameen, is the Bangla denoting, 'of rural origins' and its 72-year-old founder, economist Muhammad Yunus is a Nobel Peace prize awardee who pioneered the micro credit movement, for which he is also called "banker to the poor". The microfinance model disburses small loans to people untouched by the mainstream banking system. It was seen as a means to lift millions of people out of poverty when it began in the 1970s. But detractors also point out that its initial success has sparkled an unregulated, multi-billion-dollar commercial industry.

"We are not putting our Nobel Laureate on the dock. Only steps have been taken to investigate whether there were any irregularities in Grameen Bank. But for this, no foreign power can raise eye-brow," Hanif added.

Hanif was responding to concerns voiced in Washington more than a week ago over Bangladesh's plan to expand the government's role in Grameen Bank. Bangladesh's cabinet ordered a new probe into Nobel Prize winner Muhammad Yunus earlier this month to check for irregularities during his time as head of microfinance pioneer Grameen Bank.

US Secretary of State, Hillary Clinton, has made no secret of her admiration for Yunus, also called the banker of the poor, who founded the Grameen Bank. Clinton heaped praise on Yunus during a visit to Dhaka last year, urging the government to maintain "an environment where civil society groups operate freely".

American concerns are seen in this backdrop by the highest in the echelons of power in Dhaka. This follows the Bangladesh government launching an investigation against Yunus to check for irregularities during his time as the head of the bank. One opinion voiced many times over is that the government's approach towards Grameen smacks of vendetta against Yunus, since he announced plans a few years ago to launch a political party.

The United States does not seem to be helping Yunus by urging officials in Bangladesh to ensure the pioneering microfinance institution's independence.

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