Yunus's Grameen Bank trashes fund stash allegations

Describing the allegations as "total fabrication and baseless," the Bank in a statement said there was no wrongdoing in agreement between the Bank and Grameen Kalyan.
The Bank received a whopping USD 96 million as aid to enlarge lending to micro borrowers.

The transactions were transparent and not secretive. There was a honest disagreement with the foreign donor, the statement said.

The 2,000-word statement came late yesterday, three days after the Norwegian TV aired a documentary alleging that cash was diverted from Grameen Bank to other subsidiaries of the Grameen Group.

Admitting that transfers had taken place, the statement claimed these were done with "due deliberation, good faith, and with good intentions to benefit the poor".
"There was no wrongdoing in the agreement between Grameen Bank and Grameen Kalyan (to transfer the amount)," said the statement signed by the Bank's general manager Mohammad Shahjahan.

It added that the actions taken by the Board were viewed as the best use of the funds at the time, a way to ensure Grameen Bank would remain financially accountable for the money while still ensuring that the borrowers received the most possible benefit from donors' grants.

The private BDNews24 news agency of Bangladesh carried a report quoting the Norwegian TV on December 1 alleging that Yunus transferred nearly USD 100 million dollars in aid for poor borrowers of Grameen Bank to Grameen Kalyan, a non-profit sister venture of Grameen Bank in 1996 violating agreements with the donor and financial laws of Bangladesh.

"It was a matter of differing views on the subject. NORAD considered it a departure from the provision of the agreement, while Grameen Bank thought it was done within the agreement," the statement said.

The Grameen Bank said it did not want to enter into confrontation with NORAD on the issue and reversed its decision and restored the status quo, which was also appreciated by the then Norwegian envoy in Dhaka in a letter to Yunus.

"The Embassy highly appreciates your cooperation in solving this issue, and is pleased to have arrived at a solution which is satisfactory for Grameen Bank as well as the embassy," the statement said quoting the ambassador's letter in May 1998.

The Norwegian TV documentary had quoted Prof Jonathan Morduch of New York University saying that Grameen Bank received USD 175 million dollars in subsidies through the Norwegian aid agency for offering tiny loans to ultra poor people.

"When the Norway embassy, Norwegian aid agency Norad and the Economic Relations Division in Bangladesh demanded that he return the money to Grameen Bank, the microcredit guru gave back less than some Tk 2 billion (USD 30 million) of the 100 million.
The remainder remained with Grameen Kalyan," the report said.

But the Grameen statement claimed all the donors' money had been transferred back and only USD 11 million remained with Grameen Kalyan, a non—profit company dedicated to carryout "social advance activities" in areas of health, education and technology among the Grameen's micro-credit borrowers and poor employees.Bangladesh government has not reacted to the controversy. But a foreign radio said Norway government was reviewing the diversion of funds.