Microfinance guru challenges dismissal from bank

AP News
|
Posted: Mar 03, 2011 7:16 AM
Microfinance guru challenges dismissal from bank

Nobel laureate Muhammad Yunus challenged the legality Thursday of a Bangladeshi government order dismissing him as the head of the microfinance bank he founded.

Nine members of Grameen Bank's board of directors backed Yunus, an outspoken government critic, by filing a separate petition to the High Court, his lawyer Sara Hossain said. The court heard arguments Thursday and said it would rule on Sunday.

Bangladesh's central bank ordered Yunus out of the bank Wednesday, arguing that the 70-year-old had violated a law that makes retirement at age 60 mandatory. Grameen said it was exempt from the rule and Yunus would remain in his post.

The government owns a 25 percent stake in the bank, which gives small loans to the poor. The remainder of the bank is owned by its borrowers.

Yunus told reporters outside the court Thursday that he is interested in handing his job to a successor.

"I, too, want to quit, but it has to be done honorably," said Yunus. "If I've to leave because of malice then people will lose faith on Grameen Bank. I don't want that to happen."

The demand for Yunus' removal as Grameen's managing director caps a string of problems, including an apparently politically motivated defamation trial and accusations of an unauthorized bank transfer 15 years ago.

Yunus has long had frosty relations with Prime Minister Sheikh Hasina, who has publicly criticized Grameen Bank, saying its interest rates are too high. Hasina reportedly was angered by Yunus' 2007 attempt to form his own political party, backed by the country's powerful army.

The move to oust Yunus from Grameen has sparked criticism from foreign donors.

"We are deeply troubled by the process here that is trying to remove Prof. Yunus," U.S. Ambassador James F. Moriarty told reporters after meeting with Finance Minister Abul Mal Abdul Muhith on Thursday.

"It is an unusual way to handle a Nobel laureate who is considered outside the country as one of the greatest Bangladeshis," Moriarty said.

Muhith defended the government's decision.

"We know very well it would tarnish our image globally," Muhith told reporters. "We had to do it in line with the law of the land."

Muhith said Yunus' removal will not harm Grameen operation.

Yunus founded the bank three decades ago, pioneering the concept of reducing poverty by making tiny loans to the poor. His work, which spurred a boom in such lending across the developing world, earned him and the bank the 2006 Nobel Peace Prize.

Recently, Yunus has been under pressure at home. In addition to his legal troubles, Prime Minister Sheikh Hasina has accused Grameen Bank and other microfinance institutions of charging high interest rates and "sucking blood from the poor borrowers."

Efforts to remove Yunus from Grameen intensified in recent weeks.

Controversy surrounded Yunus after a Norwegian television documentary that screened in December accused him of transferring Norwegian development funds from Grameen Bank to another venture without prior approval in 1996. Pressure by the Norwegian Embassy in Dhaka resulted in the funds being transferred back in 1998, and the Norwegian government has said there was no indication Grameen was engaged in corruption or embezzlement.

Grameen Bank, founded in 1983 in Bangladesh, currently has nearly 9 million borrowers, 97 percent of whom are women. Many use their small loans to make ends meet or to start small businesses.