Bangladeshi probe finds Grameen Bank flouted rules

AP News
Posted: Apr 26, 2011 10:37 AM
Bangladeshi probe finds Grameen Bank flouted rules

The Bangladeshi bank that pioneered small loans to lift people out of poverty, earning the Nobel Peace Prize, flouted rules in its business activities, a government investigator said Tuesday.

Grameen Bank violated its structure as a microlender by creating affiliates that became successful business entities, the head of an investigation into the bank's practices said.

Because they were independent, the affiliates did not benefit Grameen shareholders. The committee recommended the government bring those affiliates under Grameen's direct control, A.K. Monowar Uddin Ahmed told The Associated Press.

The report found no money was stolen, and Ahmed said the irregularities are "still possible to correct."

The report, with findings and recommendations for corrective action, was given to Finance Minister Abul Mal Abdul Muhith on Monday.

Ahmed says the transfer of a Norwegian fund from Grameen Bank to one of its ventures was done beyond the bank's legal boundary, but the committee considered the matter settled between the countries.

Micro-lending has spread throughout the developing world and earned Grameen and its founder Muhammad Yunus the 2006 Nobel Peace Prize.

Bangladesh's central bank removed the 71-year-old Yunus as Grameen's managing director earlier this month after finding he violated retirement laws. He lost court appeals arguing the removal was illegal.

Yunus has said the government was trying to take over his bank.