Yunus ‘siphoned Tk 7bn aid for poor’ found out that Muhammad Yunus drew off nearly Tk 7 billion (100 million dollars) in aid for poor borrowers of Grameen Bank to another of his company back in 1996, the Norwegian TV says.

An investigative foreign TV documentary "Fanget i Mikrogjeld" or "Caught in Micro debt" aired on Tuesday on the National Norwegian Television, NRK shows ‘the banker to the poor’ transferred the money to Grameen Kalyan, which was in no way involved with microcredit operations.

Tom Heinemann, the director of the film premiered on Tuesday, said he failed to speak to Yunus despite several attempts. When tried to reach him, a personal aide said he was abroad at the moment and gave his email address to contact him. He is expected to return on Dec 12, the aide added.

The documentary film quotes Professor Jonathan Morduch from New York University saying that Grameen Bank, which also won the Nobel Peace prize alongside Yunus, received $ 175 million dollars in subsidies to give tiny loans to poor people.

The secret documents, which have never been published before and some of which are available on the website (Click here to see the documents), reveal that Professor Yunus breached the agreement on housing loans.

And 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 ($ 30 million) of the 100 million. The remainder remained with Grameen Kalyan.

As he did not want the story out, Yunus in desperation wrote a personal letter on April 1, 1998 to the then CEO of Norad requesting help. "If the people, within and outside government, who are not supportive of Grameen, get hold of this letter we’ll face real problems in Bangladesh," pleaded the man synonymous with small loans to village women.

"And Norad, the Norwegian Embassy and the Bangladeshi authorities kept their mouths shut," the documentary says. The money was from foreign grants from countries such as Norway, Sweden, The Netherlands and Germany, and the transaction took place at the end of 1996.

Heinemann, a Danish award-winning journalist who directed the documentary, told after the premiere that he had attempted to look critically into microfinance and stumbled upon these things.

"I have tried to talk to Mr Yunus for six months. But he didn’t want to talk to me," he said over telephone early on Wednesday.

In one of the many documents dated Jan 8, 1998, Yunus explained why he did the transaction. "With gradual higher interest rate charged, (…) more and more money will have to be paid out as taxes in future," he wrote to the Norwegian Embassy.


The Norwegian Embassy in Dhaka at a meeting with the bank at its office on Dec 3, 1997 came to know about the May 7, 1997 agreement between Grameen Bank and Grameen Kalyan, which became effective on Dec 31, 1996 for transfer of funds of Tk 3.914 billion.

In a letter to Yunus on Dec 15, 1997 the embassy said: "In line with the agreement, Grameen Bank transferred all funds accumulated up to Dec 31, 1996 received from donors for revolving funds, to Grameen Kalyan, which at the same date transferred the amount to Grameen Bank as a loan.

Tk 1.927 billion of the amount was related to the revolving fund for housing loans.

The letter signed by ambassador Hans Fredrik Lehne said: "The agreement concerning these transactions has not made provisions for any interest rates to be charged for this part of the loan, nor any terms of repayment."

The agreement was signed between the governments of Norway and Bangladesh on Nov 30, 1994 to support Grameen Bank’s Phase IV project.

Annex 1, clause 4 of the agreement said: "The amount of the Grant used for housing loans will be used as a revolving fund."

The Norwegian Embassy was concerned about the agreement between the two organisations for not informing it, saying "the agreement was contrary to the quoted clause of the agreement between the governments."

It also observed that the accounts of Grameen Bank as of Dec 31, 1996 did not reflect any revolving fund for housing loan in operation under the bank.

The embassy, which accepted the ownership of Grameen Bank, pointed that "the ownership of Grameen Kalyan is of another nature, and Norway has not entered into an agreement with Bangladesh to provide funds to Grameen Kalyan for onlending to Grameen Bank".

"The agreement has further left uncertainty about future repayment of the loan to Grameen Kalyan, since it is not regulated by the agreement.

"The agreement is also silent about Grameen Bank’s use of the loan from Grameen Kalyan."

The embassy in that consequence considered the agreement between Grameen Bank and Grameen Kalyan "as a change which affects two agreements between the two governments to support Grameen Bank."

It also asked for a written explanation from Yunus "why Grameen Bank entered into the agreement with Grameen Kalyan, and of the consequences for the owners of Grameen Bank and the beneficiaries of the housing loans."


Even after Yunus had provided his explanations over the agreement, there were some misunderstandings crept up between Grameen Bank and the Norad, according to his letter on Apr 1, 1998 to Norad director general Tove Strand Gerhardsen. "We are struggling to resolve it. But I think it is not making much progress."

His letter came after the embassy wrote to Bangladesh government alleging that "Grameen was transferring donor money (including that of Norad) to various enterprises outside of Grameen Bank".

He feared the allegation would create a lot of misunderstanding within Bangladesh government.

Yunus, informing Gerhardsen about his Oslo visit on Apr 29 and 30 invited by Telenor and the Worldview International to discuss a joint venture project in mass education in Bangladesh, at the end of the letter requested him to meet "for a few minutes" to explain the seriousness of the matter.

"Sorry to bring up all these matters to you. But I have no option left," he ended.


The film crew also travelled several times to Bangladesh and visited some of the most significant villages in the history of Grameen Bank.

Says Heinemann: "In Jobra, we meet the daughter of the famous original loan taker, Sufiya Begun. In "Hillary Village", where the former first lady of the USA, Hillary Clinton declared her support for both Mohammad Yunus and Grameen Bank, the crew meets poor people who have gained nothing but more debt due to micro credit."

"Almost all of the loan takers interviewed told the same story. Each one had multiple loans in various micro credit banks and organisations and had had a hard time trying to pay back their loans. Some had sold their house, others had their tin-sheets pulled off their houses to cover the weekly payments."

The film also interviews a number of leading social scientists and researchers who, for years, have questioned the "big success" of microcredit. "In fact, renowned social scientists, such as David Roodman, Jonathan Morduch, Thomas Dichter and Milford Bateman, agree on one thing: After 35 years of Microcredit there is no evidence that Microcredit lifts millions out of poverty."

The Norwegian version of the film will soon be followed by an international version which will also contain interviews from the Indian state of Andhra Pradesh, where numerous reports of suicides amongst loan takers have spread around the world and have questioned the benefits from microcredit.

Yunus, the darling of the western media credited with pioneering the global microlending revolution, in his defence, says Grameen’s board boasts nine women who represent the borrowers. His detractors say he does things his own way.

Critics put the stunning loan recovery rate of nearly 98 percent down to the harassment of villagers from the debt collectors. Some argue that people can quickly sink into a cycle of debt, with many lenders charging exorbitant rates of interest.

Dr Qazi Kholiquzzaman Ahmad, chairman of PKSF, a body that monitors microfinance, describes microcredit as a "death trap" for the poor.

Ten years after the Norwegian ambassador questioned Yunus over his handling of funds, he complained of foul play over who controls grameenphone when in December 2006,a few days before receiving the Nobel Peace Prize in Oslo, he publicly attacked Norwegian telecoms giant Telenor, the majority owner of the leading mobile-phone service provider. He said he had been considering legal action to wrest full control of the joint-venture.

He said he believed Telenor was sucking profits from the poor of Bangladesh.

(1 US dollar = Tk 70)



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