South Asians for Human Rights

Promoting Democracy, Upholding Human Rights

Professor Muhammad Yunus yesterday went to court challenging the central bank order that removed him from the post of managing director of Grameen Bank, while the wider international community showed its displeasure at the way the Nobel prize winner for Bangladesh was treated.

The court fixed March 6 (Sunday) for delivering an order on a writ petition filed by Yunus. The Nobel winner found himself in the middle of a campaign since a Norwegian TV documentary alleged that he had transferred Norway government’s money unlawfully to another organisation. Norway later in a statement cleared the air and said no corruption or illegal activity had taken place.

Challenging the legality of the government’s move to remove Yunus from Grameen, nine directors of the microlender jointly filed a second writ petition with the High Court.

Dr Kamal Hossain who appeared for Yunus told the court that the government has removed the Grameen Bank founder from his post without issuing any show-cause notice.

Earlier when Yunus had asked the Grameen Bank board of directors to exempt him from the office considering his age, they requested him to continue, Dr Kamal said.

The directors last met on February 27 and decided to hold another meeting later on, but Yunus has been removed from the office before that meeting could be held, Dr Kamal said.

Attorney General Mahbubey Alam opposed the writ petition, saying that Grameen Bank was established as per Grameen Bank Ordinance 1983, and as per its section 36, the retirement age of its officials is 60.

This provision applies to Dr Muhammad Yunus as it does to the other employees of Grameen Bank, he said.

The attorney general said Yunus is now 70 years old, and as per section 36 of Grameen Bank Ordinance 1983, he cannot hold this office.

After the court hearing, Yunus said he wanted a “graceful solution” allowing him to step down from his post at the microfinance institution.

“I have said repeatedly that I don’t want to be in the position of managing director but the (Grameen Bank) board would not accept my resignation. They asked me to stay and this is why I am in this position now,” he said.

“I want a graceful solution to my departure from Grameen,” he added.

“I urge all of you to save and protect this institution. Grameen Bank has come this far on its own money and labour, not foreign funds,” Yunus told reporters at the Supreme Court premises.

Grameen is a large organisation, in which a third of the country’s population is involved directly and indirectly, he said warning that the institution will not survive if people’s trust in it is damaged.

Who will remain in charge is not vital; survival of the institution is, he observed.

Meantime, Finance Minister AMA Muhith briefed diplomats at his office yesterday to explain the government actions.

Muhith said the government had no choice but to remove Yunus because he had held the position “illegally” since 2000; he had failed to seek the central bank’s prior approval when he was reappointed.

“The law took its routine course. Bangladesh Bank exercised its powers under section 45 of the Banking Company Act of 1991,” the minister said in a written speech.

But the diplomats seemed to be unconvinced by the arguments.

US Ambassador James F Moriarty, coming out of the meeting, said: “We are deeply troubled by the process here…that is trying to remove Prof Yunus who has continued to hold the position. It strikes us. It is an unusual way to handle a Nobel laureate, who is considered outside the country as one of the greatest Bangladeshis.”

Asked what would be the move now that they have received the Bangladesh Bank letter for removal of Yunus, Grameen Bank Chairman Khondker Muzammel Huq said: “The matter is sub judice. I won’t comment on the issue. I have to wait for a court decision.”

At Grameen Bank Building in Mirpur, a sense of insecurity seems to have set in following the removal of the managing director.

“It worries me when the head of a family becomes a victim of injustice. It is worrisome when an institution is likely to suffer political abuse,” said one of the employees hiding his identity card from view.

The presence of two Special Branch officers at the main entrance of the bank for over the last few days has added to the jitters.

What internal BB note states

Prof Muhammad Yunus has been “removed” from his position as his appointment violated the Grameen Bank Ordinance, 1983 that says a managing director must be appointed with prior approval of the Bangladesh Bank (BB), says an internal BB document.

In 1990, an amendment regarding the appointment of the managing director (MD) was brought to the Grameen Bank Ordinance making the provision of taking approval of the BB instead of the government.

On August 14, 1990, after the amendment, the then chairman of the board of directors of Grameen Bank requested the BB to appoint Muhammad Yunus as the MD of Grameen Bank.

On August 25 that year, the BB approved the appointment on certain conditions.

The conditions were: The terms and conditions for the MD’s post would follow the regulations of section 14(4) of the 1983 ordinance. The board of directors will make the regulations and those would take effect after being published in government gazette. Appointment of the MD requires a prior approval of the BB if the new regulations are inconsistent with the existing ones.

After obtaining the no-objection from the BB, Grameen Bank on August 29, 1990 appointed Prof Yunus as the MD. One of the conditions of his appointment was that he would be a regular officer and the chief executive of the bank. BB says the retirement age of a regular bank officer is 60 years.

In a comprehensive inspection in 1999, the BB raised an objection that the MD and DMD of Grameen Bank had been holding their posts for an indefinite period beyond their retirement age limit with the approval of the board of directors.

According to BB, the chief executive did not take prior approval of the central bank for this extended stay in office. Consequently on November 19, 2001, Grameen bank formulated regulations regarding the appointment of its MD. The new regulations include that age limit as per the bank ordinance is not applicable for the MD, Prof Yunus.

The regulations also made the post of the MD a contractual job, which the BB says a violation and “material alteration” of the terms and conditions of the previous appointment.

Source: The Daily Star – 04.03.2011