|Jan 06 2011
By The Economist online
IN MUCH of the world Muhammad is known as the genial pioneer of microcredit and the winner of the 2006 Nobel peace prize. Yet in his native Bangladesh Mr Yunus's reputation is under attack. His supporters fear that the government plans to remove him from Grameen Bank, the microlender he founded, and take it over. In late December Mr Yunus had to issue a statement denying claims by some in the Bangladeshi government that he had resigned from his post as the managing director of Grameen.
The initial trigger for the attack on Mr Yunus was a documentary screened on Norwegian television in November, which dredged up an old controversy about the use of development funds provided to Grameen by Norad, the Norwegian aid agency, in the 1990s. Grameen transferred the ownership of the Norwegian funds from one Grameen entity, fearing its tax-exempt status might be changed, to another. Discomforted, the Norwegian government asked Grameen Bank, which had originally been given the funds, to retain ownership. This was done in 1998. The Norwegian government said in early December that a probe by Norad had failed to uncover any evidence that its money was used for unintended purposes, or that Grameen had engaged in corrupt practices.
But the release of the documentary led to sharp attacks on Mr Yunus and Grameen in Bangladesh. Sheikh Hasina, the prime minister, accused Mr Yunus of playing "a trick" to evade taxes. She charged microlenders with "sucking blood from the poor in the name of poverty alleviation" and treating the people of Bangladesh as "guinea pigs". On December 24th the government announced that it was planning a "high-level investigation" into Grameen's operations.
Another line of fire opened up on January 4th when a Bangladeshi news website alleged that Grameen's 20-year-old relationship with a printing company called Packages Corporation, which had been owned by Mr Yunus's family since the 1960s, was rife with conflicts of interest. Grameen took over the management of the firm in 1990 to use it for its own printing needs; it has also provided the printers with loans from a Grameen fund. The bank stresses that Mr Yunus's family, who retained ownership, have not gained financially from the relationship (among other things, the agreement with Grameen restricted the owners from getting any of the printer's profits).
Mr Yunus denies all the charges against him but he has made some powerful enemies among Bangladesh's politicians. During a period of military rule a few years back, he declared his intention to run for president, a plan he soon dropped. Some in Bangladesh reckon that Sheikh Hasina is miffed that Mr Yunus and Grameen got the Nobel prize. It remains unclear how far the government, which already has three seats on Grameen Bank's board, intends to go. Some fear that if the government succeeds in taking Grameen over it could then turn its sights on other successful outfits, like BRAC. Bangladeshi microlenders can no longer consider themselves safe from the country's messy politics.