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U.S. Urges Fairness in Bangladesh’s Tax Case Against Yunus

The U.S. said it’s concerned that the government of Bangladesh may pursue a tax evasion case against Grameen Bank founder Muhammad Yunus, and urged fair and transparent treatment of the Nobel laureate.

Yunus has improved the lives of Bangladesh’s poorest citizens through Grameen’s microfinancing, lending to 8.3 million people, 96 percent of whom are women, the State Department said in an e-mailed statement yesterday. The U.S. also expects Bangladesh to name a qualified managing director to replace Yunus, according to the statement.

Bangladesh’s tax authority plans to serve notice on Yunus for alleged violation of tax exemption rules, following Prime Minister Sheikh Hasina’s approval for the National Board of Revenue to take action. The notice is based on a probe of foreign income Yunus earned and tax treatment he received from 2004 to 2011, according to a letter the board released to reporters on Sept. 9.

Yunus received tax exemptions valued at 126.54 million taka ($1.6 million) on 506.18 million taka given to him in honorariums, awards and royalties from foreign sources, according to the letter. Yunus did not get permission from the government before receiving the money as a “public servant” in accordance with tax laws, the board said.

Escalating Tension

A government review earlier this year concluded that because Grameen was created under a special law, it should be considered a government bank.

Yunus, 73, didn’t breach any law as Grameen’s managing director and his activities were approved by the bank’s board, the Yunus Centre, which promotes his ideas and programs, said in an e-mailed statement on the tax case. He resigned from Grameen in 2011 after the country’s central bank said he’d breached retirement norms by leading the company after turning 60.

Hasina’s approval of the tax authority action follows a finance ministry panel’s recommendation that the government replace officials on Grameen’s board and take control of parts of the business.

Tensions between Yunus, who gained global recognition in 2006 after winning the Nobel prize, and Hasina have escalated since he signaled an interest in entering politics a year later.

Government involvement with the bank has met with concern from global leaders including Virgin Group Chairman Richard Branson and former Federal Reserve Chairman Paul Volcker, who have urged Hasina not to seize control of the company.

Thirty-two U.S. Congress members called on Hasina not to implement the recommendations, which would “undermine the women borrowers and shareholders who have made the bank such a success,” they wrote in an open letter.

To contact the reporter on this story: James Gunsalus in Tokyo at jgunsalus@bloomberg.net

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