Richard Branson and Paul Volcker are among global leaders urging Bangladeshi Prime Minister Sheikh Hasina Wajed not to seize control of the microfinance lender founded by Nobel peace prize winner Muhammad Yunus.
A panel set up by the nation’s finance ministry is recommending that the government replace officials on Grameen Bank’s board and take control of parts of the business, according to a letter signed by 40 people that was e-mailed to Bloomberg News. Abul Kalam Azad, Hasina’s press secretary, said he wasn’t aware of the letter when reached on his mobile phone.
The letter -- which comes a week after the New York Times published an editorial saying that Hasina’s administration should “stop meddling” with Grameen -- underscores mounting international pressure on her. The conflict between Yunus, 73, who shot to fame globally in 2006 after winning the Nobel prize, and Hasina, 65, has escalated since he signaled an interest in joining politics a year later.
Implementing the panel’s recommendations “could be disastrous,” the signatories wrote in the letter. “They would lead Bangladesh to violate its obligations under bilateral investment treaties, and to compromise the independence that has protected Grameen Bank from political turmoil over the last three decades.”
The panel is due to submit a report on its proposals this week that would include nationalizing and breaking up Grameen Bank into 19 smaller lenders, the New York Times reported on Aug. 6. The government has no plan to raise its stake in Grameen beyond the present 25 percent, Finance Minister Abul Maal Abdul Muhith said on Aug. 7. Gokul Chand Das, joint secretary of the ministry, said yesterday that the commission had not submitted its final report yet.
Grameen, which means “rural” or “village” in the Bangla language, had 8.4 million borrowers as of July, 96 percent of whom are women, according to an Aug. 5 statement on the lender’s website. The bank had lent $14 billion since it began operations in 1976 and had a loan recovery rate of 97 percent as of July, according to the lender’s website.
“The seizure of the Grameen Bank would be a tragedy, not only for Bangladesh, but would also send the wrong message to every other developing country who has followed this proven model to provide loans to its borrowers,” Branson, the 63-year-old founder and chairman of Virgin Group, wrote in an e-mailed response to questions from Bloomberg News. “I urge Sheikh Hasina to take some time to consider these proposals.”
Branson was one of the signatories on the letter. Former U.S. Federal Reserve Chairman Volcker, former Federal Deposit Insurance Corp. Chairman Sheila Bair and former Securities and Exchange Commission Chairman Arthur Levitt also signed. Levitt is a board member of Bloomberg LP, the parent of Bloomberg News.
Grameen Bank is “a direct lifeline for more than 8 million people working their way out poverty,” said Kerry Kennedy, president of the Washington-based Robert F. Kennedy Center for Justice and Human Rights, who is also a signatory. “This work is possible because of the leadership of Grameen Bank’s board of directors and partners, and their continued independence to operate this bank for the poor,” Kennedy wrote in an e-mail to Bloomberg News.
Kennedy’s father, Robert, was assassinated in 1968 while campaigning for the presidency. Her uncle, John F. Kennedy, was killed in November 1963.
Separately, 32 members of U.S. Congress wrote a similar open letter calling upon Hasina not to implement the recommendations, which would “undermine the women borrowers and shareholders who have made the bank such a success.”
The government’s Grameen Bank panel was formed in May 2012 to look into the lender’s legal status and operations about a year after the country’s central bank removed Yunus as managing director. Yunus, who won the Nobel Prize for his work in starting the lender, had breached retirement norms by staying on as Grameen Bank’s head after turning 60, Bangladesh Bank said at the time.
“It’s good news that global leaders are on our side,” Tahsina Khatun, a director of Grameen Bank, said in a phone interview yesterday. “Now I hope the government will listen to them. We have tried to convince the government to let Grameen Bank be as it is.”