There's nothing quite like a bit of transparency is there? The most astonishing aspect of the detail here is the abject lack of corruption, the paying back of the money and the general desire to use donor moneys for the purpose intended. This is an incredible but unlikely to ever be emulated precedent!
What now do we say to the foul mouthed, bile spewing, intellectually stunted, hypocrisy ridden, corrupt and morally bankrupt house of Mujib and their foaming at the mouth sycophants?
Hasina and BAL should put their pig snouts into the toilet from where they came and apologise publicly for their attempts to assassinate the character of our one star on the international stage. Gandhi peace prize indeed - stick it in the toilet with the rest of the degrees (honorary, fake and otherwise) of the house of Mujib and its suckling followers.
It must have been so disappointing for these spawn of satan to discover that there was in fact no money stolen at all - after all, their belief supported by their own activities was that it was inconceivable that with access to so much money, Dr Yunus did not have his fingers in the till. I share their surprise. I don't think Dr Yunus is even Bangladeshi anymore!
One note though. The only voice of decency from the administration was that of the Finance Minister Mr Muhith. He stood quite above the gutter in which his leader and BAL colleagues operate.
Mr Muhith should resign and challenge for the leadership.
Emanur Rahman | m. +447734567561 | e. emanur@rahman.com
-----Original Message-----
From: Isha Khan <bdmailer@gmail.com>
Sender: alochona@yahoogroups.com
Date: Thu, 9 Dec 2010 07:37:24
Reply-To: alochona@yahoogroups.com
Subject: [ALOCHONA] Grameen Bank : Norad report in short
Grameen Bank : Norad report in short
The documentation of the case provides several explanations as to why
Grameen Bank decided to transfer gift funds to Grameen Kalyan.
We (The Daily Star ) are publishing the abridged version of the
Norwegian Agency for Development Cooperation (Norad) letter to the
Bangladesh Ministry of Foreign Affairs to review matters regarding
Grameen Bank:( Daily Star)
Date: December 6, 2010
Order from the Ministry of Foreign Affairs to review matters relating
to Grameen Bank
Order
We refer to the telephone call and written notification from the
Ministry on December 1 ordering an overall presentation / explanation
of the issues related to the handling of Norad's support to Grameen
Bank.
Sources:
* Norad has reviewed the documentation found in both Norad's archives
and in the embassy's archives relating to the case.
* Einar Landmark, first secretary at the Norwegian Embassy in Dhaka,
Bangladesh, 1996-1999.
Facts:
* Assistance given by Norad and other donors to Grameen Bank's
revolving funds in the period 1985-1996 was transferred from Grameen
Bank to Grameen Kalyan in 1996.
* Grameen Kalyan then loaned these funds back to Grameen Bank.
* The transfer between Grameen Bank and Grameen Kalyan was discovered
by the Embassy during a routine review of Grameen Bank's annual report
for 1996.
* The transaction was from the Norwegian side seen as a violation of
the agreements between Norway and Bangladesh.
* The formal breach was about Phase IV, an amount of 106 million
Norwegian Crowns (NOK), as previous agreements had already concluded.
* Funding for revolving funds under Phase IV, a total of 106 million
NOK, was returned in full to Grameen Bank after negotiations between
Grameen Bank and Norway. In addition, 64 million NOK related to Phase
III were returned.
Background
Norway supported Grameen Bank in the period from 1986 to 1997,
regulated by 8 agreements. According to the Embassy, under these
agreements a total of 396.45 million NOK were appropriated and a total
of 392.693 million NOK were paid out. In addition, 1.343 million NOK,
covered by the last annual appropriation, were used for a final
evaluation.
In the first years, in addition to financing the revolving fund, donor
support to Grameen Bank largely went to build up Grameen Bank's
infrastructure and to finance institution-building (Phase II and III).
Phase IV was mainly concerned with funding for the revolving funds. In
addition, Norad provided support to relief and rehabilitation efforts
after natural disasters. This support to the victims of two natural
disasters, who had their homes and other assets lost or destroyed, was
given through 4 contracts from 1988 to 1992.
In December of 1997, while reviewing Grameen Bank's "Annual Report
'96", the Embassy discovered in a footnote to the financial statements
major accounting changes in the composition of Grameen Bank's balance
sheet effective as of December 31,1996. According to a note from the
Embassy dated February 10, 1998, the changed postings concerned aid
funds.
According to a note dated February 10,1998, the Embassy contacted
Grameen Bank, requesting a more detailed explanation. In response,
they were sent a copy of the agreement between Grameen Bank and
Grameen Kalyan, as well as the statutes of Grameen Kalyan. The embassy
at that time had no knowledge of the company Grameen Kalyan.
It turned out that Grameen Bank had transferred all the revolving loan
funds that had been provided as grants from donors, totaling about 540
million NOK, to the company Grameen Kalyan. In addition, an internally
generated fund (Social Advancement Fund) of about 68.5 million NOK had
been transferred. Combined, the transfer consisted of 608.5 million
NOK. An equivalent amount was recorded as debt from Grameen Bank to
Grameen Kalyan. Ownership of the assets was thus transferred to
Grameen Kalyan, to then be loaned back to Grameen Bank. The Norwegian
share concerned funds related to the revolving fund of Grameen Bank
Phase III and IV.
Specifications, retrieved from a note dated February 10, 1998 on the
distribution of the funds that had been transferred from the Grameen
Bank to Grameen Kalyan (in local currency, Bangladeshi Taka):
General & collective loans - 1,244,811,572.85
Housing loans (members) - 1,814,903,911.70
Housing loans (employees - 87,340,075.68
Bicycle loans - 24,793,912.00
Social Advancement Fund (SAF) - 442,512,624.00
Total - 3,914,362,096.43
This corresponded to a total of NOK 608.5 million according to the
exchange rate at the time.
The agreement between Grameen Bank and Grameen Kalyan
Grameen Kalyan means "Grameen Wellbeing" and was founded in 1996. The
company was organized as a limited warranty non-profit company for the
participants. The profit was to remain in the company, and upon
dissolution of the company assets were to be transferred to a company
with similar purposes.
According to the Embassy's note dated February 10, 1998, Grameen
Kalyan's statutes would allow them to use their funds for a wide
variety of purposes:
a) Provide loans and grants to Grameen Bank's employees and members
with families.
b) Grant matching funds to companies owned and operated by Grameen
Bank's employees.
c) Provide loans to other companies associated with Grameen Bank.
d) Offer medical, health and sanitation services for Grameen Bank
members and employees.
e) Promote and establish partnership companies, joint ventures, public
limited companies and insurance companies.
f) Organize education and training programs for members and employees
of Grameen Bank.
g) Promote new and adapted technologies and innovative ideas for
development of small businesses.
h) Conduct research and carry out experiments to find ways to bring
about socio-economic changes for members of Grameen Bank.
i) Support, conduct and arrange training programs, seminars, workshops
and meetings between NGOs and other local agencies and individuals to
achieve Grameen Kalyan's goals.
j) Receive gifts, grants, aid, donations of all kinds to organize,
establish and maintain capital and assets.
k) Obtain funds from various local and international donor
organizations and from the government to carry out relief and
rehabilitation after natural disasters or other catastrophes.
l) Remedy all sorts of disasters that affect the life and property of
Grameen Bank members and staff.
m) Buy, rent or otherwise secure the necessary property or rights to
build or maintain housing for Grameen Bank members and staff.
n) Become a member of local or international organizations to promote
Grameen Kalyan's objectives.
o) Open bank accounts and take loans.
p) Invest capital in securities, receivables, shares, etc.
q) Promote, organize and establish branch offices of Grameen Kalyan.
r) Perform other functions that will work to develop the country in
general and improve the socio-economic conditions for the poor in
particular.
It was stated in the statutes that no part of Grameen Kalyan's income
and assets is to be paid to members of Grameen Kalyan in any form. In
the event of the dissolution of the company, assets were to be
transferred to a company with a similar mission statement. The
agreement between Grameen Kalyan and Grameen Bank further made clear
that Grameen Kalyan could both implement the requirement to pay
installments on the loan from Grameen Bank, and charge interest on
loans except on mortgages.
When the relationship was revealed, the project's Phase III had
already been completed and Phase IV was underway. These two phases
were the subject of discussion between Norway and Grameen Bank.
According to a note dated February 10, 1998, the Embassy's assessment
was that the transaction breached the agreement for the ongoing
support during Grameen Bank Phase IV. These funds from Norad were
meant to go into a revolving fund for housing loans at Grameen Bank,
from which Grameen Bank members would get loans. Grameen Kalyan had
other and far wider purposes and lacked a license to engage in lending
activities. A letter from Grameen Bank, dated January 8, 1998, points
out that money that was loaned back to the Grameen Bank was used for
the same purpose as was the original intent of the agreement. However,
Grameen Kalyan could require repayment of the loan. The Embassy's
February 10, 1998 response makes clear that they think also previous
support for revolving loan funds, i.e. Phase III, should continue to
be under the control of Grameen Bank. These funds both represented
values for Grameen Bank's owners (members), and secured their future
access to loan funds.
Grameen Kalyan's mission statement allowed the company to engage in a
much broader area. Grameen Kalyan had the opportunity to gain income
from interest which would be paid back from Grameen Bank to Grameen
Kalyan in addition to the loan installments.
Matters relating to the transfer from Grameen Bank to Grameen Kalyan
The documentation of the case provides several explanations as to why
Grameen Bank decided to transfer gift funds to Grameen Kalyan.
According to the Embassy in a note dated February 10, 1998, Mohammad
Yunus said at a December 3, 1997 meeting that "the main purpose of the
transaction was to reduce tax obligations, and to secure funds for the
members of Grameen Bank."
At that time, Grameen Bank had tax exempt status and the Embassy found
this explanation and clarification unconvincing. In a letter dated
January 8, 1998, Yunus explains that the internal allocation of 2% of
the interest payments on loans (SAF fund) could possibly be taxed at
40% as Grameen Bank's tax exemption would according to Grameen Bank
most likely expire the same year. In its statement to Brennpunkt (a
Norwegian documentary program), Grameen Bank again referred to the tax
issue as the explanation for the transfer of funds to Grameen Kalyan.
The Embassy points out in its memo of February 10, 1998 that at the
time the support was granted, the Norwegian side would most probably
not have accepted organizational constructs to prevent the ordinary
taxation of possible future economic gains.
In a subsequent written communication it was also noted that Grameen
Kalyan was going to administer the loan funds to Grameen Bank in such
a way that Grameen Bank would feel pressure to demand repayment of
loans from its members.
The Embassy concluded in its memo of February 10, 1998 that
"Explanations from the management of Grameen Bank on what has been the
purpose of entering into the agreement with Grameen Kalyan leave
uncertainty and are not convincing."
Embassy Evaluation
The Embassy presented the matter to Norad in a note of February 10,
1998. The Legal Department issued a statement, and it was agreed that
the Embassy would require that the ownership of the Norwegian aid
funds that had been transferred from Grameen Bank to Grameen Kalyan
and then borrowed back from Grameen Kalyan to Grameen Bank, be brought
back to Grameen Bank.
Assistance to Grameen Bank was provided as a part of government to
government cooperation between Bangladesh and Norway. Therefore, the
Embassy discussed the matter with the Bangladeshi authorities in the
Ministry of Finance, Economic Relations Division. Meeting minutes
dated March 16, 1998 make it explicit that the government agreed with
the Norwegian assessment that ownership of the funds should be
returned to Grameen Bank. They took the matter up with Grameen Bank,
but then gave notice to the Embassy that it was okay if the matter was
handled between Grameen Bank and Norway directly.
The Embassy consulted local legal expertise. This review showed that
the Embassy had a weak legal basis for demanding the return of funds
from Phase III, as that agreement was concluded. Norad's Legal
Department came to the same conclusion in a May 11, 1998 memo.
Grameen Bank and Grameen Kalyan suggested to the Embassy that the
revolving funds under Phase IV from 1993 and 1994, a total of NOK 106
million, be returned. The Embassy received authorization from Norad to
negotiate on this basis, but with a view to achieving full recovery,
even of funds from Phase III. After negotiations between Grameen Bank,
Grameen Kalyan and the Embassy, the Embassy managed to gain acceptance
also for the full return of the revolving loan funds from Phase III.
This involved the return of a total of 170 million NOK.
With this, Norad and the Embassy's requirements were met. When the
Embassy in a letter dated May 26, 1998 coined the term "compromise",
it was linked to Grameen Bank's invitation to negotiate a compromise.
The Embassy and Norad had all their demands met through the
negotiations. Payments of support for Grameen Bank during Phase IV
were completed in 1997. A project evaluation was conducted in 1998-99.
The Embassy received reports from Grameen Bank until 2001 and formally
concluded the funding agreement in 2003.
The much discussed case of the transfers between Grameen Bank and
Grameen Kalyan was according to the Embassy closed in a satisfactory
way, which the Embassy expressed in a letter to Grameen Bank, dated
May 26, 1998:
"The Embassy highly appreciates your cooperation in solving this
issue, and is pleased to have arrived at a solution which is
satisfactory for Grameen Bank as well as the Embassy. The Embassy
looks forward to continued good cooperation in the future."
Other
Regarding the assertion in Brennpunkt about NOK 50 million of
Norwegian aid money spent on Grameen Phone, the following is
documented:
According to the Embassy's memo dated February 10, 1998, the loan to
Grameen Telecom was in regards to funds from the Social Advancement
Fund (SAF), a fund created within the Grameen Bank to set aside 2% of
the interest payments from borrowers' income-generating loans.
Norwegian aid funds allocated under the above eight agreements were
not used to fund Grameen Telecom
http://www.thedailystar.net/newDesign/news-details.php?nid=165393
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