The allegations of labor law violations against Nobel Laureate Professor Muhammad Yunus, the founder of Grameen Bank, sparked an additional layer of contentious debate. It questioned his moral and legal dimensions while he talked highly of his microfinance initiatives. Yunus is widely admired for his innovative approach to eradicating poverty. But, it is also essential to understand which labor law violations he is accused of, why, and the broader implications for labor rights and legal accountability.
However, recent events have shed light on an aspect of his legacy that has been less discussed: a labor law violation case involving Dr Yunus. Moreover, allegations of Grameen Telecom Labor Law violations have surfaced, along with his ongoing legal battle for his activities. A Dhaka court summoned Grameen Telecom Chairman and Nobel Laureate Prof Dr Muhammad Yunus in a case filed against him for allegedly depriving employees of profit and laundering the money abroad.
Labor Law violation allegations
On August 28, 2023, Professor Yunus was charged with 18 cases for violating labor laws. 18 Grameen Telecom employees recruited prior to 2006 filed the cases with the third labor court in Dhaka. According to attorneys, 18 individuals have filed separate petitions with similar claims, where it has been stated, employees’ wages have not been paid.
While the ongoing case regarding labor law violations against Professor Yunus is under investigation, these 18 additional cases have been filed against him. Of these 18 cases, 17 involve retired employees, while one pertains to a currently employed individual. The cases involve allegations of Bangladesh’s Labor Law violations, primarily regarding the treatment of Grameen Bank workers. This goes against the bank’s idea of social responsibility and empowerment. The cases also highlights a disparity between the principles the bank espouses externally and the practices it is accused of engaging in internally.
You Can Also Read: Grameen Bank’s High-Interest Rates Do Not Yield People Benefits
In this case, according to Helal Uddin, the attorney for 18 of the plaintiffs, the employees are seeking approximately Tk 22 crore from Grameen Telecom. According to the Labor Law, employees are entitled to five percent of the company’s dividend, he explained. However, they did not receive it, according to the lawsuit.
“Since 2006, five percent of the annual profit has been around Rs 22 crore for 18 people. They demanded that money,” Helal Uddin said.
Earlier, in September 2021, the Department of Inspection for Factories and Establishments (DIFE) filed a case against Yunus alleging that Grameen Telecom violated the nation’s labor laws. The specific allegations include:
- Not regularizing the jobs of 101 employees and pushing their families into disaster.
- Not forming a workers’ participation fund and welfare fund.
- Not providing 5% of the company’s dividend to workers.
- Illegally deducting six percent of the amount in the name of lawyers’ fees and other fees while paying the dues of workers and employees.
- Tk 2,977 crore transferred from Grameen Telecom Company to bank accounts of various affiliates for money laundering.
In addition, there were reports of employees being under pressure to work lengthy hours, and he did not provide them with sufficient benefits. These circumstances highlight potential labor law violations and an ethical dilemma regarding the prioritization of profit over the welfare of borrowers. In addition, he is accused of using Grameen Bank funds for his expenditures. Moreover, in 2018, approximately 3000 Grameen Bank employees reported not receiving pay for six months.
Dr. Yunus’s list of key violation incidents is longer than labor law violations
Money laundering and violating company act:
Dr. Muhammad Yunus received a license to establish Grameen Telecom in 1997 with the promise of providing telecommunications services to the poor people of Bangladesh and not for any profit. However, Grameen Telecom has been paying huge dividends every year to another company named Grameen Kalyan, a for-profit organization. This violates the Companies Act of 1994, which prohibits non-profit companies from paying dividends. The government has accused Grameen Telecom of illegally paying more than Tk 5000 crore (US$ 580 million) to Grameen Kalyan in dividends. Grameen Telecom had denied the allegations, saying that it had been paying the dividends by the terms of its license. Although Yunus got removed from his position as head of the micro-lender Grameen Bank in 2011, the case is still under investigation.
The vicious cycle of debt trap via Grameen Bank:
Established in 1983, Grameen Bank initially garnered praise for its innovative approach in providing microloans to impoverished individuals, particularly women. This approach aimed at fostering entrepreneurship and promoting economic empowerment, ultimately leading to its founder being awarded the Nobel Peace Prize in 2006. However, the bank’s operational practices, and accusations of recurrent exploitation of its stakeholders have raised concerns directed towards its founder.
Comparisons have been drawn between the high-interest lending practices of Grameen Bank and usury.
In 1997, Sofia Khatun, the first Grameen Bank borrower of a modest loan, passed away. Her family members, including her daughter Halima Begum and her sons Mohammad Babul and Mohsin, have asserted that Grameen Bank did not assist them despite its mission to alleviate destitution. The absence of safeguards against excessive interest rates and debt accumulation raised additional concerns about the bank’s commitment to the financial security of its borrower. Grameen Bank’s practices allegedly created a power imbalance between borrowers and the institution. Borrowers became financially trapped and unable to escape the debt cycle with this approach. The alleged exploitative practices had compromised the ethical responsibility to protect borrowers’ rights and well-being.
Additionally, there have been many reports of victims of this vicious cycle attempting suicide for failing to repay the loans. Allegations of inadequate support for borrowers’ families have been pointed to the exploiting tendency of the Grameen Bank which was far harsher than the dream shown.
The famous case of tax dodging:
Dr. Muhammad Yunus had paid Tk12,46,72,608 in taxes to the National Board of Revenue (NBR) in cases filed in connection with unpaid taxes on so-called “donations” in July this year.
Dr. Yunus, who had a net worth of TK 560 million, paid TK 13.7 million in 2010-2011 and TK 13.6 million in 2011-2012 in taxes after earning TK 100 million in each of those years. However, in the 2011-12, 2012-13, and 2013-14 tax years, he made substantial donations of TK 760 million to three of his trusts, resulting in a substantial reduction in his income tax liability. During the tax years 2011-2012 and 2013-2014, Dr. Yunus transferred a significant portion of his personal wealth to three non-profit trusts – Professor Muhammad Yunus Trust, Yunus Family Trust, and Yunus Centre – in an apparent attempt to evade taxes.
The National Bureau of Revenue (NBR) audited the matter and demanded TK 160 million by the Gift tax law against these donations as a result of this abnormal decline in tax payment accompanied by a substantial donation.
Utilizing Nobel fame as a shield?
Professor Muhammad Yunus has attempted to deflect and avoid the labor law violation cases that have emerged in the microfinance landscape by leveraging his international reputation and prestige. Yunus has resorted to using his Nobel Peace Prize as a shield to divert attention away from the grave allegations of labor law violations involving certain microfinance practices. By continually accentuating his global recognition, he hopes to generate an aura of legal immunity.
He has orchestrated a media campaign emphasizing his accomplishments while deftly avoiding accusations of exploiting borrowers and violating labor laws. The intention appears to be to construct a narrative that portrays him solely as a champion of poverty alleviation, thereby diverting attention away from ethical and legal issues.
Utilizing his global network, Yunus has managed to coordinate international petitions and letters in his favor. These initiatives, which feature renowned individuals and organizations, create the illusion of overwhelming international support, thereby diverting attention away from the urgent labor law allegations. Instead of directly addressing the labor law violations, Yunus seeks endorsements from a group of global leaders and Nobel laureates to bolster his image as a victim of political motivations. This strategy seeks to evoke sympathy and influence public opinion, but it is no longer effective at the national level.
By implying that the government’s actions are part of a larger assault on human rights, he attempts to discredit domestic authorities and garner international support, even though he is facing serious charges and allegations. Yunus has succeeded in shifting the conversation away from labor law violations. The attention went toward broader topics such as democracy, human rights, and international recognition. This strategy serves to blur the distinction between his achievements and the severe allegations against him.
Conclusion
While Professor Yunus’ contributions to poverty alleviation are widely acknowledged, his efforts to circumvent labor law violation cases by leveraging his Nobel prestige and international influence are cause for concern. The focus should remain on the current allegations and the implications they have for ethical financial practices and borrower rights. The use of international platforms should not be a means to avoid accountability. Rather it is a way to address issues in a transparent and accountable manner.
