Nobel Laureate Dr. Muhammad Yunus, who was once celebrated at home and abroad for his so-called efforts to ‘end poverty’ through micro-finance, has seen a meteoric fall in his reputation for his deceitful involvement in money laundering, tax evasion, violating labor laws, exploiting marginalized people, influencing the World Bank to scrap the Padma Bridge financing, misuse of power and many more.
A master of personal branding, using a web of strategies, he created an empire by selling poverty alleviation, flowing funds at his own whim, and building a network with the world’s most influential people to shield his financial misdeeds.
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The controversial Nobel winner is now in hot water over labor law violation cases and losing Grameen Banner’s crown, as the Grameen Bank on February 12 legally appointed new directors to the 8 of Grameen organizations, replacing him. From leveraging foreign mighty friends and ‘statement diplomacy’ to play the victim card, he is leaving no stone unturned to impede the judicial process.
Established in 1983, the Grameen Bank’s operational practices and accusations of recurrent exploitation of its stakeholders have raised concerns directed towards its founder. Borrowers became financially strapped 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.
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Web of Deceitful Strategies to Extort People’s Money
On September 4, 1983, the government issued an ordinance, known as Ordinance-46, to initiate Grameen Bank with a modest capital of 3 million taka. Most of this capital came from the government (1.8 crore) and the rest from the borrowers (1.2 crore taka). Dr. Yunus personally did not invest any money in Grameen Bank.
Dr Yunus as the chairman of the bank manipulated the board members and created the Social Venture Capital Fund (SVCF) and Social Advancement Fund (SAF) using money from the bank.
Later, he created the ‘Grameen Fund’ in 1994 with 49.10 crores from SVCF. And on April 25, 1996, he created ‘Grameen Kalyan’ taking 69 crore taka from Grameen Bank’s Social Advancement Fund (SAF).
According to the proposal, a company named “Grameen Kalyan” would be established under the “Company Act 1994” for the welfare of Grameen Bank members and employees. Subsequently, through Grameen Kalyan, Dr. Yunus established 13 organizations and through the established Grameen Fund, he floated 15 organizations.
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Out of the 28 institutions established through ‘Grameen Kalyan’ and ‘Grameen Fund,’ only Grameen Telecom, apart from all the others, is profitable. Grameen Telecom owns 34.2 percent shares of the country’s largest mobile network, ‘Grameen Phone.’ In 2022, after paying taxes and VAT, Grameen Phone made a net profit of 3,190 crores and 16 lakh BDT. With this money, 28 bankrupt companies of Dr. Yunus are maintained and a portion of the profit from Grameen Telecom goes to Grameen Kalyan. Through Grameen Kalyan other organizations are sustained. All of these organizations are loss making organizations. So, the question is: why do these institutions run for years with losses? If we take a closer look, we will see that the institutions that have been formed through Grameen Kalyan by diverting money from Grameen Bank and have Dr. Yunus as their chairman.
However, donors raised concerns about diverting funds from Grameen Bank in this manner, considering its financial irregularity. Dr. Yunus cleverly handled this situation.
Through these organizations, Dr. Yunus conducts money laundering. The path to money laundering was created by transferring funds through Grameen Telecom. Grameen Telecom also has violated Sections 28 and 29 of the 1994 Company Act by diverting 42.6% of its earnings to Gramin Kalyan, even though Grameen Kalyan is not a shareholder of Grameen Telecom. According to the law, Grameen Telecom must enjoy its entire income as revenue, and accordingly, it must pay corporate tax at the applicable corporate rate for the relevant fiscal year. However, when their audited accounts are examined, it is seen that they have provided Grameen Kalyan with nearly half of their earnings only in the form of advance income tax (AIT) at a rate of 10-20%. However, according to the income tax ordinance 2019, the applicable corporate tax rate for the company was between 35% to 37.5%.
Tax Evasion Saga
Yunus tried to evade a huge sum of money by ‘donating’ 760 million Taka to his controlled trusts. the National Bureau of Revenue (NBR) audited the matter and demanded TK 160 million in accordance with the Gift tax law against these so-called donations. To evade tax, Dr. Yunus appealed to the court and subsequently lost in a legal battle and had to pay 12.28 crore Taka.
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Over the years, Dr. Yunus has engaged in widespread tax evasion through his controlled companies, institutions, and personal income tax. From 1997 to 2022, a total of BDT 977 billion has been transferred to the accounts of Yunus and his affiliated organizations from the company’s operational council. Dr. Yunus donated a sum of Tk 76 crores, 73 lakhs, 34 thousand to three institutions known as Yunus Trust, Yunus Family Trust, and Yunus Center Trust. The Deputy Commissioner of Taxes imposed a total tax of Tk 15 crores, 39 lakhs, 16 thousand, and 800 during the three fiscal years from 2011 to 2013.
The rate of tax dodge is given below-
Tax evasion by Dr. Yunus at Grameen Telecom
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Total tax evaded (As of 2022): Approximately 10 billion Taka
Tax documents reveal
- After 2003, Dr. Yunus concealed 189,434,835 Taka in remittances in his tax file for the 2005-06 tax year. However, his personal South East Bank (Account Number – 0212100020061) shows that he received 1,159,896,224 Taka in remittances during that time. This means that he concealed 189,434,835 Taka in remittance income from the government in his personal tax file, with the intention of evading taxes.
- From the 2005-06 tax year to the 2022-23 tax year, he concealed 189,434,835 Taka in remittance income to evade taxes. Interestingly, in the 2020-21 fiscal year, Dr. Yunus withdrew almost all the money from his personal account to form the ‘Yunus Trust’. Trust funds are exempt from income tax. However, a 15% tax is payable on such funds, which he did not pay. This tax evasion led to a lawsuit against him, which he lost in three courts.
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- To evade taxes, Dr. Muhammad Yunus concealed large amounts of remittance income in his personal tax file in various tax years.
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Earlier, after winning the Nobel Prize in 2006, he mentioned receiving a total remittance of 97 crores 4 lakh 61 thousand 191 BDT in the 2005-06 tax year. However, during that time, he received 115 crores 98 lakh 96 thousand 24 BDT in his personal Southeast Bank account as remittances. This means he concealed information about receiving 18 crores 94 lakh 34 thousand 835 BDT in remittances in his personal tax file.
In addition, Dr. Yunus has been widely accused of evading taxes by forming various shell companies and donating the profits of one company to another. For example, Dr. Yunus transferred 36 billion Taka from the accumulated 5% dividend of Grameen Telecom’s employee welfare fund to another company as a donation.
Labor Law Violation
Dr. Muhammad Yunus violated the labor law of Bangladesh. His employees were the first ones to expose his criminal offense, while the government and other institutions were unaware of it. In 2016, the initial legal action targeted 14 former Grameen Telecom employees for failing to repay loans. Following this, Dr. Muhammad Yunus faced an additional 93 cases from present employees related to overdue loans. The aggregate number of cases filed in the Labor Court of Dhaka reached 107. Moreover, an extra 14 cases were instituted against him by an additional 14 employees.
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Regarding the allegations, in April 2019, a factory inspector from the Labor Inspection Department inspected Grameen Communications, identifying various irregularities and providing directives for correction.
Later, on October 10 of the same year, another inspection revealed evidence of 10 violations at the institution. Consequently, the plaintiff filed a complaint under Section 33 (h) and Section 307 of the Bangladesh Labor Law 2006, as amended by the Bangladesh Labor (Amendment) Act 2013, accusing them of a punishable offense.
Among the multiple legal cases against Professor Muhammad Yunus, with a recent case in the Labor Court, this particular complaint, filed in September 2021, alleges violations of labor laws. Examining the content of the Labor Court case, it involves allegations against Grameen Telecom, stating violations of specific sections of the Bangladesh Labor Act of 2006 and Labor Policy of 2015.
These violations encompass:
- Failing to make laborers and employees permanent upon completing their apprenticeships (a violation of Section 4(7) of the Bangladesh Labor Act),
- Not granting workers and employees annual leave or wages in lieu of leave (contrary to Section 117 of the Bangladesh Labor Act), and
- Non-payment of 5 percent of profits to labor welfare under the Labor Welfare Foundation Act of 2006, as well as the non-establishment of labor welfare and workers’ participation funds.
On January 1, Dhaka Labor Court sentenced Dr. Yunus and three Grameen Telecom directors to six months in jail in the labor violation case.
Money Laundering
From 1997 to 2022, a total of BDT 977 billion has been transferred to the accounts of Yunus and his affiliated organizations from the company’s operational council. An investigation is ongoing regarding an allegation of money laundering involving approximately BDT 300 billion by Grameen Telecom. Furthermore, the company’s chairman and Nobel laureate Dr. Muhammad Yunus, along with 13 others, face charges of embezzlement of BDT 250,227,806 from the Welfare Fund for the assimilation of 25 crore 22 lac 780 taka.
Dr. Muhammad Yunus, the founder of this establishment, cannot rise above the law and justice because no one is above the law. In the ongoing legal drama, Grameen Telecom’s scrutiny acts as a clear reminder that accountability, transparency, and justice must prevail, surpassing individual legacies and organizational affiliations.
- Gulshan Anwar filed a case on 30 May, 2023, alleging that Dr Muhammad Yunus and the other accused embezzled Tk 252 million in total. The illegal transfer of funds constitutes an offence under the Money Laundering Prevention Act.
- Dr Yunus committed offences under the Money Laundering Prevention Act, 2012 and GTC has been transferring its dividends in violation of section 28 & 29 of the Companies Act, 1994.
- An investigation is ongoing regarding an allegation of money laundering involving approximately BDT 300 billion by Grameen Telecom
Age Policy Breach
Despite government regulations stipulating retirement for managing directors at 60, a decision was made during the 52nd Board of Directors meeting on July 20, 1999, allowing Dr. Muhammad Yunus to remain as Managing Director until further notice, despite his age of 59 at the time.
This decision blatantly disregarded established ordinances, treating a statutory public authority as a private entity. A regulation concerning the appointment of the Managing Director was subsequently published in the Bangladesh Gazette on November 19, 2001.
Key provisions included:
- The Managing Director’s appointment is contractual.
- The appointment duration specified in the letter of appointment does not exceed five years, with the possibility of renewal under new terms.
- No specific age limit for the Managing Director, exempting them from Grameen Bank’s Service Rules.
Despite a no-objection letter from Bangladesh Bank issued on August 25, 1990, requiring reapproval for changes in the Managing Director’s terms, this requirement was ignored. The 2001 Regulation mandated term specification in the appointment letter, but no new appointment letters have been issued since 1990, raising concerns about violating Article 14(4) of the Grameen Bank Ordinance and the integrity of the 2001 regulations.
Under Section 21(12)(ii) of the Bangladesh Penal Code of 1860 and Article 152 of the Constitution of Bangladesh, the Managing Director of Grameen Bank is legally defined as a Public Servant and holds the status of a Public Officer. Dr. Muhammad Yunus was found to have significantly breached the terms and conditions of his service as a Public Servant by overstaying as the chief executive, clearly violating section number 14(1) of the Grameen Bank laws.
Yunus’s Padma Bridge Fund Conspiracy
Bangladesh signed a $1.2 billion loan agreement with the World Bank on April 28, 2011, to fund the construction of the Padma Multipurpose Bridge, initially estimated at $2.9 billion. However, the loan disbursement was suspended by the Washington-based agency following corruption allegations related to consultant selection for the country’s longest bridge project.
According to the Associated Press (AP), during Hillary Clinton’s tenure as Secretary of State, Muhammad Yunus met with her on May 6, 2012, and had multiple telephone conversations. Yunus sought Clinton’s assistance in retaining control of Grameen Bank, leading Clinton to direct her aides to explore options to support him.
After losing his position, Yunus initiated efforts to annul the Padma Bridge agreement. Pressure started coming from the US office to the Bangladesh government. The United States advocated for Yunus to transition leadership responsibilities with dignity at his own pace.
At one juncture, the World Bank began levying unverified corruption accusations, ultimately failing to substantiate any claims. In June 2012, donor organizations, including the World Bank, terminated the loan agreement, citing concerns.
Playing the Victim Card?
Prof. Yunus has attempted many times to seek impunity and avoid labor law violation cases and other financial misappropriation by leveraging his global reputation and Nobel fame.
Yunus has gathered support through international petitions, featuring endorsements from famous figures, creating the impression of global backing. This tactic diverts attention from labor law violations. Instead of addressing the charges directly, Yunus seeks endorsements to paint himself as a victim of politics.
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Recently, 12 US senators’ letter urged Sheikh Hasina to stop the abuse of Bangladesh’s judicial system (over the trial of Dr. Yunus). Their letters strongly sided with Dr. Yunus and matched with the previous propaganda by 40 eminent persons and then 160 other eminent persons. 40 world leaders jointly published an open letter as a full-page ad in the Washington Post forUS$73,033.
On 28 August 2023, Cision PR Newswire a Chicago-based news and PR agency of United States published the open letter on their website. The signatories of the letter include former U.S. President Barack Obama, former U.S. Secretary of State Hillary Clinton, former President of East Timor José Ramos-Horta, former President of Ireland Mary Robinson, and former UN Secretary-General Ban Ki-moon.
The letter states, “Recent actions targeting Dr. Yunus have deeply troubled us, and we believe they constitute an ongoing judicial harassment.”
However, it raises questions about the signatories’ understanding of Bangladesh’s legal context, as it doesn’t specify if they comprehend the country’s Constitution or the legal implications of their statements.