March 03, 2011

Article at Washington Post

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U.S. 'deeply troubled' as Bangladesh tries to remove Nobel laureate as bank chief

NEW DELHI - The United States reacted with dismay Thursday to Bangladesh's attempt to dismiss Nobel laureate Muhammad Yunus as head of the microcredit bank he founded. Yunus had contested the government order in court.

Yunus's model of providing small loans mainly to poor rural women was hailed as revolutionary and has been replicated all over the world. But its founder has run afoul of Bangladesh's political elite since trying to launch a political party with the backing of the army in 2007.

The microcredit industry in neighboring India and other countries has come under fire in recent months for charging sky-high interest rates and often using coercive tactics to collect debts. In light of that, Bangladeshi prime minister Sheikh Hasina accused Yunus in December of "sucking blood from the poor" by charging excessively high interest rates. Hasina launched an investigation last month into allegations that Yunus had misused foreign aid money.

But the country's central bank ordered his removal as managing director of Grameen Bank this week because, it said, the 70-year-old had violated a mandatory retirement law, which sets the retirement age at 60.

Grameen argued that the bank was exempt from that rule, and nine members of the bank's board went to court Thursday to challenge the government's dismissal of the economist whose role as "banker to the poor" won him the Nobel Peace Prize in 2006.

U.S. Ambassador James F. Moriarty met with the country's finance minister, Abul Maal Abdul Muhith, in the Bangladeshi capital of Dhaka on Thursday. He told reporters afterward that the United States is "deeply troubled by the process here that is trying to remove Professor Yunus. It is an unusual way to handle a Nobel laureate who is considered outside the country as one of the greatest Bangladeshis."

The court heard three hours of arguments on Thursday and said it would rule on Sunday, a work day in this Muslim-majority country.

Yunus told reporters outside the court that he is interested in handing his job to a successor. "I, too, want to quit, but it has to be done honorably," Yunus said, according to the Associated Press. "If I've to leave because of malice, then people will lose faith on Grameen Bank. I don't want that to happen."

Moriarty said the Bangladeshi authorities had acted hastily and he called for the dispute to be resolved amicably. But he said the United States would not play any role in the matter. However, an embassy statement said that Secretary of State Hillary Rodham Clinton looked forward to discussing the issue in a meeting with Yunus scheduled to take place in Washington next week. Clinton has been a strong advocate of microfinance programs as a way to lift millions of people out of poverty.

Yunus has been a harsh critic of the government but abandoned the idea of forming a political party in 2007. He said he was not cut out for the rough-and-tumble politics of Bangladesh, where two feuding families have dominated the political scene for decades in this country of 140 million people.

The charismatic, white-haired economist, who said his dream was to lift the living standards of the poor by lending them a few dollars to buy such things as a cow or a sewing machine, became a folk hero to many Bangladeshis. His first loan - of $27 - came from his own pocket and went to a group of rural women who made bamboo furniture. Today, women make up 97 percent of Grameen's more than 8 million borrowers.

The Bangladeshi government's campaign against Yunus intensified late last year after a Norwegian television documentary alleged that his bank had shifted aid funds among other companies in the group to evade taxes. Grameen denies the charge, and the Norwegian government said its own investigation found no evidence that funds had been misused or embezzled.

Finance Minister Muhith said he had been trying to convince Yunus since last year that it was time for him to retire.

"We are proud of him," he said. "But it is also true that an illegal matter cannot go on for an indefinite time."

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