Bangladesh's Nobel laureate Muhammad Yunus refuses to step down, preferring a 'graceful solution' to his exit. The government has tried to fire the pioneer of microfinance of Grameen Bank for allegedly breaking the law.
Yunus has begun a legal fight against dismissal
The official retirement age of managing directors at commercial banks in Bangladesh is 60. At 70, Yunus is well past the official retirement age but he does not think this is reason enough to remove him. On Thursday, he lodged a case in the High Court contesting the government's decision.
His supporters rallied around him, as did his colleagues at Grameen Bank that he founded almost 30 years ago. "Grameen Bank is discussing this issue with legal experts," announced Jannat-e-Quanine, the bank's media coordinator. "It followed all the legal procedures regarding the post of managing director. According to our legal advisors, Nobel laureate Dr Muhammad Yunus should remain in his post."
The economist was awarded the Nobel Peace Prize in 2006, after shooting to international fame by founding Grameen Bank, one of the first microcredit institutions.
The 'banker to the poor' and Grameen Bank won the Nobel Peace Prize in 2006
He is a popular figure and the international reaction to his attempted sacking has been one of concern, with the US calling for the dispute to be resolved "amicably."
In Bangladesh, meanwhile, economists warned that the government's "hasty decision" could trigger a collapse of confidence in the microfinance sector.
Microfinance under fire
However, the microfinance sector has already come under a lot of fire recently, with many experts saying the poor are being exploited and getting deeper and deeper into debt.
Many small textile firms have been set up with microloans
Badruddin Umar, an activist and the author of "Poverty Trade" is a vocal critic of microcredit. He said it was right for Yunus to lose his job, "better late than never."
He especially criticized the fact that people had to start paying interest on their loans so soon because "they have to take the money out of the capital they have borrowed and cannot use it properly for investment.
"People have to sell their land, their utensils, and domestic animals to repay their loans. The number of suicides is increasing."
He added that many critics of microfinance and of Yunus in particular were reluctant to voice their fears in public "because they are afraid, not of Yunus directly, but of other people who are praising him."
'Bloodsucker of the poor'
His biggest critic, however, is not afraid - Prime Minister Sheikh Hasina has described Yunus as a "bloodsucker of the poor."
He first attracted her wrath in 2007 when he floated the idea of forming a political party, while Bangladesh was under the rule of an interim military government. His supporters say this feud is what is behind the current affair.
Yunus attracted the ire of Bangladeshi PM Sheikh Hasina in 2007
Last year, Grameen Bank was accused in a Norwegian documentary of dodging taxes. Yunus has always denied any financial irregularities.
Bangladesh's Banking Companies Act of 1991 grants sweeping powers to the central bank, including the right to dismiss senior management figures at private banks. Now, Bangladesh Bank is claiming that Grameen Bank did not seek its prior approval when Yunus was reappointed in 2000. It says this violates one of the company's statutes.
However, Akbar Ali Khan, a former finance secretary, refuted this on Thursday. "Grameen Bank was established in accordance with the proper legal procedure and is not a banking company," he insisted. "If Dr Yunus is removed from his post, it will spell disaster for the bank's activities."
The Bangladeshi state owns 25 percent of Grameen Bank, which has over eight million customers and provides collateral-free loans in over 80,000 villages across Bangladesh.
Author: Anne Thomas
Editor: Thomas Baerthlein