Dr. Yunus siphoned TK 7bn aid meant for poor :Documentary unveils

In a secret memo from 1998 beats the Norwegian Embassy in Bangladesh alarm: Peace Prize winner Yunus has quietly tapped the Grameen Bank - the poor bank - for 608 million aid dollars, and moved the money into a company that Norwegians have never heard of. Burn-point documentary "Caught in the micro-debt" shows a completely different side than the microcredit Muhammad YunusMuhammad Yunus and his bank Prize-winning Grameen Bank portrays in public.

A TV documentary telecast in Norway, the country that honoured the pioneer of micro-finance with the Nobel Prize, again shed a light on the downside of the cash flow from the donors to the receivers funneled through the micro-finance operators.

‘Caught in Micro-debt’, a documentary on microfinance shown on a Norwegian TV, reveals that Grameen Bank’s founder diverted developmental aid money from foreign countries meant for Grameen Bank into another of his company back in 1996.

In 1997, the Norwegian authorities discovered that approximately US$ 100 million (608 million kroner) aid from Norway and other countries contributed to the Grameen Bank was being diverted by Mohammed Yunus to Grameen Kalyan, which was not involved with microcredit operations.

It was disclosed in the world premiere of the documentary film on micro-finance titled ‘Caught in Micro debt’ aired on Tuesday on Norwegian State TV, NRK. It’s a film by award-winning Danish documentary film-maker Tom Heinemann.

Quoting Professor Jonathan MorduchJonathan Morduch from New York University, the documentary says Grameen Bank, which also won the Nobel Peace prize and received $ 175 million dollars in subsidies for lending to the poor.

When the Norway embassy, Norwegian aid agency Norad and the Economic Relations Division in Bangladesh demanded, Grameen Bank gave back less than $ 30 million out of the 100 million.

Following Yunus’ request, Norad, the Norwegian Embassy and the Bangladeshi authorities kept silent, the documentary says. “The money was from foreign grants from countries such as Norway, Sweden, The Netherlands and Germany, and the transaction took place at the end of 1996,” it adds.

The Danish journalist, Tom Heinemann, made several trips to Bangladesh, and talked to a number of international experts worldwide, for the investigations that showed that the Grameen Bank leads many poor women to a “crippling debt spiral”.

Tom Heinemann, the director of the film premiered Tuesday, said he failed to speak to Yunus despite several attempts.Besides, the 30 percent interest rate of Grameen Bank, the famous micro-credit bank of Yunus, is leading many poor women into a debt spiral, the documentary reveals.

The film shows a completely different angle than the microcredit Muhammad Yunus and his Nobel Prize-winning Grameen Bank likes to portray in public.

It shows that the women pay about 30 percent interest on loans, as they already have to start paying back after a week.

The documentary tells the poor about the harsh collection methods by Grameen Bank, which has received the entire $ 400 million in aid from Norway.

The enthusiasm has been great for the "bank for the poor" that started with Yunus in 1976 giving $ 27 as loan to 42 women in the village of Jobra in Bangladesh.

Today, Grameen Bank has nearly 8.5 million borrowers, mostly women, and thus the flagship in a micro business has spread to the entire globe.

Grameen Bank itself boasts a repayment rate of around 97-98 per cent, and believes that it proves the bank`s success.

It is believed that micro-loan shows women a way out of poverty, but the scenario is different in the "Caught in the micro-debt" documentary as per experiences and studies.

“People of goodwill want to help developing countries, particularly in Scandinavia, have been fooled into thinking that this is the ideal solution to poverty," says Ha-Joon Chang, professor at the University of Cambridge.

Another expert who spoke very critical of the documentary is senior David Roodman of the Center for Global Development in Washington.

“We decide who should get money based on who tells the best stories and makes us feel good about where the money goes,” said Roodman.

High interest rates

The Grameen Bank charges the interest rate between 26 and 31 percent, while interest rates were even higher in other microfinance institutions.

Burn-point studies have shown that microfinance institutions around the world take over 100 percent interest and at worst 200 percent.

Scared to payment

“At one point I got problems with your refund. The staff of Grameen Bank came and called me names. They threatened me with selling panels from the house. If I did not pay, they would throw me on the street. They said many nasty things to me. I was scared and sold everything I owned and paid installment. The house will collapse. There are holes in the roof. I have no one in the world, "said Hazera, one of the poor women Focal Point meetings in the documentary.

Norad warned

Norad supported the Grameen Bank from 1986 to 1997 with a total of 400 million. Focal Point has gone through the entire archive of Norad, which has the Grameen Bank to make. Here it emerged that employees of NORAD in the 1990`s were concerned that the poor were trapped in a debt spiral.

A memo from Norad 20 December 1993 states the following:

"In fact, according to a survey done by David Gibbons and Helen Todd of the 40 women with 10 years of membership (of Grameen Bank), had almost all borrowed privately to pay installments."

And another note from Norad 1 June 1994 states the following:

"One of the matters which the report points out is that the credit concept, as it has evolved, created fertile ground for a practice in which new loans can be used to repay current loans.

I took a loan, so I was forced to take another loan to cover the costs of the first loan. So I took another loan to cover the payment. Now I have debt in five organizations, "said Yasmeen, another woman in Bangladesh who spoke with Focal Point.

Here you will Find Norwegian DOC:

http://www.nrk.no/programmer/tv/brennpunkt/1.7397163