I had written quite critically on the charges that Grameen Bank founder Dr. Md. Yunus had engaged in accounting impropriety with development aid funds. Grameen Bank recently faced down allegations and was cleared of any wrong-doing. At the time I had written that this mishap provided an opportunity for stakeholders in the micro-finance industry to figure themselves out in this new economic circumstance supplied by the recent global financial crash; I had supposed MFIs might now begin to tinker with their credit models and do away with their exceedingly high interest rates.
Now the government of Bangladesh has put together a 5 member team to investigate those allegations anew. On the face of it this seems like a fair move because the country can ill-afford another blotch on its somewhat blemished reputation. Moreover MFI do need to investigate their books. However, it would have been best if MFI’s had done some house cleaning, mandates or otherwise. Furthermore, the strict and rather coercive manner in which this investigation has proceeded suggests that the AL government is trying to get rid of a potential political enemy, even if that supposed enemy has shown himself to be rather weak and politically insecure.
At this time when the microcredit business model is faltering as a secure investment tool, an instrument of economic growth and social development, the government might have supposed it can make a scapegoat out of Grameen. This, even if Grameen and its other MFI cohort BRAC are not the culprits here. (For profit MFI’s that charge astronomically high interest rates and do not have the managerial capacity to restructure those small loans are the culprits in this story.)
Grameen is not known to have run its businesses purely for exorbitant profit; nor for diving into unsustainable, publicly harmful business practices. So apart from an audit of some sort, the more extravagant investigations seems quite overdone. Moreover, by investigating Grameen for a span of time-in fact, 3 months– it is opening the books on tricks of the trade that will now fall within the AL’s purview. There is something altogether despicable going on here.
Indeed, the government announced that it is appointing a new Chairman to lead Grameen through this difficult time. One wonders whether Dr. Md. Yunus was indeed, not a capable guardian and leader for the Bank!
