Muhammad Yunus' Grameen Bank accused of diverting money

A Norwegian documentary on microcredit has made some allegations of diverted money within Muhammad Yunus' Grameen Bank. Money that the Norwegian government gave to Grameen Bank for housing loans was instead diverted to another arm within the Grameen Family of companies. Grameen has other branches including medical care services, developing other microcredit banks and more. Grameen counters that the money was diverted only for tax purposes.

From this NewsCore story that we found at Fox News Detroit, we learn more about the allegations.

But letters obtained by a Norwegian filmmaker suggest that Oslo’s embassy in Dhaka was furious to discover that cash donated to his micro finance vehicle, Grameen Bank, for housing loans was diverted to another company without its knowledge or permission. The arrangement, which Yunus claimed was made for tax reasons, was not mentioned in Grameen Bank’s annual report.

When his actions were challenged in formal correspondence, Yunus wrote to the head of an aid agency, Norad, asking for its help.

“This allegation will create a lot of misunderstanding within the government of Bangladesh. If the people, within and outside government, who are not supportive of Grameen get hold of this letter, we’ll face real problem[s] in Bangladesh,” he wrote.

Yunus was ordered to return the money but while about £17.6 million was repaid, the rest of the funds were used for other social causes including victims of cyclones, according to the Norwegian government.

The chain of events -- which took place between 1996 and 1998 -- came to light this week after the letters were aired as part of a documentary on micro finance that was shown on Norwegian television.

Although it said that there was no suggestion of tax fraud, a minister in the current Oslo administration said that it was “totally unacceptable” that aid was used for purposes other than what was intended. A report into the matter has now been ordered by the International Development Minister after questions in the Norwegian parliament.