The Platform

University of Salford Press Office

Nobel Laureate Muhammad Yunus and his Grameen initiatives are trending for all the wrong reasons. Yunus and his umbrella of ‘non-profits’ have been subject to criticism for both theoretical and empirical flaws. Besides the flaws and ‘over-hype’ of microcredit, the Grameen entities run by Yunus have also been found to be ridden with corruption.

Due to Grameen Bank’s positive image in the West, any problems with Grameen Bank and related entities are quite often seen as political. There is also a tendency to turn a blind eye to microcredit institutions’ unbridled corruption and ‘corporatization’ which undermines democratic values, labor, and human rights.

However, the recent Grameen Telecom lawsuit can’t be ignored. The lawsuit and its recent developments also unmask the folklore of the ‘non-profit’ disguise of Grameen entities. To understand better, we need to dive into the details of the lawsuit and the subsequent events that took place afterward.

According to labor laws, profitable organizations must share 5% of profits with their employees. Grameen Telecom has a 34.2% share in the country’s largest telecom, Grameen Phone, and earns millions of dollars in profit each year. But Grameen Telecom denied profit sharing with its employees referring to the organization as a non-profit.

From 2017 to 2021, the employees formed a union and filed over a hundred lawsuits against Yunus and Grameen Telecom. They also held demonstrations for their rightful claim of the profit. To crush the movement, Grameen Telecom took draconian measures. In October of 2020, it sacked its 99 employees through a single notice. Later, a court directed Grameen Telecom to reinstate the employees. But even though the employees rejoined, Grameen Telecom didn’t let them participate in any official work.

In February, Firoz Mahmud Hasan, the head of the employee union, filed a writ petition on behalf of the employees demanding the liquidation of the organization citing corruption, violation of regulations, fund diverting, and hiring lobbyists to influence the trial. The petition eventually transformed into a lawsuit and went to court. In April, Grameen Telecom signed a settlement agreement with the employees for $50 million. The employees would withdraw all lawsuits and resign from the organization. They would be paid once they submitted their resignation letters, and they would dissolve their union.

According to the settlement agreement, Grameen Telecom agreed to pay the employees their rightful profit share with 4% interest from 2010-2022 within 7 days of the agreement.

As per the agreement, Grameen Telecom opened an account for the payment and deposited $50 million on May 10th. But later, the transactions of that account suggest that Grameen Telecom sent $2.73 million to an account run by the Grameen Telecom Employees Union through two transactions on May 17 and the 25th.

Again, from that union account, several transactions from May 19 to June 2nd siphoned $2.62 million to several accounts. Among them, Yusuf Ali, the employee’s lawyer, received $1.26 million, Jafrul Hasan, his partner, received $315,000, their firm received $105,000, and the union president, and two others received $315,000 each.

As per the settlement agreement, Grameen Telecom would pay the employees individually after they submitted their resignation letters. The transfers to the lawyers and union president are questionable and a violation of regulations.

On June 30th, when the incident was published in the media, Justice Khurshid Alam recalled the lawsuit citing illegalities, and ordered further investigation. On the very same day, the bank suspended the accounts of the lawyers and union leaders.

The High Court stated that there are claims that the employee’s lawyers brokered the agreement and were biased in exchanging the money. And the employees were forced to settle the matter through compromise. Later, law enforcement arrested union leaders as a part of the investigation and their alleged involvement in embezzlement.

However, another letter signed by Nazmul Islam, Grameen Telecom’s Managing Director, sent to authorities revealed that the organization cut 6% from all employees’ profit as advocate expenses and other fees- another violation of the settlement agreement.

On July 28th, the Anti-Corruption Commission (ACC) also announced a probe into the matter and allegations of money laundering.

Recent developments suggest that by agreeing to pay profit sharing, Grameen Telecom has proved itself to be a profitable organization even though it always claimed to be a non-profit. Through this folklore of ‘non-profit,’ Grameen entities are also evading many regulations applicable to profitable organizations. Again, the settlement agreement and following grafts also reveal corruption and irregularities taking place at the expense of workers’ rights.

And last but not the least, the sacking of 99 employees, dissolving of the union, and ‘resignation’ clauses in the settlement agreement also show that the Grameen entities are also clouded by ‘corporatist’ and anti-democratic characteristics.

Doreen Chowdhury is a Doctoral Researcher at University of Groningen. Her areas of interest are Comparative Politics, Globalization, South Asian Studies, and Migration Studies. Her works have appeared in The Geopolitics, Aequitas Review, Eurasia Review, and The Financial Express.