Last updated: March 3, 2011 3:29 pm

Yunus opens legal fight over dismissal

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Bangladeshi microfinance pioneer Muhammad Yunus has gone to court to challenge the legality of a central bank order dismissing him as the head of Grameen Bank, the trail-blazing micro-lender he founded.

In a petition to the Bangladesh high court, Mr Yunus argued that Bangladesh Bank – the regulator – lacked the authority to remove him from the helm of the microlender.

Nine members of the Grameen bank board – who are elected by the institution’s more than 8m poor female borrowers – have also expressed their support for Mr Yunus in a separate petition to the Bangladesh High Court.

Mr Yunus and his supporters hope the court will issue a temporary stay that would prevent Bangladesh Bank – the central bank and financial sector regulator – from enforcing its order removing Mr Yunus as managing director of Grameen. The court is not expected to make any judgment until Monday.

The central bank on Wednesday said that Mr Yunus, the winner of the 2006 Nobel Peace Prize for his efforts to alleviate poverty, had been “relieved of his responsibilities” as Grameen’s managing director for “non-compliance” with the proper process for his reappointment.

The court appeals are the opening salvo in what could turn into a bitter, protracted legal battle over the future control of Grameen, after a hostile campaign against Mr Yunus by the prime minister, Sheikh Hasina Wajed, and her administration.

“It’s possible that, without him, the [bank’s] operation could be threatened,” said a Dhaka-based businessman, who asked for anonymity. “That’s what I would worry about. The reasons he didn’t build a succession plan is that he pretty much micro-managed the whole organisation. That is his biggest failure.”

While the central bank had raised some questions in 2001 about Mr Yunus’ ongoing role as managing director, the Nobel laureate’s supporters say the regulator had not said anything further on the issue, until its sudden letter this week ordering his dismissal.

“He was removed without any notice and personal hearing, which is a gross violation of the basic principles of rule of law and administration of justice,” said Asif Nazrul, a University of Dhaka law professor.

A.M. Muhit, the Bangladeshi finance minister, on Thursday defended the decision to remove Mr Yunus, after a meeting in Dhaka with James F. Moriarty, US ambassador, on the move to dismiss Mr Yunus.

“We knew very well it would tarnish our reputation globally,” Mr Muhit told reporters, after the meeting. “We had to do it in line with the law of the land.”

The US said on Wednesday, after the dismissal, that it was “deeply troubled” by the move against Mr Yunis. Hillary Clinton, US secretary of state, is to meet Mr Yunis on March 8 to discuss the case.

Mr Moriarty told reporters: “It is an unusual way to handle a Nobel laureate who is considered outside the country as one of the greatest Bangladeshis.”

Whatever the legal technicalities, most Bangladeshis, and foreign observers, believe the effort to remove Mr Yunus is motivated by Mrs Hasina’s deep suspicion that the Nobel laureate harbours political ambitions and may use Grameen’s network of 8m borrowers to further these political aims.

Relations between Mrs Hasina and Mr Yunus were poisoned by Bangladesh’s 2007 military coup, when he accused Bangladeshi politicians of only seeking their own self-enrichment, and also briefly toyed with the idea of starting his own political party to clean up corrupt public life.

Since her return to power in 2009 after landslide elections, Mrs Hasina has made little secret of her antipathy towards microfinance, and its famous pioneer, describing micro-lenders as “sucking blood from the poor in the name of poverty alleviation”.

A Norwegian television documentary, which dredged up a long-resolved 1990s tiff between Mr Yunus and Oslo over the use of donor funds, provided the administration the excuse it needed to go after Mr Yunus more aggressively.

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