Dhaka Jan 04 (bdnews24.com)—A Chittagong-based packaging company appointed Grameen Bank as its managing agent in a deal, dating back 20 years, giving the poor borrowers' bank a job having nothing to do with its core business.
Muhammad Yunus signed the deal for Grameen Bank, granting the microlending entity all rights—just ownership aside—to run and manage the packaging business.
His father, Muhammad Dula Meah Saodagor, represented Packages Corporation as its managing director, in an apparent case of conflict of interest. He along with his sons owned the company incorporated in 1961 as Pakistan Packages Corporation.
The family still owns the company, and Yunus still sits on the board as a shareholder director, according to documents obtained by bdnews24.com.
Signed on June 17 1990, the contract was initially valid for 15 years. Three of Yunus' brothers—Muhammad Ibrahim, Muhammad Azam and Muhammad Jahangir—signed as witnesses to the contract between the father and the son who would secure a Nobel peace prize 16 years later.
In 1997, the management of the packaging business was handed over to Grameen Shamogree, a sister concern of Grameen Bank.
"The handover," Grameen Bank deputy managing director Nurjahan Begum said in response to bdnews24.com queries sent to Yunus, was executed "with consent of the owners" of Packages Corporation.
The Grameen Bank managing director has evaded bdnews24.com requests for a face-to-face interview.
Under the 1990 deal, Packages Corporation was allowed to deploy Grameen Bank employees and managers, to be sent on "deputation" from the Yunus-run non-profit, to boost dividends for the family business.
Grameen Bank told bdnews24.com that six managers or executives had gone on "deputation" so far.
The deal also created room for Grameen Bank to invest in Packages Corporation. According to the contract, such investments would be considered as loans given by Grameen Bank to the business.
The Bank said on Monday it did not lend any money to Packages but that Social Venture Capital Fund (SVCF) of the Bank gave the loans.
The SVCF fund channelled to Packages until 1993 amounted to Tk 30 million, the Bank told bdnews24.com.
For the last 17 years, Grameen Fund has been lending Packages Corporation. The Grameen Bank responses to bdnews24.com queries did not include the loan figures after 1993.
Grameen Bank was given the right to hire new employees for Packages Corporation "to efficiently conduct production and commercial operations" but the family company would be under no compulsion to retain such employees once the contract ends.
The agreement clearly stated that the deal would not change the ownership of the company, of which Yunus, other siblings and father were shareholders. After his father's death, brother Muhammad Ayub took over as managing director of the Packages Corporation.
The 1990 agreement appointed H I Latifee, the then associate professor and chairman of the economics department at Chittagong University, as the arbitrator.
Four years later, in 1994, Latifee joined Grameen Trust, a sister concern of Grameen Bank, as managing director.
Latifee has headed Grameen Trust, touted Grameen Bank's international arm, for the last 16 years. It could not be known if he still would arbitrate in case of a dispute between the Bank and Packages Corporation.
Grameen Bank has said there has been no dispute so far.
Latifee, as a student, was a contemporary of Yunus at Dhaka University and, as a teacher, at Chittagong University where the Grameen Bank founder also taught economics before General H M Ershad facilitated the launch of the microfinance outfit in 1983.
According to the 1990 contract, after-tax profits—as well as losses—would be shared equally between the Packages Corporation and Grameen Bank (50:50).
Neither party, however, would pay in cash to spilt losses. Any losses, says the contract, would be adjusted against profits in the following years.
DONATING EARNINGS FROM GRAMEEN BANK
The contract further says that any profits generated from any printing work done for Grameen Bank would be diverted to Grameen Trust. Such profits would be calculated in consultation with the Trust.
Grameen Bank said on Monday that no money had been donated in the last 20 years to Grameen Trust.
"There's been no question of sharing earnings since Packages could not accumulate any profits, and there's been no chance for Grameen Trust to receive any donation," Grameen Bank said in a written response to bdnews24.com.
In 2009, Packages Corporation made Tk 2.4 million in net profit. In 2008, the profit figure was Tk 3.7 million.
The company has been making money quite steadily since 1998, barring two lows in 2000 and 2002 when it lost money, according to figures provided by Grameen Bank.
The Bank claims the accumulated losses for Packages at the end of 2009 was Tk 14 million.
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