Nobel laureate Prof Muhammad Yunus Centre refutes Finance Minister’s Muhith comments

The Yunus Centre yesterday contradicted the finance minister’s recent comment that none of the social business organisations set up by Nobel laureate Prof Muhammad Yunus has any institutional foundation. It said all the social business companies are registered with the office of the Registrar of Joint Stock Companies and Firms, and have all relevant permissions and licences to operate.

The following is the Yunus Centre’s response to some of the claims the minister made about social business, its future and Grameenphone on Sunday.

The finance minister’s remark: None of the social business organisations have any institutional foundation.

Response: All of the social business companies are registered with the Registrar of joint stock companies and have all the relevant permissions and licences from the government ministries, agencies, and regulatory authorities to operate. All social businesses companies hold their regular board meetings and are audited externally on an annual basis. They all pay taxes regularly. The GB Inquiry Commission is in possession of all documents from Grameen social businesses and can verify this easily.

The minister’s remark:  We do not know what will happen when Prof Yunus leaves these institutions.

Response: The social business organisations have all been founded by Prof Yunus. Each company has its own separate management structure, headed by its CEO and his/her competent staff. These companies will continue to operate according to the by-laws of each company, on the basis of which they were formed, into the future, as is the case for all companies that operate in the land.

The minister’s remark:  Prof Yunus is also making social investments like selling yoghurt for improving public health status but these are mainly non-profit ventures.

Response: Grameen Danone produces and sells fortified yoghurt for reducing malnutrition among children. Like other social businesses this is also a for-profit business where the owners never take out any dividends, except to recoup the initial invested amount.

It is wrong to say that “these are mainly non-profit ventures”, because they are for-profit ventures where owners don’t take any dividend by their own choice.

All the social business companies are profit making companies. In a social business, the investors/owners only recoup the money initially invested by them, but cannot take any dividend beyond that point. Purpose of the investment is purely to achieve one or more social objectives through the operation of the company; no personal gain is desired by the investors. That is the basic concept of social business.

Many companies founded in earlier years by Prof Yunus were designed as section 28 companies, which do not have owners. These are companies limited by guarantee. These do not fall in the category of social business since they don’t have any owners.

The minister’s remark:  Prof Yunus had spent all the dividends from GP in the social business companies.

Response: Grameen Telecom, not Prof Yunus, has received profits from GP, as owner of GP. Grameen Telecom donated this money to Grameen Telecom Trust. The trust has invested some of this money, not spent, in social business companies that aim to help solve specific social problems faced by the poor people, especially women.

The minister’s remark:  But when Dr Yunus established GP he said all of its profits will go to Grameen Bank (GB). But GB did not get any benefit.

Response: GP never had any agreement with the government to give away money to anyone. The government gave telephone licence to GP, not to Prof Yunus. If government had wanted to put any pre-condition for license, this would have had to be incorporated in the licence agreement, and the government could sue the company if they violated any such condition.

To our knowledge no such pre-condition was ever discussed let alone imposed.  If any pre-condition exists beyond our knowledge, government should sue GP, instead of making complaints about violation.

The minister’s remark: I think in the last 20 years GB has got at best Tk 200 crore from GP. The rest went to social investment projects.

Response: Grameen Bank does not own a single share in GP. Since GB is not a shareholder of GP, why would GP give any money to GB, leave alone Tk 200 crore. Grameen Telecom receives the dividend from GP, as part owner of GP. It did not receive this money from GP as a favour.

The minister’s remark:  The in-charges of these companies have all been hand-picked by Prof Yunus.

Response: All the heads of Grameen companies are appointed by the board of each company according to the company laws. These are all recorded in board decisions.

The minister’s remark:  Prof Yunus’ recommendation to raise the wage of garment workers in Bangladesh in line with international standards is unrealistic.

Response: Prof Yunus’ proposal is to create international minimum wage for each garment exporting country, by the international buyers, individually, or in groups, or collectively, on a voluntary basis, so that element of exploitation of poor workers is removed. He proposed that 50 cent per hour could be an acceptable level of such international minimum wage for Bangladesh.

Prof Yunus did not ask the government or anyone else to “impose” such minimum wage. He is campaigning for voluntary acceptance of the concept of international minimum wage by the buyers. The idea has been lauded internationally, as a practical solution to the existing exploitative wage in an international sector of business.