The alleged fraud and money laundering case against Muhammad Yunus

On May 30th 2023, the Anti-Corruption Commission (ACC) filed a First Information Report (FIR) alleging  that the Nobel Peace Prize winner Muhammad Yunus was among a group of 13 people who had committed offences of “forgery,” “cheating”, “breach of trust” and “money laundering” under the Penal Code (1860) as well as offences of the Money Laundering Prevention Act (2012). The FIR has now been forwarded to a court under whose jurisdiction the criminal case lies. The ACC is conducting further investigation and is next due to report to the court on January 3rd, 2024.

The offences alleged in the FIR relate to a financial settlement worth Taka 409.69 crore ($37.1 million) that was agreed between Grameen Telecom and its trade union that represented 164 employees who had worked at the company at some time betwen 2010 to 2022. Grameen Telecom, is a not-for-profit company whose chairman of the board is Muhammad Yunus, also the founder of Grameen Bank. The company owns a minority share in Grameenphone, the country’s largest mobile phone company, and uses the dividends it receives through these shares, to fund social businesses.

The other 12 accused in the case include six further board directors of Grameen Telecom, the managing director of the company, three trade union leaders and two lawyers who represented the trade union since 2017.

Background
In the FIR, the ACC makes two key claims. First, that the settlement agreement between the company and the trade union was “fake”. And secondly, using this "fake" agreement, the company's board of directors "colluded" in the "illegal transfer" of as much as Taka 26.22 crore into the bank account of the trade union, and that most of this money was then misappropriated by the trade union leaders and their lawyers. The FIR is complicated and, confusingly, at different points in the document, the ACC claims that the amount of money illegally transferred/ misappropriated was Taka 26.22 crore, Taka 25.22 crore and Taka 1.63 crore.

The background to the FIR has been written up in an earlier Netra News article. The company paid the money to be compliant with provisions of the Bangladesh Labour Act (2006, BLA) that requires 5% of the annual profits of a company to be distributed between the employees of the company and various worker welfare funds — with 80% going to the workers and the remaining 20% to the funds.

The trade union, on behalf of the workers, had first sought payment for the “Workers Profit Participation Fund” (WPPF) back in 2017, but since then Grameen Telecom had consistently rejected it had such an obligation, claiming that as a not-for-profit company, it was not required to pay this money, and that, even if it was, the very significant dividends it receives from Grameenphone should not be considered part of the profits to be “divvied” up.

However, due to over five years of sustained litigation by the trade union , which included an attempt at winding-up the company due to non-payment of its claim, the company decided to pay the money to the workers on the terms required by the legislation. A settlement was therefore signed on April 27th 2022 by the managing director of Grameen Telecom and the president of the trade union.

The settlement itself stated that the company should pay a total of Taka 437 crore ($39.6 million) into a bank account (known as the settlement account), from which each of the 164 workers would receive an amount of money which was dependent on how many years they had worked at the company. This included year-on-year interest at 4%. Money could only be released from the account if signed by a company official named in the settlement agreement, and one of two named trade union representatives.

After the settlement agreement was signed, the company realised that the level of settlement amount had not been accurately calculated and should be reduced from Taka 437 crore to Taka 409.69 crore. This was, it argued, because the Bangladesh Labour Act allowed the company not to pay any interest in the first nine months of each year when the money was initially due to be given to the workers. The company explained this error to the trade union leaders, who agreed with the company that the total amount should be reduced. The subsequent June 2022 Grameen Telecom board minutes state:

"The accounts for WPPF have been calculated from 2010 to 2021-2022. It is stated in the law that the outstanding amount of WPPF for the year must be paid within the first 9 months of the next year. Therefore, to calculate the interest on the pending amount for each year, 3 months have been considered for the next year. But the Workers Union did not calculate this way, instead they calculated interest for the entire year. Therefore, due to mistakes in the Union's calculation of interest, it has been adjusted. The modified total amount of WPPF is BDT 409,69,22,789. According to the contract, the compound interest method was followed to calculate interest."

And so it was — with full agreement from the trade union and its members, and without any complaint — that Taka 409.69 crore was duly distributed.
- Taka 364.62 crore ($33 million) was sent to the different accounts belonging to 156 of the 164 workers (4 of the 164 had died and another four were abroad);
- Taka 20.48 crore ($1.9 million) was sent to the government as tax (5% of the total); and
- Taka 24.58 crore ($2.2 million) was sent to the trade union account for payment for lawyers and union expenses (6% of the total).
This was a total distribution of Taka 409.69 crore. All the money was paid through legitimate banking channels. In addition, a further payment of Taka 1.63 crore was sent from the settlement account to the trade union account. The diagram below sets out the movement of money.

Call for suspension of proceedings
The FIR — along with other labour court proceedings taking place against Yunus — has been subject to strident international criticism.

In early September 2022, the spokesperson of the United Nation Office of the High Commissioner of Human Rights stated that “Yunus has faced harassment and intimidation for almost a decade.” About this case, he went onto say that, “While Yunus will have the opportunity to defend himself in court, we are concerned that smear campaigns against him, often emanating from the highest levels of government, risk undermining his right to a fair trial and due process in line with international standards.”

Perhaps more significantly, a week before the high commissioner's office issued that statement, over 170 global leaders and Nobel laureates, including former US President Barack Obama and former UN Secretary-General Ban Ki-moon, wrote an open letter urging Bangladesh’s Prime Minister Sheikh Hasina to "immediately suspend" the legal proceedings against Yunus and others.

Although the government strongly criticised this letter (and the prime minister Sheikh Hasina claimed that Yunus had “begged” the leaders to write it for him) the prime minister also said that she would welcome international experts and lawyers to assess the legal proceedings and examine documents related to the charges against Yunus.

No experts or lawyers appear to have taken the prime minister up on her offer, so, we sought to collect as much as possible of the documentation relating to the settlement and speak to many of the key actors. Below is our assessment of the allegations.

The “fake” settlement
The first claim the ACC makes in the FIR was that the settlement agreement was itself “fake”. The purported rationale for this is that although the settlement was signed on April 27th 2022, with the document providing the number of a bank account where the money was to be deposited, the actual bank account linked to that number was in fact opened 11 days later on May 8th 2022.

The ACC questioned how an agreement could provide the details of an account number when the account itself had not been set up, with the implication, presumably, that the agreement was actually written and signed after the bank account was opened on May 8th. As a result, ACC claimed the agreement was "fake" and that "in collusion" the company board members used it to "misappropriate" the money "with dishonest intention".

Yet, if one looks at the settlement document it was typed out and a space was left blank in the document for the bank account number to be added later in writing when the account was opened. This is exactly what happened. The settlement clearly shows that the bank details were hand-written into the document at a later date, and initialled. This must have been very apparent to the ACC. There is no reason to doubt that this is a genuine document.

The fraud and misappropriation allegation
The ACC’s central allegation is that, "on the direction of Chairman Professor Muhammad Yunus" as much as Taka 26.22 crore was "illegally transferred" from the settlement account to the trade union account “without seeking the consent" of the employees. The claim here is that this Taka 26.22 crore should have gone to the individual workers, but that it was taken by the trade union leaders and its lawyers, with the complicity of Yunus and the other company directors.

The Taka 26.22 comprises two pockets of money — Taka 24.58 crore and Taka 1.63 crore. We shall look at each of these amounts in turn and consider whether the money was misappropriated from the employees.

The Taka 24.58 crore: Taka 24.58 crore represents 6% of the Taka 409.69 crore settlement amount. The ACC claims that this amount was deducted from the total "without the consent of the workers". The evidence however shows otherwise. On May 24th 2022, each worker signed a letter stating that "I have no objections to ... the deduction of 6% for legal and other expenses for Grameen Telecom Employees Union." A typical signed letter read as follows:

“I am writing to state for the record that I submitted my resignation on 24th May 2022 from my job at Grameen Telecom. According to my resignation letter, my last working day was on 31st May 2022. I have no objections to the deduction of 5% income tax from my WPPF and Welfare Fund, as well as the deduction of 6% for legal and other expenses for Grameen Telecom Employees Union, from the amount that is owed to me at the time of my end of employment, as per the Bangladesh Labour Act 2006. I have received the remaining amount after deductions, through this cheque: cheque number […] dated 24th May 2022, and the amount is BDT 4,10,81,917 (emphasis added)

As the letter makes clear this is money given to the trade union to pay for "legal and other expenses". Below is an image of an actual letter. Netra News has seen many of them.

These letters were signed before the money was sent to the workers which took place between May 25th and June 12th 2022 (according to the ACC's own FIR).

The ACC has been given these letters, so it is difficult to understand how it can continue to claim that this amount of money, Taka 24.58 crore, was misappropriated from the workers. There is also no record of a single worker complaining about this.

The ACC also claims that the settlement agreement states that advocates fees would only be paid "after" the employees were paid their money. However, the settlement agreement does not mention the payment of the trade union's legal fees or when they should or should not be paid.

It is correct that Tk 10 crore out of the Taka 24.58 crore was paid from the settlement account into the union account before these particular letters were signed, however the workers had earlier already agreed a deduction to pay the union's legal fees. In September 2017 when the company employees first instructed lawyers to represent them on this matter, the workers all signed a "memorandum of understanding" committing themselves to paying the lawyers 5% of whatever amount of money they obtained from the company through their litigation. The agreement, signed only by the employees themselves and without any involvement of lawyers, states: "If we win the case (i.e. the verdict of the case is delivered in our favour), we will be bound to provide 5% (five per cent) of the amount received." The union only came into existence later in September 2018

In addition, on April 18th 2022, before any money was deducted, each employee signed a letter confirming that "I delegated full authority to the said union to settle the compromise with the management authority of your organisation on my behalf to recover the amount due to me." It also states ""I will not have any objection if my due money allocated for this fund is handed over to the said union."

It should also be stressed that these deductions were an internal arrangement involving the trade union, its lawyers and the workers. The employees are obviously entitled to give to their union as much money as they agree to. The company and its board members were not involved in this arrangement.

So, in conclusion, Taka 24.58 crore was legally and properly sent from the settlement account to the trade union account on the basis of a request from the trade union and with the consent of the employees whom the union represents.

The Taka 1.63 crore: The second pocket of money (the smaller part of the Taka 26.22 crore) which is alleged to have been illegally transferred to the trade union account is the amount of Taka 1.63 crore. The ACC claims that this specific amount was paid "for illegal gains" and "with a view to getting rid of the cases."

To understand this payment, we need to go back to the original erroneous Taka 437 crore calculation that the workers were owed (not the correct and agreed Taka 409.69 crore sum).

The trade union leaders themselves felt that despite this change, they were owed 6% of Taka 437 crore (the original calculation), not 6% of Taka 409.69 crore. This amounted to an extra Taka 1.63 crore. The leaders insisted that the company give them the additional money in order to finalise all the terms of the settlement.

Although the company would rather not have paid this additional sum, it felt it had little choice as the trade union had filed a winding up petition in the company court, and the union said they would only withdraw the case once the settlement was finalised. So, Grameen Telecom board members agreed to pay it, a decision that was subsequently recorded in the minutes of the board meeting on June 26th. This stated:

After the revision of the interest calculation, the total outstanding amount of WPPF is BDT 409,69,22,789. Each employee has provided their commitment letter instructing to deduct 6% from their payable amount to pay to the Grameen Telecom Workers-Employees Union (CBA) and the Union has been paid  according to this instruction. In the agreement, the amount that the parties agreed to settle for is BDT 437,01,12,621. The Grameen Telecom Workers-Employees Union (CBA) is demanding an amount equal to 6% of the amount agreed upon in the Settlement Agreement. In this regard, discussions were held with Barrister [...]. He has stated that he will not comment on the percentage; it is not his concern. However, both parties have agreed to the amount mentioned in the Settlement Agreement. According to the demand made by the Grameen Telecom Workers-Employees Union (CBA), an excess amount of BDT {(437,01,12,621 X 6%) - (409,69,22,789 X 6%)} = BDT 1,63,91,389 has been paid [to them].

However, this payment can only be considered to have been illegally transferred or misappropriated if it constituted money to which the employees were entitled and was instead given to the trade union — as the ACC seems to be suggesting. This however is not the case. It was not deducted from the Taka 364.62 crore that was owed to the employees, all of which was sent to the different accounts belonging to 156 workers. Instead, the money was deducted from the approximately Taka 28 crore that remained in the settlement account — the difference between the originally deposited Taka 437 crore and Taka 409.69 crore. This money was due to be returned to the Grameen Telecom’s account since it was in excess of the final settlement.

While it would certainly have been less messy had the trade union not asked for the extra Taka 1.63 crore, the key point is that this was not money that the individual workers had been entitled to and so there was nothing improper in the payment. Grameen Telecom is a private company and it can technically pay the trade union however much money it wants, as long as it did not come from funds that were supposed to be paid elsewhere. And since the workers were not entitled to this money, there was no need for the workers to agree for this payment to be made.

So, in sum, Taka 24.58 crore was quite properly deducted (from the amount due to the workers) and transferred into the trade union account so that it could be used to pay their expenses. And the additional Taka 1.63 crore payment was not deducted from money that should have been given to workers. There is no question that any "criminal offences were committed.

Payments made from the trade union account
In the FIR, the ACC makes a series of allegations about what subsequently happened to the Taka 26.22 crore (comprising as we have seen the 6% worker deduction of Taka 24.58 crore and the additional payment of Taka 1.63 crore).

Before discussing this, one should note that what happened to this money has nothing to do with Grameen Telecom for very simple, straight forward reasons. The company — and its directors — had completed their responsibility in paying the correct amounts of money to the workers; a total of Taka 364.62 crore distributed directly to the union members, after having deducted with the consent of the workers, 5% for tax (Taka 20 crore) and 6% as  legal and administrative fee to the union (Taka 24.58 crore). Once this has been paid, the company/directors have no control of, or responsibility over, what then happened to the money put into the trade union account.

Nonetheless, since the ACC is seeking to link the Grameen Telecom directors to this money and claiming it was embezzled, it is important to discuss it.

Legal fees: First, there are the legal fees. It has already been mentioned that in 2017 the trade union employees signed a certificate agreeing to pay the union lawyers 5% of any money they received. The agreement, titled “Certificate of the joint agreement regarding the case on the Company’s Net Profit Share and Terms of Employment at the Labour Court” was signed by 79 workers who were at that time working at the company. It stated:

4. To bear the legal costs for the case, a fund will be created by collecting an equal amount of money from everyone, that will be used to bear the actual cost to fight the case, trade union-related costs and other miscellaneous costs.

5. If we win the case (i.e. the verdict of the case is delivered in our favour), we will be bound to provide 5% (five per cent) of the amount received.

Five years later, in April 2022, the law firm won the case, and Grameen Telecom agreed to pay Taka 409.69 crores to the 164 workers. From the perspective of the union, workers and their lawyers, this was an extraordinary success. 22 workers would obtain more than Taka 4 crore ($363,000) (and another 44 workers more than Taka 3 crore ($272,00). These are life changing sums of money in Bangladesh.

With the settlement complete, the lawyers needed to be paid, and they invoiced the union for Taka 16 crore ($1.5 million). While this might seem like a large sum of money for legal fees in Bangladesh, it is in fact less than 4% of Taka 409.69 crore  — indeed less than the 5% agreed in the 2017 agreement. Had the lawyers insisted on being paid 5% of the settlement money, the fee would have exceeded Taka 20 crore.

The lawyers were not only paid for the work involved in negotiating the final settlement for 164 separate clients, but for all the legal work they undertook over a five-year period since 2017 that ultimately led to the settlement. This included litigation in four separate cases on behalf of many of the workers in the labour and High Court and one particularly voluminous case in the company court.

Bangladesh’s Bar Council, “Canons of Professional Conduct and Etiquette” states that in determining their fees, a lawyer not only can take into account “the time and labour required, the novelty and difficulty of the questions involved and the skill requisite properly to conduct the case” but also “the amount involved in the controversy and the benefits resulting to the client from the service.” (emphasis added)

The ACC claims that only 1 crore taka was disbursed as fees for lawyers. The FIR does not explain in any detail why it believes this to be the case, stating only that this is "according to the description". However, this cuts across all the evidence above. In addition, below is one of the two letters the trade union sent to the bank seeking transfer of the money that the lawyers were owed. The letter says it is issued, "as part of the lawyer fee for legal services."

While many lawyers — and indeed others — may be envious of this pay check, there is nothing inappropriate about it, particularly as, had the union lawyers not obtained a settlement with the company, they would not have received the fees. Moreover, it is difficult to see how legal fees can be the subject of criminal investigation, let alone prosecution, if all the parties involved have no concerns. If this case was a precedent, then it would be a crime for lawyers in Bangladesh to receive large fees for their work.

The union administrative fee: Next, there is the question of what happened to the remaining Taka 10.22 crore ($927,000) - out of the Taka 26.22 crore. This was supposed to pay for all the work the trade union had undertaken over the years in relation to this case. The FIR claims that three union leaders transferred all or most of this money to their personal accounts.

The trade union leaders are not, it seems, disputing that they took money from the trade union account and put it into their personal accounts. Sources close to the trade union leaders however say that they did not intend that the money be used for their personal use, but to set up a new business for all the employees who had all now resigned from Grameen Telecom. According to these sources, the union leaders put the money into their personal account as the leaders had to close down the trade union, along with its bank account, as part of the settlement with the company. This meant that the union leaders had to transfer the money out of the union bank account to another account. Since at the time they did not have a new bank account for their new business, they transferred the money to their private accounts.

Whatever the truth of all this, if indeed the union leaders did misappropriate the money, this is not a matter for the ACC but the Bangladesh Labour Directorate to prosecute as it enforces a provision within the Bangladesh Labour Act specifically dealing with such a situation. It states

“If an officer or employee of a trade union of workers or employers misappropriates or embezzles or spends to his own use with bad intention any money of the trade union fund, he shall be punished with imprisonment for a term which may extend to 1 (one) year and shall also be liable to fine.”

And section 298 (3) provides the power through this prosecution to ensure the reimbursement of that money.

However, more significantly, if the trade union leaders did misappropriate the money, this has absolutely no connection at all with the Grameen Telecom directors or indeed the trade union lawyers.

ACC’s lack of factual foundation
This allegation depends entirely on the notion that the company and its directors colluded in the misappropriation of money that should have been given to the employees. However, as explained above, there was no improper expropriation since:
(a) The employees received all the money to which they were entitled;
(b) Grameen Telecom did not give to the trade union any money that should have been given directly to the employees; and
(c) the employees agreed in writing to all deductions that were taken from their money in order to pay legal and administrative expenses.

There can therefore by no question that Grameen Telecom directors have committed the alleged offences of “forgery,” “cheating”, “breach of trust” or “money laundering”. The same can be said for the trade union lawyers.

What particularly does not add up about these allegations is what could have been the motive for the company directors in getting involved in any criminal scheme alleged by the ACC? As we have seen the settlement was hugely to the advantage of the workers, who all became Bangladesh millionaires. The company had agreed to settle with the workers on financial terms which was in compliance with the law, and on the basis that the workers wanted. The employees got everything they wanted. What interest could the company or its directors have in a criminal scheme in which they would receive no personal or corporate benefit at all?

If the trade union leaders did misuse the Taka 10 crore money that was given to them — and this article does not seek to conclude whether they did or did not — this is not the responsibility for Grameen Telecom or its directors. Moreover, if there is evidence that they have misused the money, it is not a matter for the ACC but for the Bangladesh Labour Directorate (not the ACC) to prosecute the trade union leaders under section 298 (3) of the BLA.

In any democratic state with rule of law, the presence of a specialised anti-corruption body should mean an enhanced level of protection against corruption. This case is an example of how in Bangladesh, compliance with the law can sometimes be just as dangerous as not complying.

Correction: Some of the US dollar conversion figures have been corrected. In addition, the text has been amended to make clear that the agreement in 2017 should be described as a "Memorandum of Understanding", and was an agreement amongst the workers themselves, and the union lawyers were not a party to it. The union only came into existence in September 2018 after this memorandum was signed. A correction was also made to the date of the settlement. It was April 27th 2022 not 2023. Also other dates have been corrected to 2022, not 2023.