Grameen founder Muhammad Yunus in Bangladesh aid probe

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By Ethirajan AnbarasanBBC News, Dhaka

Norway says it is examining reports that Nobel Peace Laureate Muhammad Yunus allegedly diverted millions of dollars of aid money from a bank.

International Development Minister Erik Solheim said that it was "totally unacceptable that aid is used for other purposes than intended".

A documentary maker has alleged that cash was diverted from Professor Yunus' Grameen Bank to other parts of Grameen.

In a statement, the bank said that the allegations were false.

It said that a full explanation with more details would be provided at the "earliest convenient time".

The bank was set up by Professor Yunus to provide micro-credit - or small loans - to the poor.

The move by the Norwegians - who insist that no criminal activity has taken place - comes at a time when the reputation of the micro-credit industry has been under attack.

The original aim of the micro-credit concept was poverty reduction, but in recent years some micro-financial institutions have been criticised over exorbitant interest rates and alleged coercive debt collection.

In the south-eastern Indian state of Andhra Pradesh, for example, micro-loans have been blamed for a series of suicides among struggling farmers.

It is estimated some 250 organisations in the state have handed out loans totalling more than £1.65bn (£883m), only a small proportion of which have been paid back.

Objections

The Grameen Bank's denial followed the release of a documentary by Danish filmmaker, Tom Heinemann, who claimed Professor Yunus and his associates diverted nearly $100m of grant money to another company - Grameen Kalyan - which was not involved in micro-credit operations.

Mr Heinemann said he stumbled upon the documents and letters relating to the alleged transfer while doing research for his documentary on micro-credit.

"I got most of the documents from the archives of Norad, the Norwegian aid agency in Oslo," he said.

The Grameen group of more than 30 companies headed by Professor Yunus is divided between those not operating for profit and those which do.

Mr Heinemann's report alleged that after the Norwegian authorities raised objections to the alleged transfer of funds, the Grameen bank returned about $30m. The aid money was from Norway, Sweden and Germany.

Professor Yunus, known as the Banker to the Poor, and the Grameen Bank were awarded the Nobel Peace Prize in 2006 "for their efforts to create economic and social development from below".

Replicated model

The economist founded the bank, which is one of numerous organisations now providing loans to the poor - especially women - in Bangladesh.

The micro-credit lending model has been replicated in other parts of the world.

Reacting to the latest report, the Norwegian authorities say they have no suspicions of tax fraud or corruption committed by Grameen Bank.

"Having said that, the Government of Norway finds it totally unacceptable that aid is used for other purposes than intended no matter how praiseworthy the causes might be," Norwegian International Development Minister Erik Solheim said in a statement e-mailed to the BBC.

Mr Solheim said that he had asked the Norwegian Agency for Development Co-operation for a full report on the matter.

"At the same time it is important to stress that we are firm believers in micro-finance as a tool in the fight against poverty," he said.

The documentary "Caught in Micro Debt" was shown on Norwegian National Television earlier this week.

"I travelled to Bangladesh, India and Mexico to find out whether micro-credit loans have really helped the poor. But I found out that poor people are getting into more and more debt because of micro-credit loans," Mr Heinemann told the BBC.

He said that he was not accusing Professor Yunus of misusing the money or personally benefiting from the transfer.

Norway lambasts Ban Ki-moon

A confidential memo from the Norwegian UN ambassador fails Ban Ki-moon as Secretary-general of the United Nations.

A confidential memorandum from Norway’s United Nations Ambassador Mona Juhl to her government delivers a hefty broadside at UN Secretary-General Ban Ki-moon saying that he is ‘battling to show leadership’ and that he is conspicuously absent in discussions about broad solutions to global crises.

The confidential memorandum, which was given the Highly Confidential stamp at Norway’s foreign ministry, has nonetheless been leaked to and published by one of Norway’s leading newspapers, Aftenposten.

Burma
Juhl says that the United Nations is having difficulty in entering the environmental agenda and that Ban’s leadership has been minimal during the global financial crisis.

“At a time when the United Nations and the need for multilateral solutions to global crises is greater than ever, Ban and the United Nations are conspicuous in their absence,” says Juhl.

Political crises are not Ban’s cup of tea either, says Juhl adding that his recent visit to Burma was a clear example of a lack of leadership and inability to deliver on behalf of the United Nations.

“ After a seemingly fruitless visit (to Burma) by the Secretary-General, the United Nations ‘good offices’ will be made even more difficult. (United Nations Special Representative) Gambari will have major problems after ‘the top man’ has failed and the generals in Rangoon will no longer meet him,” says Juhl.

Sri Lanka
Juhl says that another example of Ban’s weakness was the war in Sri Lanka, where she says Ban was a helpless observer as thousands lost their lives and were driven from their homes.

“The authorities in Colombo refused to receive the Secretary-General during military operations, but he was invited – and accepted an invitation – as soon as the war had been ‘won’,” Juhl says adding that Ban’s ‘moral voice and authority’ have been lacking.

Bland one-term SG
“Common to all of these issues is that a bland Secretary-General lacking charisma cannot be compensated for by high-profile and visible aides. Ban has general chosen special representatives and secretariat chiefs who don’t make much of an impression either – apart from Afghanistan,” Juhl says.

“As you know (Ban) was a conscious choice by the then American administration that did not want an active secretary-general, nor has the current U.S. administration signalled a changed attitude to Ban – although there are rumours that people in Washington are now calling Ban a ‘One-term SG’,” Juhl says adding however, that China is happy with Ban and holds the key to his possible re-election, while Russia is displeased with his handling of Kosovo and Georgia.

General displeasure
The Norwegian ambassador says that most other nations are increasingly negative towards Ban, who is half way through his term.

“Of the many who felt he should be given more time, that he’d get better after warming up and that comparisons with his predecessor’s charisma were unjust, the tone is now that the learning potential has been used up and that (his) lack of charisma is, in fact, a problem,” Juhl writes adding that Ban is given over to fits of rage that even sober-minded and experienced employees are finding difficult to tackle.

No comment
Norway’s Foreign Minister Jonas Gahr Støre has declined to comment on the memorandum.

“It is something that we have noted,” Gahr Støre tells Aftenposten.