Yunus eyes lawsuit for GP control

We Expect Telenor to Honour Its Written Intentions, Law of Bangladesh, and the High Ethical Standards Demanded By the People of Norway

In 1996, with great hopes and excitement we, as Grameen Telecom, partnered with Telenor to launch a mobile telephone company, Grameenphone, in Bangladesh. The purpose of the telephone company was to bring telephone services in the rural areas of Bangladesh and to empower poor rural women by turning them into “telephone ladies.” The telephone company became a successful company in terms of rapid growth and high profits, but the partnership between Telenor (62% shareholder) and Grameen Telecom (38% shareholder) has become difficult. Telenor is effectively running the joint company and has been in charge of the management from the beginning.

Both Telenor and Grameen Telecom seek to maintain and expand the growth and the profits in the phone company, Grameenphone. The agenda of Telenor to maximize returns for the benefit of its owners is, however, in conflict with the social and non-profit agenda of Grameen Telecom.

The differences between Grameen and Telenor relate to business ethics and corporate governance. Grameen follows strict business ethics. Telenor knew this when we became partners. Telenor knew we expected strict business ethics to apply to any organization or entity we participate in and that we as a non- profit organization rely on the statements of our partners. Unfortunately, the telephone company recently has been criticized for labor violations by its contractors, for violation of environmental law and for engaging in illegal telecom activities in Bangladesh. Journalists have recently revealed cases where children have been working for the subcontractors of Grameenphone. On September 4, 2008, the Norwegian state-owned television NRK released pictures of children under 14 years who are building parts for Grameenphone cell phone base stations. The pictures are, according the NRK’s homepage, taken at Gazi Engineering in Dhaka, Bangladesh. The pictures document children who are working with welding apparatus without any protection. Grameen and I can not be identified with this.

Bangladeshi authorities on two different occasions found that the telephone company was not in compliance with Bangladeshi law. In total, the company was fined US $60 million. US $60 million is a huge amount of money. In Bangladesh, USD 60 million is enough to pay for over 2 million cataract eye operations, giving that many people their sight back. It is enough to educate over 500,000 girls for one year.

The breach of Bangladeshi law imposed a risk of loss of the company’s license as telephone operator. Furthermore, I personally have been condemned by the Bangladeshi media for this violation of Bangladeshi laws and have been accused of making illegal money. All this while I devote myself to upholding a high ethical standard. The people of Bangladesh know the phone company is a “Grameen” Company and the phone company thus must stand for the values the Grameen name promotes. The people do not understand that Telenor runs the company and that Grameen Telecom hardly has any effective say in the company operation.

Grameen Telecom and I have not yet been given all the facts we need to have a complete understanding of the alleged illegal activities. However, those activities should be fully and independently investigated and disclosed. We want the majority shareholder Telenor to authorize complete transparency in all these matters, including the release to the public

of the shareholders agreement and all investigations of the alleged charges. We cannot allow the Grameen name to be tarnished directly or indirectly by inappropriate operations.

We recently have received the police report from the authorities’ investigation of the illegal activities. Another company, a Malaysian-based company named DiGi Telecom Ltd., is accused of contributing to the illegal activities. DiGi Telecom also is accused of laundering money through an account in Singapore. DiGi Telecom Ltd is owned 61% by Telenor. The police report includes severe information regarding Telenor’s involvement in the activities, and states, “It can be perceived to the committee members that the majority shareholders of Grameen Phone Ltd are involved in encouraging the illegal VoIP business in the international field.”

The reputation of Grameen and the hard and honest work of its now 300,000 telephone ladies have been an important factor in the success of the phone company in Bangladesh. The telephone ladies became internationally acclaimed as successful entrepreneurs through mobile technology, and Telenor reaped financial benefits from this. Now the goodwill the Grameen name provides to the telephone is being undermined by these alleged illegal activities.

Back in 1996, Telenor and we agreed that the joint company within six years should be a locally operated company with Bangladeshi management and Bangladeshi majority ownership. This has not happened. Telenor is unwilling to let go control of the company. We now are being told that the words of the written agreement in a legal sense are non-committing statements. We relied on the words of the agreement.

We believed in the agreed intentions of the parties. We believed in business ethics and generally accepted company government rules of conduct. We believed that a Norwegian public listed company, controlled by the Norwegian government, a government supportive to the poor people of Bangladesh, would do as agreed. Telenor now tells me that it was a mistake to rely on their words.

The recent activities in Bangladesh leave me with little alternative other than to investigate the possibility of taking legal action to protect the interests of the millions of poor people in Bangladesh who stand behind Grameen and who will be the ultimate beneficiaries if the phone company comes under Bangladeshi ownership and management to become a company with social objectives. Although Grameen Telecom will see that social objectives will be implemented in the management of the phone company, Grameenphone, it will seek to maintain and expand the growth and the profits in the phone company. The poor people of Bangladesh, through Grameen Telecom, will benefit from the ownership in and dividend from Grameenphone. I remain hopeful, however, that such legal action will prove unnecessary because the owners of Telenor will require the company to honor the intention it expressed in 1996 to transfer ownership and control of Grameen Phone to the poor of Bangladesh. In light of the recent alleged illegal activity, that transfer should now occur as soon as possible before further damage is inflicted on the Grameen name.

I am very optimistic about the eventual outcome of this controversy because it is really in the hands of the people of Norway, whom I have come to know and trust. Norwegians set a very high standard for business ethics, and they are the majority owners of Telenor. I am confident the people of Norway will see to it that the companies that they own and

control honor their written intention, in all cases, and especially when dealing with the poor women of Bangladesh.

Source: http://www.bdnews24.com/upfile/yunus.pdf