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by Mahboob Ar Rahman
October 28, 2008
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During October last year, Grameen Phone, a company basically owned by Nobel laureate Muhammed Yunus was fined US$ 25.5 million for illegally operating Voice Over Internet Protocol [Voip] businesses thus depriving the Bangladesh government from huge amount of recevnue. Norweigian telecom company Telenor owns 62 per cent of Grameen Phone shares. GP is the leading mobile phone operator in Bangladesh with over 15 million subscribers.
It has been proved that Grameen Phone did not comply with laws requiring private operators to use the state-owned Bangladesh Telegraph and Telephone Board land phone network for international calls by its subscribers. Grameen Phone used VoIP to receive calls from abroad. Acknowledging that this has caused the government loss of revenue, Grameen Phone has accepted to pay this compensation to the government. But, Bangladesh authorities maintained silence in taking legal action against the master mind of the company for commiting such punishable crime.
Commenting on the incident a high level official with Bangladesh Telegraph and Telephone Board [BTTB], on condition of anonymity told Weekly Blitz that they are reluctant in putting the Nobel laureate into trial dias for such crime as such actions may dampen the image of Nobem Peace Prize itself.
The country's telecom regulator, the Bangladesh Telecommunication Regulatory Commission, and law enforcers jointly launched a crackdown on the illegal practice after the emergency government took over in January 2007.
BTRC filed a case against 10 former and in service high officials of GP including two former CEOs, accusing them of being involved in the illegal activities.
Grameenphone, AccessTel, a local internet service provider, and Malaysia-based international call carrier DiGi Telecommunications are also accused in the case.
BTRC filed the case with Gulshan police station on January 16.
According to the first information report (FIR), the implicated former GP officials are ex-CEOs of the company Erik Aas and Ola Ree, former technical director Thor Randhaug, former chief technical officer Yogesh Sanjeev Malik, and former sales and marketing director Mehboob Chowdhury.
The in service accused GP officials are Khalid Hasan, director of regulatory and corporate affairs, Md Shafiqul Islam, chief technical officer, Kafil HS Muyeed, director of new business, Md Arif Al Islam, director of finance, and Espen Wiig Warendroph, head of revenue assurance.
The January 16 case was a follow-up of an 8-day long Rapid Action Battalion (Rab) raid, which started on December 6, 2007, on the GP head office in Gulshan of the capital. The raid recovered a large number of illegal VoIP equipment.
During the raid Rab officials claimed that they had evidence of GP providing VoIP equipment to AccessTel to run an illegal call termination business. The law enforcers found four circuits of E1 technology that connected the GP lines with AccessTel's.
DiGi Telecommunications was accused as it has a bilateral deal with GP to terminate the latter's international calls. Norway-based Telenor, the major stakeholder of Grameenphone, is also a shareholder of Digi Telecommunications.
BTRC sources said GP terminated international calls through DiGi Tel. GP's earnings from international calls are deposited in Webstein Bank in Singapore. But a considerable amount of the money might have been siphoned off from the bank instead of its dispatch to Bangladesh, apprehends BTRC.
Grameen Phone is the largest private enterprise in Bangladesh. Its net profit in 2006 grew by 55% to $136m on turnover of $656m. Bangladesh is one of the world's poorest countries with nearly half of its 144 million populations surviving on less than a dollar day. The booming mobile phone industry in Bangladesh has emerged as a key driver of the nation's economy, creating nearly 240,000 jobs and adding $650m annually to gross domestic product.
After being caught red-handed, the Bangladeshi controversial Nobel laureate is continuing various attempts in putting the entire blame on Telenor.
According to press reports in September this year, Nobel peace laureate Muhammad Yunus of Bangladesh turned up the heat in battle for control over Bangladesh's Grameen Phone, warning Norwegian co-owner Telenor ASA it may face a lawsuit.
Telenor owns 62 percent of Grameen Phone, Bangladesh's biggest mobile phone operator. Grameen Telecom, a non-profit unit of Yunus's Grameen Bank, owns the rest and insists that Telenor agreed in 1996 to relinquish control within six years.
Yunus, who shared the 2006 Nobel Peace Prize with his bank for lifting millions out of poverty by granting micro-loans, initially pulled no punches on a visit to Oslo.
"Telenor now tells me that it was a mistake to rely on their words," Yunus said in a statement.
He blamed Telenor for sullying the Grameen name and demanded that Telenor pay all of the $60 million in fines saddled on Grameenphone by Bangladeshi regulators for alleged illegalities.
Later he softened his stance at a press conference, saying a lawsuit was only a "remote possibility."
"We are not the kind of people to rush to the courts."
Telenor said it was "very surprised" by Yunus's statement, but repeated that the 1996 deal was not binding.
"In the conflict regarding the ownership of Grameen Phone, Telenor disagrees with Muhammad Yunus that we have an agreement to sell our stake in the company to him," Telenor said. It said that the shareholder agreement stipulated disagreements had to be settled through the Swedish courts.
Telenor shares fell 4.1 percent to close at 77.80 crowns, versus a 2.8 percent drop in the Oslo bourse benchmark index and a similar fall in the DJ Stoxx Telecoms Index.
Yunus urged the Norwegian people to ensure that Telenor, which is 54 percent state-owned, did the right thing.
"I am bringing the case in front of the public opinion court of Norway," Yunus said.
"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," Yunus said.
Grameen Phone claims to have provided mobiles to 300,000 women in villages who earn a living by letting people use the phones. But, according to fact finding investigations it was revealed that such cell phones were sold to poor village women at several fold higher price thus imposing the traditional Grameen Bank styled high interest rate.
Telenor said it was working to ensure that suppliers to Grameen Phone obeyed its rules against the use of child labor and cited Unicef figures showing that child work is extensive in Bangladesh. It said the country had inadequate inspections.
Telenor said it was in "complete agreement" with Yunus that the VOIP issues must be investigated.
Telenor and Yunus both said that listing Grameen Phone on the Dhaka bourse remains a goal.
"The IPO could be this year or next ... At the moment, things are a bit unpredictable," spokesman Dag Melgaard said. He declined to say how much Telenor wanted to own after an IPO.
Yunus said an IPO would be small because the Dhaka stock market could not handle a huge sale of stock and he said it could only be carried out by Telenor selling shares.
In a bizarre twist, Telenor let slip in a botched press release it later retracted that Yunus was wearing a recording device in meetings with Telenor executives. "It's true, and the wire-tapper is right here," Yunus said, pointing to a cameraman accompanying him to make a documentary.
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