An investigative journalist for 20 years, Tom Heinemann has raised some unsettling questions about microfinance and more importantly, about Nobel Laureate Muhammad Yunus, pioneer of the funding model, in his documentary Caught in a micro debt. In this interview, he talks about microfinance and his other documentaries made on sweatshops and violation of labour rights in India. Heinemann believes that he should play the role of a 'pebble in the shoe', constantly asking disturbing questions.

By Asha menon

It was not a question of corruption. But, simply of who decides for the poor and of their right to transparency. Whether they should be expected to trade democratic rights for prosperity? The question was put to Nobel Laureate Muhammad Yunus, popularly known as the Banker to the Poor, on November 30, 2010. It was the day of the world premiere of Danish journalist Tom Heinemann's documentary on the fallout of theYunus initiative in Bangladesh.

The film itself is about the darkside of microfinance, a model which is otherwise associated with "smiling faces" (as Heinemann put it). But a part of the story questions Yunus's motives in transferring funds from the Grameen Bank (the microfinance wing of the Grameen Foundation) to another entity of the Foundation, Grameen Kalyan. Then he went on to borrow the same amount for the Grameen Bank – as a result, it owned a large debt to its own subsidiary. More problematically, Yunus had not informed the Norwegian aid agency, Norad, of the transfer of funds before he did it.

The amount involved was $96 million ($100 million according to the film). Heinemann's story is based on a series of correspondence between the Norwegians and Grameen, dating from 1996 to 1998 -- a decade before Yunus and his Foundation were awarded the Nobel Prize in 2006. Taking political advantage of the revelation, Bangladesh Prime Minister Sheikh Hasina (who fell out with Yunus when he floated a political party before general elections in 2008) has called for a full investigation of a sector that she says "does not lift people from poverty."

Yunus, however, got a clean chit in December. Following a review of processes, Norway's minister of international development Erik Solheim has, in a statement, said there is "no indication that Norwegian funds have been used for unintended purposes, or that Grameen Bank has engaged in corrupt practices or embezzled funds."

The documentary quotes Yunus telling the Bangladeshi media: "If the fund remains in the bank, I'll have to pay a great amount of tax in the future. That's why Grameen Bank informed Norway that the fund had been trasferred."

One of the related documents was a letter written in 1996 by Yunus to the chief of the Norwegian Agency for Development Cooperation (Norad), Tove Strand. Norad had expressed concern at the way Yunus handled funds. Yunus wrote:"I need your help. This allegation will create a lot of misunderstanding within the Government of Bangladesh. If the people, within and outside government, who are not supportive of Grameen, get hold of this letter we'll face a real problem in Bangladesh. Sorry to bring up all these matters to you. But I have no option left."

According to the documentary, a year after this letter, in 1997 the Norwegian Ambassador in Dhaka, Hans Fredrik Lehne, found Yunus' explanation of tax evasion "not particularly credible."

When Caught in a micro debt was telecast on NRK (Norwegian National Televsion), Heinemann says, he was "blown away" by the response among his colleagues in Bangladesh. There has been immense interest in his work. "In just one week, I have articipated in numerous interviews in Bangladeshi media, I have given my response to media worldwide such as the Wall Street Journal, the BBC, Financial Times, The Times and AFP."

Heinemann found the enormous interest "almost absurd" as "hardly anyone (in Norway) understood what was being said in the documentary." He concedes that his movie has been used for political ends. But, "that's not my problem. It's theirs (read politicians)."

Question: What were the documentary team's findings?

Tom Heinemann: Yunus was only a part of the story. Our story is about the reality of the poor people, and how they deal with microcredit - all over the world.

We, of course, knew that the documents (uncovered) were new to the public, and that they told a story that had never been told before.

Question: Was there corruption by any particular person or any organisation in this scandal? Or do you think it was a policy failure?

Tom Heinemann:There was never any mention of corruption in the documentary. In our programme, we have not mentioned one word about missuse of money, nor have we used the C-word. We have shown a stack of documents - kept far away from the public gaze and politicians. This is undemocratic. No matter that they were 12-year-old documents, they tell us a story other than the one we have been told before.

Question: Was the transfer of funds unethical or illegal, as there is this contention that it was transferred to another welfare scheme?

Tom Heinemann: The transfer (of funds) was a breech of the original agreement. There is no question about that. Both Bangladesh and Norway agreed on this. That's why the parties use the word 'compromise'.

Question: What are the unanswered questions?

Tom Heinemann: We have repeatedly asked [Norway and Grameen Bank] the same questions again and again. No one has yet answered the main questions we have asked. Why did both Norad and Yunus decide to keep the transfer of money a secret? What happened from the time when Norad, Norway and Bangladesh said that all the $100 million should be transferred back to the Grameen Bank to when a compromise was arrived at, and only a third of the money was transferred back to GB?

The documentary team had asked these questions repeatedly to Yunus and to the Grameen Bank, but got no reply. We have done this since June/July 2010 and we have sent the documents for comments. We have sent Yunus the written summaries of all the critical voices from the many, many poor people we met in Bangladesh.

We went to Spain and followed Yunus for an hour, but without any luck. He had decided not to talk to us. I can only regret it.

Question: What about the unaccounted for funds?

Tom Heinemann: There is a fundamental difference in what Norad says in their report and what GB says in their report. What we know is that 170 million NKK was transferred back to GB, after pressure from Norway, Bangladesh and Norad. The rest, around 438 million NKK, is still not (for us) accounted for. This is not saying anything about misuse or anything else. We simply have not got proper answers.

The Grameen Bank statement says that all the money was transferred back. But the Norwegian minister of development, Eric Solheim, says that 170 million NKK was transferred back. Both can't be right.

Question: Why did you decide to do a story on microfinance? Is there a growing interest in this sector across the world and if yes, why?

In December 2007, when I was filming 'A Tower of Promises', many people and local newspaper articles pointed me to yet another story that they said ought to be investigated further.

In a village some two hours outside of Dhaka, we met Jahanara who told us a heart-breaking story about her various micro loans from different organisations and banks. She told us that she had sold her house to cover the debts and she told us she took new loans to cover the old ones.

This came as a total surprise to our team. In the West, we had been told again and again about how fantastic microcredit was for the poor. But after listening to Jahanara, I personally felt that we had to investigate this deeper.

There seemed to be an enormous interest in seeing smiling faces in association with the microfinance systems. So far, I had seen only documentaries that hailed microfinance. When I started the research, it was almost impossible to find publications, articles and TVprograms that took a more critical stand. At least, that was the case in the mainstream media. Jahanara's was an untold story and the team had to verify it. So, we met other borrowers with similar problems. Then, we went back to Denmark to finish the critical story on Telenor and Ericsson, and how their towers are made in Bangladesh, before returning to Bangladesh for the new film 'Caught….'

Question: There were complex dilemmas.

Tom Heinemann: The complex thing in the initial research was and is, whether poor people have rights to access to money. I agree partially with the philosophy of microfinance. Poor people must also get a chance to get out of poverty. There is, of course, a lot of people who have gained success with access to loans.

But what about their, often less considered, consumer rights? Why should the poor people in developing countries pay 30-200 per cent in annual interest rate when we can get loans in Denmark down to 2-3 per cent? Why should poor people have their tin-sheet roofs pulled off by loan officers? Do the poor not have any human rights?

We did research not only in Bangladesh, but also in India and in Mexico (where we have filmed).

Question: To what extent has the microfinance model brought change in the lives of people in Bangladesh?

Tom Heinemann: When I look at the United Nations's Human Development Report from 1990, more than 84 per cent of the country's population was below the official poverty line. In 2009, the report said that the figure was over 80 per cent. [Not a significantly huge change.]

Question: In India, currently there is a growing debate about microfinance, which is now being blamed for indebtedness and loss of property to trafficking and deaths. After your film, do you believe that microfinance is the villain it is being made out to be?

Tom Heinemann: In India, there is no doubt that the many suicides in Andhra Pradesh should get the developed world to see the dark side of microcredit / microfinance.

In Andhra, I see a repeat of Jahanara's story. Multiple loans creating nothing but 'pyramiding', leaving poor people hopeless and harassed. The microfinance group members' pressure is terribly humiliating to many people we talked to, who thought suicide was their only option.

Question: Recently, the AP assembly passed the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Bill, 2010. Women's Development and Self-Help Groups' Minister Sunitha Lakshmy Reddy said that this new legislation could help over 10 million women in the villages, who were being harassed by microfinance lending institutions.

Tom Heinemann: I welcome the investigations initiated by the authorities. But the regulations should have been imposed well before the loan sharks found their new market. When someone, in the name of helping the poor, can pocket millions and millions and offers an IPO, there seems to be a long distance between the noble idea and reality.

Question: After producing 'The Killer Bargain', you had issued a strong statement against poor working conditions in India. Could you tell us about some specific instances that you witnessed in Bikaner, Rajasthan's Sanganer and other places?

Tom Heinemann: Young migrant workers from Bihar standing in acid baths up to their waist, bleaching cotton for the European market. Totally unprotected.

Child labour at work in big, dangerous factories in Panipat, providing goods for Scandinavia.

Question: The film 'The Killer…' speaks about cotton farmers depending on excessive pesticides. Which are the banned pesticides (where are they banned?) you found being used in different parts of India?

Tom Heinemann:Other than endosulfan, tons of monocrotophos and five to six other products (banned in Europe) are used in India.

The documentary 'The Killer…'created a huge outcry in Scandinavia.The Danish pesticide company, Cheminova, decided to phase out all its most- dangerous pesticides in all developing countries.

And when it comes to the hazardous working conditions and environmental disasters, for example, in Sanganer, several of the involved Scandinavian companies reacted very positively. New working conditions were introduced and waste-water treatment plants built.

This documentary, 'The Killer Bargain' has special relevance to India, though it was not a direct critique of India. The documentary shows how some companies missused a weak implementation of environmental laws and regulations.

Question: You specialise in investigative journalism. Have you faced threats or legal action from the people you have exposed?

Tom Heinemann: Numerous and almost always. But my facts are mostly okay and so far I have never lost any case - either in court or at the Press Scrutiny Board in Denmark.

Question: Has your job changed your personal choices? For example, have you stopped wearing cotton or using cotton products from India?

Tom Heinemann: No! But I think twice before shopping. I'm certainly not a 'saint' when it comes to being a consumer. But when you can buy three bath towels for US$18 in Denmark, I certainly know that the initial chain of production can't have made much on this 'bargain'.

Cheap products are not the only ones made under horrendous conditions, it's the same with designer goods.

Question: What are the other projects you are working on and more specifically, the ones you are working on, in India?

Tom Heinemann: No Indian project at the moment, but we are working on global issues such as a series on the global climate question and a series on human rights (or lack of same).