The commission on Grameen Bank has recommended that the licence of Grameenphone be suspended immediately, as the country's largest mobile operator was not a party to the 1996 licence agreement.
"The commission has requested that Grameenphone Ltd mobile telecommunication licence be suspended immediately. But as this is an ongoing enterprise it should not be allowed to cease operation," said the Grameen Bank Commission in its interim report.
The government-sponsored body that has come under criticism for its ineffectiveness submitted the report to the finance ministry last week.
The report said the licence may be given to a trust or be issued against Grameen Telecom, as it was once responsible for providing bid bonds and financial guarantee under a Memorandum of Understanding, and was also the substantial Bangladeshi party to the licence.
The commission said if the government desires to let GP continue operation it may consider doing so only if Telenor agrees to transfer 16 percent of its shares immediately and unconditionally to either Grameen Telecom or Grameen Bank.
The report said the transfer of shares should be made effective from 2002, when Telenor was supposed to reduce its shares to 35 percent. And all benefits should also be accrued from that date.
The commission estimates that these changes alone should bring at least Tk 6,000 crore for Grameen Bank and its landless and poor members, mostly rural women.
Grameen Telecom along with Norway-based Telenor and New York-based Gonophone signed a non-binding Memorandum of Understanding on November 5, 1996.
This group named itself Grameenphone Consortium to bid for a digital mobile telecommunication licence.
The MoU stated that the three groups would be shareholders in the venture with 44.5 percent for Grameen Telecom, 51 percent for Telenor and 4.5 percent for Gonophone.
According to the agreement, after six years of operation, Telenor was supposed to reduce its share to below 35 percent and that Grameen Telecom would have the right of first refusal to these shares.
The licence agreement between Grameenphone Consortium and the government was signed on November 11, 1996 and the licence was issued against Grameenphone Consortium on November 28, 1996.
There is no reference to Grameenphone Ltd in the licence, said the four-member commission.
Grameenphone Consortium started mobile communication operation on November 26, 1997.
The Grameenphone Consortium agreement with the government was amended on March 8, 1999, through which Grameenphone replaced Grameenphone Consortium.
"It turns out that the government made a serious error in accepting the bid of Grameenphone Consortium for mobile telecommunication licence. The MoU was non-binding on the parties and had not been registered."
"In fact, it was not a legal entity and therefore Grameenphone Consortium could not have bid and should have had their offer rejected right away," said the commission.
The report said the Grameen Telecom, Telenor and Gonophone have apparently committed a serious crime by “an illegal statement” in the agreement between the government and Grameenphone Consortium dated November 11, 1996.
They stated that Grameenphone Consortium was a registered organisation and a company registered under the Companies Act, when this was not the case, said the commission.
"This makes all three of the parties to the MoU liable and subject to legal proceedings. They have knowingly induced the government to sign an agreement under patently false pretences," said the report.
The commission said the amendment to the 1999 contract was in violation of the terms of the agreement and seems to have been malafide according to the records.
It said the agreement clearly stipulates that the mobile licence is not transferable and that any change to the terms of the agreement can be made only if it is initiated or requested by the first party (the government) and not by the second party (Grameenphone Consortium).
"The records of the government do not indicate that this request for a change to the terms of the agreement was made or initiated by any government entity. The change was sought by Grameenphone Ltd which was not even a party to the agreement and should have been rejected outright."
"The change itself amounted to a transfer to another entity, which is also a violation of the agreement of November 11, 1996," said the commission.
Grameenphone's comments on the matter were not available.
In May last year, the government formed the commission to review the activities of Grameen Bank and the 54 legally independent organisations bearing Grameen names, and make recommendations on how to run the organisations.