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Al-Jazeera Reporter Asks about Shariah-finance

The Dangers of Shariah-compliant Finance in the USA

Idiots in the Banking Sector Eager to Play Dhimmi
THE STAR: A controversial study looking at Islamic banking by the Canada Mortgage and Housing Corp. has ignited protest from some sectors of the Muslim community.

But despite opposition from the Muslim Canadian Congress, the federal housing authority said yesterday it is going forward with the study looking at banking that adheres to Islam's guiding body of rules, or sharia.

Tarek Fatah, founder of the Muslim Canadian Congress, which bills itself as a progressive Muslim group, said in an interview he was "shocked" to learn that "a Crown corporation is using taxpayers' money" for faith-based banking.

Fatah calls sharia banking the "biggest con job ever. What are we going to have next, Buddhist banking?" he asked.

The congress released a letter yesterday written to CMHC chief executive officer Karen Kinsley, urging the housing authority to abandon the $100,000 study.

"Religion has no place in the banking or mortgage industry," the letter said.

The group says the vast majority of Canadian Muslims already use conventional mortgages. Muslim leader calls sharia loans a `con job': Congress wants CMHC to end its banking study >>> By Tony Wong and Tonda Maccharles

Mark Alexander (Paperback)
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Banks are Helping Sharia Make a Back-Door Entrance
GLOBE AND MAIL: It seems only yesterday that Premier Dalton McGuinty declared: "There will be no sharia law in Ontario." Many of us, who witnessed the medieval nature of manmade sharia laws in our countries of birth, heaved a sigh of relief back in September of 2005. We thought this was the end of the attempt by Islamists to sneak sharia into a Western jurisdiction. We were wrong.

The campaign to introduce sharia is back. Last time, the campaign took a populist approach, invoking multiculturalism. This time, the pro-sharia lobby is dangling the carrot of new niche markets and has the backing of Canada's major banks. Such icons of the corporate world as Citibank NA, HSBC Holdings PLC, and Barclays PLC have endorsed sharia banking and have started offering Islamic financing products to a vulnerable Muslim population.

In May, 2007, The Globe reported that "Several Canadian financial institutions are preparing sharia-compliant mortgages, insurance, taxi licensing and investment funds to help serve the country's fastest-growing part of the population." Recently, the Toronto Star's business section reported that an unnamed bank may offer sharia loans as early as this summer; Le Journal de Montreal disclosed that Canada Mortgage and Housing Corporation (CMHC) was also getting in on the act. Stephanie Rubec, spokesperson for the CMHC, said the Crown corporation had launched a tender worth $100,000 to study Islamic mortgages for Muslim Canadians. Could she be oblivious to the fact that almost all Muslim Canadians currently have home mortgages through banks and don't feel they are living in sin? In fact, CMHC has gone a step further: It has quietly entered into a partnership with a Saudi company, AaYaan Holdings, to develop sharia-compliant mortgage-lending systems.

The origin of Islamic banking has its roots in the 1920s, but did not start until the late 1970s and owes much of its foundation to the Islamist doctrine of two people — Abul Ala Maudoodi of the Jamaat-e-Islami in Pakistan and Hassan al-Banna of the Muslim Brotherhood in Egypt. The theory was put into practice by Pakistani dictator General Zia-ul-Haq who established sharia banking law in Pakistan.

Proponents of sharia banking rest their case on many verses of the Holy Koran that outlaw usury*, not interest.

Verses that address the question of loans and debts include:

Al Baqarah (2:275): God hath permitted trade and forbidden usury;

Al Baqarah (2:276): Allah does not bless usury, and He causes charitable deeds to prosper, and Allah does not love any ungrateful sinner.

Every English-language translation of the Koran has translated the Arabic word riba as usury, not interest. Yet, Islamists have deliberately portrayed bank interest as usury and labelled the current banking system as un-Islamic. Instead, these Islamists have created exotic products with names that are foreign to much of the world's Muslim population. This is where they mask interest under the niqab of Mudraba, Musharaka, Murabaha, and Ijara. Two authors, both senior Muslim bankers, have written scathing critiques of sharia banking, one labelling the practice as nothing more than "deception," with the other suggesting the entire exercise was "a convenient pretext for advancing broad Islamic objectives and for lining the pockets of religious officials." Why Canadian banks would contribute to this masquerade is a question for ordinary Canadians to ask. Banks are helping sharia make a back-door entrance >>> By Tarek Fatah

*Usury is “the practice of lending money at exorbitant, or illegally high, rates of interest”. [Source: Dictionary.com]

Tarek Fatah is the author of Chasing a Mirage: The Tragic Illusion of an Islamic State, to be published in March.

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Premium Bonds and Islamic Law
Premium bonds have been debated for decades over their ability to actually beat out interest bearing savings plans and conventional banking practices. Premium bonds allow the bond buyer to participate in a monthly lottery that picks out individual bond numbers. If your bond number is picked you are awarded a cash prize that can range from fifty pounds to a million pounds. Your investment is safe and the government uses the money to fund public projects. There have been conspiracy theories and other grumblings about the premium bond system and now there are religious concerns.

A recent ruling in the Islamic world has made premium bonds ownership against Islamic law. Muhammad Adam al-Kawthari has interpreted the Koran in stating that contrary to shares, premium bonds are a loan instead of a partial owning of a company as in shares. The act of making money off of your own money in the form of interest is considered usury and takes away from the pillar of faith that represents being charitable. Islamic scholars have declared all bonds that produce interest as unlawful. Even a premium bond cash prize is considered apart of interest and cannot be allowed. Premium Bonds and Islamic Law >>> By Allyson Rowen Taylor

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Banking on Piety
Image of Muhammad’s name in calligraphic art form courtesy of Google Images
ARABIAN BUSINESS.COM: There is no such thing as an Islamic Sukuk; these are conventional bonds that are coated with an Islamic shell." To say Hassan Heikal, the CEO of the leading home-grown investment bank in the Middle East, EFG-Hermes, is sceptical about Islamic finance is an understatement. On the other side of the spectrum, Dr Abdul Moman Al-Olaby, a professor who was one of the pioneers in the industry agrees that some Sharia-compliant structures are questionable, but says "Sharia-compliant finance is our jewel, and even in its infancy, it is well positioned to compete among global banking giants."



Dr Ibrahim Warde, a professor of international business at Tufts University in the USA, and author of Islamic Finance in the Global Community, has been studying the industry for the past decade. As an academic, he takes a more nuanced approach, and tells Arabian Business "the initial hope of the sector was that it would be a completely different approach to finance and it would have many economic and social benefits, and would be based on the principle of sharing profits and losses." Critics today claim that "it evolved into a mimicking of conventional finance" and some question if it is a "new model", but supporters defend the approach on the grounds that they are leading the much needed modernisation of the financial sector.


While the debate will undoubtedly continue, it is undeniable that the cat is out of the bag. Sharia-compliant finance is a growth sector all over the world, and has now become a US$600bn industry. Given the immense wealth of the Arab world and the billion-plus global Muslim population, market dynamics forced the creation of Sharia-compliant finance. From Singapore to London, from Doha to New York, bankers are developing new products, chasing new clients, and laying the groundwork for global expansion.

In this report, Arabian Business examines the origins of Sharia finance, modern banking products, and the rise in corporate finance. We also speak to some of the players behind the burgeoning Takaful (insurance) market, see the Qatari innovation of Sharia-compliant private equity, and look at the scholars and boards endorsing the various structures. Banking on piety >>> By Christina Corbett and Mohammed Aly Sergei

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Frank Gaffney Jr: Shariah’s Trojan Horse
TOWNHALL.COM: Suddenly, a new national debate is beginning about the national security, economic and other implications of Persian Gulf potentates using their petrodollars to buy up strategic American assets. Most recently, the Emir of Dubai’s purchase at fire-sale prices of 4.9 percent of the largest U.S. bank, Citigroup, has caused a level of unease not seen since he tried to buy his way into a large number of this country’s port facilities.

Almost completely unremarked thus far has been a parallel – and in many ways far more insidious – effort to penetrate, influence and dominate America’s capital markets: so-called “Shariah finance.” Some estimates suggest that there are approaching $1 trillion now being invested around the world under this rubric. If present trends continue, all other things being equal, such funds may grow to many times that amount within a few years.

Shariah is, of course, the term used by adherents to the totalitarian ideology practiced by the Saudi Wahhabis, the Iranian mullahs and the Taliban to describe the all-encompassing theocratic code they use to justify repressive rule at home and to extend their dominance elsewhere. While it is often depicted by its promoters as Koranic in character, in fact, it is largely man-made, the product of dictates and rulings by caliphs and scholars over many centuries.

For non-Muslims, Shariah is best known for its sanction for the brutalization of women, homosexuals and Jews. Beheadings, amputations, flagellation and stoning are among the prescribed punishments for those who transgress this barbaric code, punishments plucked from primitive tribal practices in the Arabian deserts dating back to medieval times. Shariah’s Trojan Horse >>> By Frank J. Gaffney Jr.

Frank Gaffney Jr. is the founder and president of the Center for Security Policy and author of War Footing: 10 Steps America Must Take to Prevail in the War for the Free World (Hardcover)

Mark Alexander (Hardback)
Mark Alexander (Paperback)