The Threats of Sharia Finance  

By Jamie Glazov | Wednesday, June 11, 2008  

Frontpage Interview’s guest today is Alex Alexiev, vice president for research at the Center for Security Policy



FP: Alex Alexiev, welcome back to Frontpage Interview.


Alexiev: Thanks Jamie.

In our last interview, we focused on defining Sharia Finance – discussing what it actually is. Today we will expand the discussion on the actual threat that Sharia finance poses.

So let’s begin. What are some of the actual threats that Sharia-Compliant Finance (SCF) represents to us?

Alexiev: SCF poses a number of significant threats to the United States and the West. Many of these are neither well understood nor addressed by Western governments with the partial exception of terror funding. They range from financing terrorism and radical Islamist networks around the world to undermining our capital markets and legitimizing medieval barbarism in the form of Sharia doctrine — whose ultimate objective is nothing short of the destruction of Western civilization and the imposition of Islamist rule worldwide.

FP: Tell us how SCF has been used in the past.

Alexiev: There are a number of well-documented cases where Shariah-compliant institutions have engaged in the financial support of terrorism and extremism and many others where Islamic banks are strongly suspected of having done the same. My own view is that this is continuing today and more than likely on a large scale.

FP: A specific example?

Alexiev: Sure. In the late 1980s, two SCF banks, Bank Al-Taqwa and Akida Bank, were registered in Nassau, Bahamas for the ostensible purpose of promoting Islamic banking. Their founders and executives were Muslim Brotherhood bigwigs in Europe, people like Yousef Nada, Ahmed Idris Nasreddin and Ghaleb Himmat. In fact, these ‘banks’ were in the words of the U.S. Department of the Treasury “shell companies” run out of Switzerland and Italy, whose only business was laundering money to terrorists.

And this they did for years and very successfully. Between its founding in 1988 and its listing as a specially designated global terrorist (SDGT) entity by the United States government and the United Nations in November 2001, Bank Al-Taqwa, for instance, had managed to transfer tens of millions of dollars to virtually all known Islamic terrorist groups in existence. Hamas alone is reported to have been the recipient of $60 million. The long list of its other beneficiaries, includes Al Qaeda, the Palestine Liberation Organization, the Algerian Armed Islamic Group (GIA), the Taliban, the Egyptian Gama’a al-Islamiya and the Tunisian An-Nahda, as well as terrorist groups in Kuwait, Tunisia, Yemen, Bosnia, Libya, Jordan, Lebanon and Sudan.

FP: And there is a lot of collusion going on here I can imagine.

Alexiev: Without a doubt. The above mentioned two banks, for example, were so closely intertwined through a variety of cross-cutting investments, interlocking directorships and personal and organizational ties that they were two branches of the same enterprise. Yousef Nada, the chairman of Al-Taqwa, was a director of Akida Bank, while Ahmed Nasreddin, chairman and owner of Akida, sat on Al-Taqwa’s board and both banks shared the same office and personnel in Nassau. Moreover, they worked synergistically with a great number of other Islamic banks, organizations and ‘charities’ in Europe, the Middle East and the US. So much so that it would not be an exaggeration to argue that taken together, this network operated in a manner similar to that of an organized crime syndicate, with the sole difference being that while mafia syndicates have illicit financial gain as a primary objective, the Sharia-compliant syndicate pursues providing illicit financial support for Islamic extremism and terrorism as its overriding goal.

FP: And SCF outfits are in the U.S.?

Alexiev: You bet. One was called Bait ul Mal al Islami (BMI), a Sharia-compliant investment company founded by the well-known European Muslim Brotherhood associate, Soliman Biheiri, just months after he immigrated to the U.S. in 1985. Based in Seacaucus, New Jersey, the company advertised itself widely in American Muslim publications as a profitable Islamic alternative to conventional investment and solicited funds for real estate investments and housing developments. Prosecutors will later call Biheiri the “US banker for the Muslim Brotherhood, “ while former White House counter-terrorism czar, Richard Clark, will testify to a senate hearing that BMI’s financial services offered were little more than a cover “to conceal terrorist support” and that its investor list “read like who’s who of designated terrorists and Islamic extremists.”

BMI worked closely with the Bank Al-Taqwa/Akida Bank network in transferring millions of dollars to terrorist groups through them, while receiving large amounts from well-known donors suspected of funding terrorism. These included the Hamas top leader, Mousa Abu Marzouk, who made a number of investments with BMI. Tellingly, BMI continued to work with Marzouk even after the latter was declared an internationally designated terrorist by the United States government in 1995.

FP: What about the large Islamic banks?

Alexiev: There is plenty of evidence that the largest SCF banks also get involved in the financial support of extremism and terrorism, but unlike the shell banks discussed above they get away with that on a regular basis. These include Islamic banks such as Al Rajhi Bank, the Dallah al-Baraqa group and the Prince Al-Faysal banking conglomerate. These banks are owned respectively by Suleiman Abdul Aziz al-Rajhi, Saleh Kamel and Prince Faysal al-Saud. All three of these individuals are extremely rich and highly influential members of the Saudi establishment, as well as being Wahhabi zealots and key promoters of Sharia finance.

We don’t have the space here to get into the details, but suffice to say that these Saudi institutions were intimately involved in sponsoring and funding Bank al-Taqwa, Akida, BMI etc.

FP: Were there any direct ties between these Islamic banks and terrorist groups or did they operate through charities?

Alexiev: Generally, the large SCF institutions provided funds to terrorist and extremist groups through various Islamic “charities” and cutouts that served to conceal the origin of the funds. A favorite vehicle was, for example, the International Islamic Relief Organization (IIRO), which is actually a department of the Muslim World League (MWL). Here is how the system works. The banks donate money to IIRO or a similar cutout, which “invest” in organizations like Bank Al-Taqwa or BMI that, in turn, steer the funds to terrorist groups.

There are, however, also numerous known instances of SCF banks and their owners engaging directly with terrorist organizations and individuals. Both Prince Faysal and Saleh Kamel, for instance, were co-investors with Osama bin Laden in the Sudanese Shamal Islamic Bank while several designated terrorists maintained accounts in their banks. Saleh Kamel and Al Rajhi also figured prominently in the Golden Chain list of key Al-Qaeda financiers.

FP: Is there any evidence of state sponsorship of Sharia finance?

Alexiev: State-sponsorship of Islamic banking has been an established fact since the founding of the first SCF bank – Islamic Development Bank (IDB) in 1975. It continues directly or indirectly to this day. Indeed, in many Muslim countries, Islamic banking has been the subject of all kinds of preferential treatment in areas such tax treatment, lower reserve requirements etc. For instance, the Sudanese government, which was run by the Muslim Brotherhood at the time, gave the Faysal Islamic Bank unique privileges at the time of its founding in 1977 and passed a state law to that effect. The same thing happened in Turkey in the early 1980s, with the so-called “Islamic finance houses’ as well as in places like Pakistan, Malaysia, Kuwait etc. In a number of countries the state or the ruling families went directly into partnerships with SCF business. This is the case in Kuwait, where the government owns 49% of the largest Islamic bank and in Qatar, where the ruling Al-Thani family owns both Islamic banks. Similarly, in Dubai, the new Islamic $1 billion mega bank, An-Noor, was recently set up by Dubai’s ruler, Sheikh Maktoum.

FP: What if anything is the US government doing about SCF?

Alexiev: Unfortunately, very little so far, despite the fact that all the information provided above and more are well-known to US authorities. There appears to be a puzzling timidity not to say an outright reluctance on the part of Washington to do anything that impugns our “strategic allies” in Saudi Arabia for their blatant and well-documented support of anti-American extremism and terrorism. A while ago, the Wall Street Journal’s top notch investigative reporter, Glenn Simpson, provided exhaustive evidence that the Al-Rajhi Bank was involved in all manner of terror-supporting and subversive activities, yet USG refused to do anything. My feeling is that US authorities, such as the Department of the Treasury, are either completely clueless about the seditious nature of Sharia finance, or else they are so determined not to upset the Saudis, that they practice a form of preemptive appeasement of people, who, in my view, are sworn enemies of our civilization. Either way, it looks like the Bush Administration will leave a disastrous legacy behind on that score.

FP: Alex Alexiev, thank you for joining Frontpage Interview.

Alexiev: Thank you.


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