All too frequently, an article will appear in the news media extolling the virtues of “Islamic” finance as a way to protect wealth from the ravages of the current financial crisis. When we first came across a recent article in the Sacramento Bee, we figured that we had another case of this and were prepared to make a rather pedestrian posting about how Shariah-Compliant Finance has not in fact been the safe haven that some of its promoters maintain.

But as we dug deeper into the article, the more we realized that it contained clues to a much larger puzzle.

That’s largely because of the complete lack of curiosity on the part of the reporters and editors at the Bee. This is unfortunately rather typical. So many of the articles on “Islamic” finance amount to fluff pieces which seem like nothing but regurgitations of marketing brochures and public relations press releases.

What makes the situation regarding this particular article so aggravating is the fact that just drilling down slightly raises all sorts of questions, yet the Bee didn’t bother:

The article starts off by assuming that Shariah-Compliant Finance has provided some sort of “shield” against the economic downturn. There is just a world of information out there to refute that, as we have documented on SFW:

• Qatar has had to bail out its banking system, which is almost entirely Shariah-Compliant.

• The UAE and Iran have both had to float conventional bonds to raise money.

• Stock markets throughout the Islamic world–Qatar, UAE, Saudi Arabia, Egypt to name a few–were all down sharply in February.

• Issues of “sukuk,” or Islamic bonds, were down 37% in Q1 2009 as compared to Q1 2008.

The Bee article mentions that Shariah-Compliant Finance prohibits investments in companies in the “weapons” business. This is a stark example of a lack of curiosity on the part of the journalists. That prohibition does not apply to companies that contribute to the “defense of Islam,” as I myself heard at the Harvard Law School celebration of “Islamic finance” in April of 2008. Need an example?

How about Bank Melli of Iran, which we have written about extensively on SFW. Bank Melli is the world’s largest Shariah-Compliant Financial institution. Bank Melli has also been sanctioned by the US, the EU and Australia for its finance operations in support of Iran’s ballistic missile program and support of terrorism.

This information is not hard to find. You actually have to try not to check out some of the claims associated with Shariah-Compliant Finance.

One of the Muslims interviewed in the article explains that his investments in the Shariah-Compliant Amana mutual funds have performed much better than non-Shariah-compliant investments.

The Amana funds have indeed performed extremely well, but not due to their adherence to Shariah. They are down 23% and 29% respectively over the past year

The Dow Jones Islamic Index is down over 33% for the year, as compared to 36% for the Dow Jones Industrial Average; not a lot of difference.

But it is notable that the Shariah-Compliant Iman Fund is down over 40% over the past year, thus it has fared worse than the S&P 500 and the Dow-Jones Industrial Average.

Again, Shariah-Compliant Finance has provided NO safe haven from the financial crisis.

But the story of the Amana Mutual Funds only begins with their performance. There is MUCH more to be curious about when it comes to these funds.

First of all, the Amana Mutual Funds web site has an extensive section on zakah, which is usually referred to as zakat. Zakat is a form of tithing in Islam in which pious Muslims are required to donate a portion of their wealth to the needy, most often these days through Islamic charities.

Here at SFW, we have documented the activities of the dozens of Islamic charities that have been discovered to fund terrorist organizations. No fewer than 27 Islamic charities have been designated as terrorist entities by the US Treasury Department, including the three largest Muslim charities in the US.

Zakat is one of the most opaque aspects of Shariah-Compliant Finance and it is rarely mentioned by Shariah-Compliant financial institutions, even though it is a requirement for Shariah Compliance.

The Amana Funds explain zakat in detail, without actually disclosing anything specific about where the money actually goes or who makes the decisions:

This is where things start to get disturbing. On the page in which Amana instructs investors as to how much money to devote to zakat, they quote none other than Sheikh Yusuf al-Qaradawi:

To fully explain why this attribution is so troubling, we will repeat our background on Qaradawi here:

There is sooooo much more to know about Sheikh Qaradawi. First of all, he is banned from entering the US and the UK for his ties to terrorist organizations. In 2001, Sheikh Qaradawi was the chairman of the Shariah Advisory Board of Bank al-Taqwa, which was shut down by the United Nations and the US Treasury Department for funneling large amounts of money to several Jihadist terrorist organizations, including Ayman al-Zawahiri’s Egyptian forerunner of Al Qaeda. Much of the money came through a Shariah-Compliant real estate firm in New Jersey and the money was funneled to the terrorist groups as zakat payments to charities.

Earlier this year, the US Treasury Department designated the Union of Good, an umbrella group of 57 charities run out of Saudi Arabia, as a terrorist entity. Qaradawi runs the Union of Good.

Qaradawi has written extensively in support of “martyrdom” operations (suicide bombings) against Israelis and Americans. And here are Sheikh Qaradawi’s views on women’s rights:

“Beating is not suitable for every wife; it is suitable for certain wives and for other wives it is not. There is a woman who cannot agree to being beaten, and sees this as humiliation, while some women enjoy the beating and for them, only beating to cause them sorrow is suitable…”

In the financial realm, back in October 2008, Qaradawi called for Islamic finance to replace capitalism. In 2006, he told the BBC that he liked to refer to Shariah-Compliant Finance as “jihad with money,” because “allah teaches us to fight our enemies” with weapons and our money.

The mention of Qaradawi on the Amana Funds web site certainly got our attention and it is too bad that the Bee reporters didn’t bother to look into zakat or even Google “Qaradawi.”

Our next step was to look into who Amana’s Shariah advisors are. It turns out that Amana does not disclose anyone by name, but identifies the Fiqh Council of North America as their adviser on Shariah.

The Fiqh Council of North America has a troubling background. It is an outgrowth of the Muslim Students Association, a Muslim Brotherhood front group funded out of Saudi Arabia. It is an affiliate of ISNA, the Islamic Society of North America. ISNA was founded in part by Sami al-Arian, who is now in jail for ties to terror funding. The president of the Fiqh Council of North America, Taha Jaber Al-Alawani, was named an unindicted co-conspirator in al-Arian’s prosecution.

 The Justice Department named ISNA an unindicted co-conspirator in the Holy Land Foundation terrorism financing trial in which America’s largest Muslim charity was shut down for funding terrorist organizations.

One of the original trustees of the Fiqh Council of North America was Abdurrahman Alamoudi, who is now serving a 23 year sentence on terrorism charges. Alamoudi had raised millions of dollars for Al Qaeda. 

The current chairman of the Fiqh Council of North America, Muzammil Siddiqui, was with the Muslim World League, an entity identified as having ties to Al Qaeda. On October 28, 2000 at a rally in Lafayette Park in Washington D.C., Siddiqui said, “America has to learn — if you remain on the side of injustice, the wrath of God will come!”

Another member of the Fiqh Council of North America, Jamal Badawi, issued a fatwa authorizing a husband to physically punish his wife: “There are cases, however, in which a wife persists in bad habits and showing contempt of her husband and disregard for her marital obligations. Instead of divorce, the husband may resort to another measure that may save the marriage, at least in some cases. Such a measure is more accurately described as a gentle tap on the body, but never on the face, making it more of a symbolic measure than a punitive one.”

The invaluable people at The Investigative Project have much more information on the Fiqh Council of North America:

The next time you see a fluff piece on Shariah-Compliant Finance, you can be sure there is a lot more to the story than meets the eye.


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