The Middle East North Africa Financial Network has just published a report on Shariah-Compliant Finance.

The report (linked below) starts out with a promising title–“Shariah Compliant or Complaint”–but soon resorts to the same misinformation about the performance of Shariah-Compliant assets and vehicles for which the industry is now infamous.

The MENAFN report glosses over the fact that Shariah-Compliant Finance has been hit hard by liquidity issues, the bursting of the real estate bubble and the decline of the construction industry.

It then delves into the happy talk about all the demand for Shariah-Compliant products cropping up around the world and all the good that is being done as a result.

In other words, like many “reports” and articles on Shariah-Compliant Finance, what we really have here is a marketing piece and not true journalism. 

The article talks briefly about sukuk, aka Islamic bonds, without discussing the fact that the market for sukuk has dried up like Death Valley in the current economic slump.  Nor does it discuss the fact that sukuk tend to illiquidity and provide consistently lower returns than conventional bonds–germane facts that absolutely should be disclosed by American standards of full and fair disclosure. 

Moreover, there is no mention of the controversy within the Islamic world about whether sukuk are even truly in compliance with Shariah. According to Shariah authorty Mufti Taqi Usmani, most sukuk are not.

Paragraph 13 contains some ominous passages for those of us who worry about the spread of Shariah through a financial Trojan Horse:

“Although Islamic Finance initially had its focus in Muslim populated regions, its ability to offer security to investors has drawn significant participation by non-Muslims…The growth of Islamic Finance is not only restricted to the Muslim world on the account of the religious and business considerations, but also across the Western world where commercial and business considerations are the factors that drive growth.”

In other words, the promoters of Shariah-Compliant Finance are using the myth of “security” provided by “Islamic Finance” to dupe Westerners into investing in their vehicles. In the context of Shariah missionary work, what this basically means is that they want to use the financial angle to lull us to sleep and put us at ease with Shariah. They have already accomplished this in Great Britain, where the Archbishop of Canterbury has already stated that Shariah should be incorporated into British common law, basing this theory on the very fact that Shariah-Compliant Finance has already been operating in Britain for years.

The report does reinforce one useful bit of information: it lists the Shariah-compliant assets of the world’s nations who are  heavily involved in Shariah Finance and, as we have reported here repeatedly, Iran is WAY out ahead of everybody else. In fact, Iran has over twice as many Shariah-Compliant financial assets as Saudi Arabia, who is number two.

Turn on Fox News or CNN today and take a look at how things are going in Iran these days. Something tells me that Shariah isn’t the panacea that its promoters make it out to be…

The report then goes on to discuss other more mundane aspects of Shariah Finance, including one that should be interesting for legal scholars. The article points out that among the Top 20 Shariah advisors who work for the financial community, each one is on retainer with an average of 46 different institutions.

Now, we should also point out that, in some cases, these same advisors also sit on Shariah boards and councils which actually make up the rules which they are then paid by banks and brokerage houses to interpret.

What all this means is that the entire industry is controlled by a powerful cabal of just a few Shariah authorities. The Top 20 work on average for 46 institutions and also make the rules. Anyone who doesn’t see the problem with this just doesn’t WANT to see a problem.

The report acknowledges the shortage of Shariah scholars, but not for the hazardous reasons which seem obvious to most objective Western observers. Promoters of Shariah-Compliant Finance see the shortage of scholars only as a hindrance to growth.

As we have reported on SFW repeatedly, the fact that so few Shariah authorities exist is especially a problem given the fact that so many of the most prominent ones have worrying ties and backgrounds:

• First, there is Mufti Taqi Usmani who we have profiled extensively, including here:

Among other things, Usmani has written that Muslims living in the West should pretend to get along with non-Muslims until they are strong enough to rise up in Jihad. He also wrote lamentations about the shortage of martyrs to attack US troops who overthrew Saddam Hussein in Iraq. 

• Then there is the infamous Sheikh Yusuf al-Qaradawi, who we profiled in this post:

Among the gems that this “scholar” has come forth with was this utterance:

“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…”

• Another example is Sheikh Yusuf DeLorenzo, who we profiled in an article back in March:

DeLorenzo was educated at an Islamic school in Pakistan with ties to the Taliban and more recently was the Director of Education at the Islamic Saudi Academy in northern Virginia, a school that issued textbooks promoting the Shariah practices of killing adulterers and Muslim apostates.

Together, these three men alone make up 15% of the Top 20 Shariah authorities who dominate the Shariah advisory boards in the financial world. This is certainly something to be concerned about.

Not surprisingly, the MENAFN report delves into none of these truly troubling aspects of Shariah-Compliant Finance.


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