Monday, April 13, 2009
Shariah bankers: West ready for faith-based alternative?
Simon Roughneen
SINGAPORE | Backers of Shariah-compliant finance see an opportunity for expansion amid the global economic downturn, and some Western banks are welcoming this growing source of new business.
"Islamic bankers should do some missionary work in the Western world to promote the concept of Shariah banking, for which many in the West are more than ready now," Indonesian President Susilo Bambang Yudhoyono said at the World Islamic Economic Forum last month in Jakarta.
Such statements have given rise to fears that Shariah finance is a stalking horse for hidden political or religious aims. Shariah finance is an extension of Islamic law, pushing a faith-based alternative to Western banking.
Key Islamists who advise Shariah financial houses have called for full Shariah law to be adopted in Western countries and, in some cases, have made statements supporting terrorist groups.
Shariah finance means institutions and norms that fit with Islamic law. Fully compliant Islamic financial institutions are prohibited from interest payments and require transactions to be backed by tangible assets.
Speculation and hedge funds are off limits — ditto for anything connected to porn, gambling, alcohol or pork. Shariah finance targets Muslims who want to avoid what are deemed "un-Islamic" Western banks or financial practices, and appeals to clients' faith as well as their bottom line.
The practice has its detractors.
"A shift from present global economic practices [in which many Muslims participate] to Shariah-based practice" would mean "an unacceptable intrusion into Western culture," said Stephen Schwartz, executive director of the Center for Islamic Pluralism.
Mr. Schwartz said the sector is arguably un-Islamic by contradicting the traditional Islamic teaching that "Muslims living in non-Muslim societies must accept the laws and customs of the countries to which they immigrate."
Depending on the measurements used, the Shariah finance sector manages assets of $700 billion to $800 billion, according to the Islamic Financial Services Board, an industry body. Standard and Poor's estimates that the sector could reach $4 trillion before long.
Shariah banks make up a small fraction of the global banking sector, and they may have suffered less than Western counterparts by being sheltered from the subprime crisis.
However, as Duncan McKenzie, director of economics at International Financial Services London (IFSL), told The Washington Times: "Islamic finance is one model but is by no means a panacea. The Islamic finance industry faces a number of challenges, including the need to standardize interpretation of Shariah law, harmonize tax and regulation of the industry, and develop the skills base."
Christopher Holton, vice president of the Center for Security Policy and director of its Shariah Risk Due Diligence Project, told The Times: "It is a myth that Islamic finance has provided a hedge against crisis. The FTSE Islamic Index has fallen 41 percent, and the all-world index 44 percent, similar losses over the past six months."
Shariah finance remains dominated by banking, but the sector is diversifying. A growing proportion — up to 20 percent according to some estimates — is taken up by sukuk, which is a Shariah-compliant bond issuance. Malaysia is a dominant base for this particular service. Bonds can play a key role in helping countries deal with the global economic crisis, but the global sukuk market has fallen for two years in a row, in step with the global downturn.
Despite the varying prohibitions, some Shariah banks find creative ways to make the equivalent of market interest rates by other means, such as by pegging debtor repayment rates to his or her future profits, or when a bank offers a "hibah," or gift to those who open an account — in essence a way of attracting new customers in lieu of interest accruals on savings.
Shariah finance likely will grow in coming years, with Saudi Arabia and the United Arab Emirates being followed by Indonesia, Turkey, Singapore and some Western countries as viable locations for expansion.
The IFSL recently published a detailed report on the sector highlighting how "the U.K. is getting ahead of the game, in Europe at least, in facilitating this sector" — as noted by Emile Abu-Shakra, media relations manager at British bank Lloyds TSB.
Lloyds stole a march on the competition by greasing the wheels for Shariah-compliant bank-to-bank transactions, and now Britain has a bigger Shariah finance sector than Egypt or Pakistan.
In total, 22 financial institutions offer Shariah-compliant services in Britain, compared with nine in the United States. However the American financial sector is eager to source and provide new products — among them Shariah finance.
American International Group Inc.'s December pledge to bring Islamic home insurance to the United States was met with a written rebuke by Rep. Sue Myrick, North Carolina Republican, and Rep. Frank R. Wolf, Virginia Republican, who warned that opaque charitable transfers made by Shariah finance advisers could end up funding terrorists.
Mr. Holton said some Islamic financial institutions have been implicated directly in bankrolling terrorists. "From 1988 to 2001, when it was designated a terrorist entity by the United States and the United Nations, Bank al Taqwa [registered in the Bahamas] transferred tens of millions of dollars to Hamas, al Qaeda, the Taliban, and others," he said.
An elite cadre of scholars dominates the advisory boards of Shariah institutions, and these same thinkers are often called by Western institutions who want to develop Shariah-compliant products. However some, such as Sheik Yusuf al-Qaradawi, are banned from entry into Britain and the United States for making statements supporting Islamist terrorism, while another, Mufti Taqi Usmani, who has advised the Wall Street Islamic index, has promoted extension of full Shariah law into Western countries.
Most troubling, perhaps, is the appearance of Bank Melli of Iran at the top of a listing of the world's top 500 Islamic financial institutions, published by the Banker in November 2008 and reproduced in the IFSC report. Bank Melli is under U.S. and EU sanctions for facilitating Tehran's support of Hamas and Hezbollah and funding Iran's uranium enrichment program. In total, Iran has six of the 10 biggest Shariah-compliant institutions and double the Shariah assets of any other country.
Showing posts with label sharia finance. Show all posts
Showing posts with label sharia finance. Show all posts
Wednesday, April 15, 2009
Tuesday, March 17, 2009
U.S. Taxpayers Funding Terrorism
Monday, March 16, 2009
I didn’t know I was funding terrorism
I bet you didn’t know you are too!
By Allan Erickson
3.10.09
Al-Waleed bin Talal * , net worth $20B, the man who helped Barack Obama get into Harvard Law School, it is alleged. He is the second largest shareholder in Citigroup, right behind the U.S. Government.
Forbes: “Last year (2006) he and a partner also closed a $3.9 billion deal to buy Fairmont Hotel & Resorts and more recently he announced that, with Bill Gates, he would take Four Seasons Hotels private for $3.8 billion, including debt.”
————————————
Imagine my surprise learning today I’m funding terrorism. And guess what, if you are an American taxpayer, you are funding terrorism too.
“Surprise” is a soft word, eh? “Horrified” is more appropriate.
Is this true? How can this be? Please let me explain.
Not too long ago we were forced to refinance thanks to a business ‘partner’ who stole a significant sum, destroying a business venture, leaving us without income for six months while we started over. Part of that refinance package included a Citi second mortgage a high rate of interest, with a balloon.
We have dutifully made our mortgage payments.
When we had a new baby girl a while ago, before the meltdown and bailouts, we decided we needed more life insurance, so we purchased a policy from AIG, and paid up front.
Now I learn from Frank Gaffney and Daniel Greenfield and others our mortgage payments and insurance premium are being managed by Islamic scholars to fund terrorism and finance the destruction of western civilization. No BS.
Since the U.S. government now owns controlling interest in both Citigroup and AIG, guess what? Your tax dollars are going to Muslims who do not have your best interests at heart.
“The U.S. taxpayer now owns most of AIG and Citigroup, two companies massively engaged in Shariah-compliant transactions, at odds with our constitutional separation of church and state,” writes Gaffney in a column published yesterday.
Source: http://townhall.com/columnists/FrankJGaffneyJr/2009/03/09/farewell_to_britain
What is Shariah-complaint finance?
Greenfield: “Islamic Banking uses a Sharia board to vet permissible investments. That Sharia board is much the same for Citigroup and AIG. It consists of Saudi or Saudi affiliated ‘religious scholars’ who have to give their okay on financial products that can be sold by a bank. This has obvious political implications.”
[Imagine the potential for boycotts, a favorite Muslim tactic, Greenfield rightly points out.]
Gaffney: “ . . . promoters of this industry, like ‘Shariah advisor’ and al-Jazeera host Sheikh Yusuf al-Qaradawi, have described SCF as ‘financial jihad’ and al Qaeda has publicly embraced its practice. . . (and British Prime Minister) Brown has declared he wants Britain to be the world capital of Shariah finance. The British government has refused to take punitive action against British-based Islamic “charities” that provide money to terrorist organizations. The latest is Interpal, a Palestinian organization that even the BBC was able to figure out provides support to Hamas."
Greenfield: " . . . the terrorist connections aren’t hard to find either. Citi Islamic Investment Bank is overseen by ‘eminent’ Sharia scholars. For example Nazih Hammad, President of Citi Islamic Investment Bank’s Sharia board. Nazih Hammad is a board member of the North American Fiqh Council. The North American Fiqh Council is another one of the Saudi front groups operating in America, one of whose trustees was Alamoudi, an Al Qaeda fundraiser. The North American Fiqh Council’s former President, Taha Jaber Al-Alawani, was an unindicted co-conspirator in the case of Islamic Jihad leader, Sami Al Arian. And there was board member Sheikh Muhammad al-Hanooti, who had extensive Hamas ties.’
Greenfield has more detail:
http://canadafreepress.com/index.php/article/9073
Note some highlights:
The second largest shareholder in Citi behind the U.S. Government is Saudi Prince Alaweed Bin Talal. (This is the same Saudi prince who blamed America for 9/11 and intervened to help Obama get into Harvard Law School.)*
Citigroup pioneered the big bank embrace of Sharia finance back in the 90’s
Citigroup’s Islamic Banking operation represents the world’s leading of Islamic loans and Sukuk bonds
Currently American taxpayers are in hock for 45 billion dollars to bailout Citigroup, while the Treasury, the FDIC and the Federal Reserve cover 90 percent of Citi’s 335 billion dollar losses
The American taxpayer is maintaining the number one Sharia finance bank in the world and that means the US government now officially owns a third of the largest Sharia finance arranger in the world, together with the Saudi royal family: Wahhabism’s quest for global Islamic domination and the US government come together.
AIG is also big into Sharia finance, even fielding Sharia finance offerings domestically.
The Obama connection: Citigroup provided half a million dollars to ACORN, essentially money directed for the Obama campaign’s ‘Get Out the Vote’ fraud program. Citigroup partnered with Acorn Housing Works to provide a specialized mortgage program for ACORN, the exact sort of program that caused the economic disaster in the first place.
ALL COINCIDENCE? ALL HAPPENSTANCE? Or orchestrated to destroy our country, using our own money, and our own leaders? The Mother of all Conspiracy Theories, or haphazard dotted lines?
Greenfield is certain:
“The US government hasn’t just bailed out Wall Street fat cats, but the centers of Islamic finance, rescuing the sizable investments of Saudi Arabia and the Abu Dhabi Investment Authority. And American taxpayers are now in the position of funding the world’s largest Sharia arranger, as well as the importation of Sharia finance to the United States through AIG. Lenin used to talk about the capitalists selling him the rope with which he would hang them. He had no clue that we would actually be buying the noose of Sharia Finance with which we’re being hung, and paying through the nose for the privilege.”
So, is my money going to prop up Saudi princes and, through channels, to kill Americans in Iraq and Afghanistan and elsewhere?
Not any more it isn’t.
I didn’t know I was funding terrorism
I bet you didn’t know you are too!
By Allan Erickson
3.10.09
Al-Waleed bin Talal * , net worth $20B, the man who helped Barack Obama get into Harvard Law School, it is alleged. He is the second largest shareholder in Citigroup, right behind the U.S. Government.
Forbes: “Last year (2006) he and a partner also closed a $3.9 billion deal to buy Fairmont Hotel & Resorts and more recently he announced that, with Bill Gates, he would take Four Seasons Hotels private for $3.8 billion, including debt.”
————————————
Imagine my surprise learning today I’m funding terrorism. And guess what, if you are an American taxpayer, you are funding terrorism too.
“Surprise” is a soft word, eh? “Horrified” is more appropriate.
Is this true? How can this be? Please let me explain.
Not too long ago we were forced to refinance thanks to a business ‘partner’ who stole a significant sum, destroying a business venture, leaving us without income for six months while we started over. Part of that refinance package included a Citi second mortgage a high rate of interest, with a balloon.
We have dutifully made our mortgage payments.
When we had a new baby girl a while ago, before the meltdown and bailouts, we decided we needed more life insurance, so we purchased a policy from AIG, and paid up front.
Now I learn from Frank Gaffney and Daniel Greenfield and others our mortgage payments and insurance premium are being managed by Islamic scholars to fund terrorism and finance the destruction of western civilization. No BS.
Since the U.S. government now owns controlling interest in both Citigroup and AIG, guess what? Your tax dollars are going to Muslims who do not have your best interests at heart.
“The U.S. taxpayer now owns most of AIG and Citigroup, two companies massively engaged in Shariah-compliant transactions, at odds with our constitutional separation of church and state,” writes Gaffney in a column published yesterday.
Source: http://townhall.com/columnists/FrankJGaffneyJr/2009/03/09/farewell_to_britain
What is Shariah-complaint finance?
Greenfield: “Islamic Banking uses a Sharia board to vet permissible investments. That Sharia board is much the same for Citigroup and AIG. It consists of Saudi or Saudi affiliated ‘religious scholars’ who have to give their okay on financial products that can be sold by a bank. This has obvious political implications.”
[Imagine the potential for boycotts, a favorite Muslim tactic, Greenfield rightly points out.]
Gaffney: “ . . . promoters of this industry, like ‘Shariah advisor’ and al-Jazeera host Sheikh Yusuf al-Qaradawi, have described SCF as ‘financial jihad’ and al Qaeda has publicly embraced its practice. . . (and British Prime Minister) Brown has declared he wants Britain to be the world capital of Shariah finance. The British government has refused to take punitive action against British-based Islamic “charities” that provide money to terrorist organizations. The latest is Interpal, a Palestinian organization that even the BBC was able to figure out provides support to Hamas."
Greenfield: " . . . the terrorist connections aren’t hard to find either. Citi Islamic Investment Bank is overseen by ‘eminent’ Sharia scholars. For example Nazih Hammad, President of Citi Islamic Investment Bank’s Sharia board. Nazih Hammad is a board member of the North American Fiqh Council. The North American Fiqh Council is another one of the Saudi front groups operating in America, one of whose trustees was Alamoudi, an Al Qaeda fundraiser. The North American Fiqh Council’s former President, Taha Jaber Al-Alawani, was an unindicted co-conspirator in the case of Islamic Jihad leader, Sami Al Arian. And there was board member Sheikh Muhammad al-Hanooti, who had extensive Hamas ties.’
Greenfield has more detail:
http://canadafreepress.com/index.php/article/9073
Note some highlights:
The second largest shareholder in Citi behind the U.S. Government is Saudi Prince Alaweed Bin Talal. (This is the same Saudi prince who blamed America for 9/11 and intervened to help Obama get into Harvard Law School.)*
Citigroup pioneered the big bank embrace of Sharia finance back in the 90’s
Citigroup’s Islamic Banking operation represents the world’s leading of Islamic loans and Sukuk bonds
Currently American taxpayers are in hock for 45 billion dollars to bailout Citigroup, while the Treasury, the FDIC and the Federal Reserve cover 90 percent of Citi’s 335 billion dollar losses
The American taxpayer is maintaining the number one Sharia finance bank in the world and that means the US government now officially owns a third of the largest Sharia finance arranger in the world, together with the Saudi royal family: Wahhabism’s quest for global Islamic domination and the US government come together.
AIG is also big into Sharia finance, even fielding Sharia finance offerings domestically.
The Obama connection: Citigroup provided half a million dollars to ACORN, essentially money directed for the Obama campaign’s ‘Get Out the Vote’ fraud program. Citigroup partnered with Acorn Housing Works to provide a specialized mortgage program for ACORN, the exact sort of program that caused the economic disaster in the first place.
ALL COINCIDENCE? ALL HAPPENSTANCE? Or orchestrated to destroy our country, using our own money, and our own leaders? The Mother of all Conspiracy Theories, or haphazard dotted lines?
Greenfield is certain:
“The US government hasn’t just bailed out Wall Street fat cats, but the centers of Islamic finance, rescuing the sizable investments of Saudi Arabia and the Abu Dhabi Investment Authority. And American taxpayers are now in the position of funding the world’s largest Sharia arranger, as well as the importation of Sharia finance to the United States through AIG. Lenin used to talk about the capitalists selling him the rope with which he would hang them. He had no clue that we would actually be buying the noose of Sharia Finance with which we’re being hung, and paying through the nose for the privilege.”
So, is my money going to prop up Saudi princes and, through channels, to kill Americans in Iraq and Afghanistan and elsewhere?
Not any more it isn’t.
Monday, March 16, 2009
Minnesota And Sharia Finance
The State of Minnesota goes into the Shariah compliant finance business by SANE Staff,
Fri, March 13, 2009, 10:30:AM
Two days ago, Investor's Business Daily, probably the best editorial page in the country, published an editorial on the now weeks-old story about the State of Minnesota Housing Authority getting involved in offering Shariah-compliant mortgages. The editorial is here.
We had previously blogged about this when Minnesota Public Radio first ran the story and it was picked up by the reliable Jihad Watch. Our blog is here and we promised to look into it.
Here is what we have learned, although the public details remain scant at best. We are working on filing a Freedom of Information Act request with the Minnesota Housing Authority to learn exactly what is going on. But, from what we can tell from the State of Minnesota Housing Authority web site and the published reports, this is what we think is going on.
A non-profit group called the African Development Center began pushing for mortgage assistance for Muslims, mostly new immigrants from Africa (we presume the growing Somali community is one of the target beneficiaries) from the State Housing Authority. This has been in the works for years. Thus, in a June 2005 report (at p. 12 of the pdf) produced by Fannie Mae, the Federal Reserve Bank of Minnesota, and the Minnesota Housing Authority, we find the following:
We have also learned that the program decided upon by the State of Minnesota is being underwritten by Devon Bank. That is, Devon Bank provides the SCF mortgages and the State of Minnesota subsidizes them in some way. We will learn how exactly with the FOIA request. Devon Bank is a small Chicago community bank that has long been in the SCF space, utilizing pre-rulings by the Office of the Comptroller of Currency to approve the purchase and "cost plus" sale of real estate to Shariah-faithful Muslims. The special approval is required because generally federal banking rules prohibit banks from buying or investing in real estate other than what the bank needs for its own offices and as temporarily acquired in foreclosures and the like. What Devon wanted to do was offer Muslims a mortgage with interest but one that Shariah considers not to be interest. How? One popular way was through what is called a Murabaha contract per Shariah that allows the bank to buy the home and then immediately sell it back to the real buyer-borrower who then pays "cost PLUS". The PLUS of course represents the interest at the going rate for 30 years. And, lo and behold, the "sales contract" can be paid out over 30 years. Whalla! "Interest Averse"!
But this is all of course a ruse because Devon Bank and the buyer-borrower consider the profit "PLUS" to be "mortgage interest" not cost basis for purposes of the IRS--the tax payer wants the deduction. Also, imagine the bankruptcy complications if a lending institution went bankrupt after issuing hundreds of Cost PLUS mortgages. Were these sales of bank assets subject to being set aside as voidable?
Interestingly, Devon Bank set up its Shariah operations through the good offices of now defunct Sunrise Equities CEO Salman Ibrahim and Shariah authority Mufti Nawal-ur-Rahman. Both of these men were instrumental in establishing the Shariah [Supervisory] Board of America in Chicago which supervises and issues the approving fatwas for the Devon Bank products. (See here and here.)
Ibrahim has since gone on the lam after his Sunrise Equities, a Shariah-compliant investment business, turned out to be a mini-Madoff scheme stealing about $80 million from unsuspecting Muslims. (See also here.) Many of the Muslim victims consider Devon Bank's Mufti Nawal-ur-Rahman to be very much a part of the scheme since he was very close to Ibrahim, and indeed the Shariah [Supervisory] Advisory Board was created by these two men. (See here.) One well-informed community journalist-blogger reports that Rahman has also disappeared, presumably back to his Deobandi masters in Pakistan, including Usmani. (See here.)
Now, fraud among religious groups is hardly new and there is no argument to be made against Shariah simply because of these criminal characters but this does point to why the State of Minnesota's involvement in the African Development Center-Devon Bank scheme is so problematic.
First, Fannie, the Fed Res Bank of Minn., and the State Housing Authority use an expression in their report, "interest-averse", which on its face is misleading and was only used to avoid saying what it is they are doing: using a given religious legal ruling to satisfy the religious desires of a minority group. It is misleading if not fraudulent because there is nothing "interest-averse" about it. All of the SCF mortgages, whether they be structured as cost-plus, or rent-buy back (called 'ijara' contracts per Shariah), are simply interest disguised through a legal fiction. Now, again, there is nothing wrong with legal fictions--form over substance--we use them all the time in the law and accounting. But when the State uses such terms to hide the fact that it is promoting a given religion, that, we suggest, is a fraud employed in an effort to hide what is likely a violation of the Establishment Clause. If they thought what they were doing was kosher (to mix metaphors as it were), why hide behind terminology which is patently misleading if not simply false?
Second, there are many non-Shariah Muslims who don't consider "interest" as we know it to fall within any Islamic prohibition. Even others, who consider themselves Shariah-respectful though not strictly adherent, who understand the prohibition against "riba" to be a prohibition against usurious default rates and charges, not market-based interest. Thus, these federal and state authorities should not have used the fraudulent term "interest-averse", but "riba-averse according to X, Y, Z Shariah religious authorities". In other words, by promoting what the "traditional" Shariah authorities consider "interest", the State is aligning itself not just with one particular religion, but one particular theological-legal choice within that religion. Granted, the Shariah authorities who so hold that riba is what we call interest have an absolute monopoly in the Shariah-Islamic world, that is no reason for a US governmental body to align itself with one group's religious choices over another. This is very much akin to the NY case we cited to in our earlier blog where the federal court held that a city could not pass "Kosher Anti-Fraud" laws which would accept as "truthful" a merchant's claims of "kosher" only when it satisfied Orthodox rules of kashrut.
We leave aside for the moment the even more important policy discussion, which we have carried on here at SANE for years, how and why a state agency would align itself with any form of Shariah which demands our conversion, subjugation or murder (and in that order)?
What we need to find out in the FOIA request is what criteria does the State Housing Authority use to "authorize" one version of "interest-averse" mortgages over another. Why the Devon Murabaha mortgage? How did the State learn that the target minority of African Muslims would accept a Murabaha contract where interest is called "profit PLUS" over say a contract blessed by SANE where we call the interest a "charitable donation" to a worthy cause (i.e., the bank, who in turn makes a donation to the IRS who in turn makes a donation to AIG who in turn offers SCF insurance). Surely Muslims have no problem taking out a loan if all they do is agree to give a donation to some worthy cause? We jest of course because Shariah-faithful Muslims will only accept a mortgage approved by a fatwa issued by a recognized Shariah authority--like Usmani who wants us all converted, subjugated or dead. This points out the problem with the State choosing which religion to support and which version of that religion to support.
On its face, the State of Minnesota has a problem and if it doesn't realize it now, we'll make sure it finds out.
Fri, March 13, 2009, 10:30:AM
Two days ago, Investor's Business Daily, probably the best editorial page in the country, published an editorial on the now weeks-old story about the State of Minnesota Housing Authority getting involved in offering Shariah-compliant mortgages. The editorial is here.
We had previously blogged about this when Minnesota Public Radio first ran the story and it was picked up by the reliable Jihad Watch. Our blog is here and we promised to look into it.
Here is what we have learned, although the public details remain scant at best. We are working on filing a Freedom of Information Act request with the Minnesota Housing Authority to learn exactly what is going on. But, from what we can tell from the State of Minnesota Housing Authority web site and the published reports, this is what we think is going on.
A non-profit group called the African Development Center began pushing for mortgage assistance for Muslims, mostly new immigrants from Africa (we presume the growing Somali community is one of the target beneficiaries) from the State Housing Authority. This has been in the works for years. Thus, in a June 2005 report (at p. 12 of the pdf) produced by Fannie Mae, the Federal Reserve Bank of Minnesota, and the Minnesota Housing Authority, we find the following:
Interest-Averse Mortgages
While significant mortgage innovations have been made in recent years and several flexible product offerings exist to meet the needs of first-time homebuyers, credit needs. One of the most pressing credit needs in this market is for an interest-averse mortgage product for interest-averse populations. The African Development Center is currently in the process conducting a financial analysis of available interest-averse loan products, including the American Finance House-LARIBA and Guidant Financial product. It is important to note that while both LARIBA and Guidant Financial market a product to interest-averse populations, neither company has a local outlet in the Twin Cities. The African Development Center’s objective for conducting a financial analysis of interestaverse products is to provide accurate and transparent pricing information to consumers who are interested in evaluating a variety of financing options available, including an interest-averse product. The ADC, which currently offers interest-averse small business financing for micro-enterprise entrepreneurs, is also exploring research and development around the creation of an interest-averse mortgage product.
"Interest-averse" is of course code for Shariah-compliant and this is clear from the fact that LARIBA and Guidance, two financial companies catering to the Shariah-compliant markets, are involved in the "financial analysis". If you go to the link provided for Guidance, you'll find that the Chairman of the Shariah Board is none other than Mufti M. Taqi Usmani, probably the most important Shariah authority on SCF in the world and also famed for his role on the Dow Jones Islamic Index Shariah board, HSBC, and many others, the same Usmani who wrote an entire chapter calling for violent jihad by Muslims living in the West against the western infidels. See here for the details of his fatwa.
We have also learned that the program decided upon by the State of Minnesota is being underwritten by Devon Bank. That is, Devon Bank provides the SCF mortgages and the State of Minnesota subsidizes them in some way. We will learn how exactly with the FOIA request. Devon Bank is a small Chicago community bank that has long been in the SCF space, utilizing pre-rulings by the Office of the Comptroller of Currency to approve the purchase and "cost plus" sale of real estate to Shariah-faithful Muslims. The special approval is required because generally federal banking rules prohibit banks from buying or investing in real estate other than what the bank needs for its own offices and as temporarily acquired in foreclosures and the like. What Devon wanted to do was offer Muslims a mortgage with interest but one that Shariah considers not to be interest. How? One popular way was through what is called a Murabaha contract per Shariah that allows the bank to buy the home and then immediately sell it back to the real buyer-borrower who then pays "cost PLUS". The PLUS of course represents the interest at the going rate for 30 years. And, lo and behold, the "sales contract" can be paid out over 30 years. Whalla! "Interest Averse"!
But this is all of course a ruse because Devon Bank and the buyer-borrower consider the profit "PLUS" to be "mortgage interest" not cost basis for purposes of the IRS--the tax payer wants the deduction. Also, imagine the bankruptcy complications if a lending institution went bankrupt after issuing hundreds of Cost PLUS mortgages. Were these sales of bank assets subject to being set aside as voidable?
Interestingly, Devon Bank set up its Shariah operations through the good offices of now defunct Sunrise Equities CEO Salman Ibrahim and Shariah authority Mufti Nawal-ur-Rahman. Both of these men were instrumental in establishing the Shariah [Supervisory] Board of America in Chicago which supervises and issues the approving fatwas for the Devon Bank products. (See here and here.)
Ibrahim has since gone on the lam after his Sunrise Equities, a Shariah-compliant investment business, turned out to be a mini-Madoff scheme stealing about $80 million from unsuspecting Muslims. (See also here.) Many of the Muslim victims consider Devon Bank's Mufti Nawal-ur-Rahman to be very much a part of the scheme since he was very close to Ibrahim, and indeed the Shariah [Supervisory] Advisory Board was created by these two men. (See here.) One well-informed community journalist-blogger reports that Rahman has also disappeared, presumably back to his Deobandi masters in Pakistan, including Usmani. (See here.)
Now, fraud among religious groups is hardly new and there is no argument to be made against Shariah simply because of these criminal characters but this does point to why the State of Minnesota's involvement in the African Development Center-Devon Bank scheme is so problematic.
First, Fannie, the Fed Res Bank of Minn., and the State Housing Authority use an expression in their report, "interest-averse", which on its face is misleading and was only used to avoid saying what it is they are doing: using a given religious legal ruling to satisfy the religious desires of a minority group. It is misleading if not fraudulent because there is nothing "interest-averse" about it. All of the SCF mortgages, whether they be structured as cost-plus, or rent-buy back (called 'ijara' contracts per Shariah), are simply interest disguised through a legal fiction. Now, again, there is nothing wrong with legal fictions--form over substance--we use them all the time in the law and accounting. But when the State uses such terms to hide the fact that it is promoting a given religion, that, we suggest, is a fraud employed in an effort to hide what is likely a violation of the Establishment Clause. If they thought what they were doing was kosher (to mix metaphors as it were), why hide behind terminology which is patently misleading if not simply false?
Second, there are many non-Shariah Muslims who don't consider "interest" as we know it to fall within any Islamic prohibition. Even others, who consider themselves Shariah-respectful though not strictly adherent, who understand the prohibition against "riba" to be a prohibition against usurious default rates and charges, not market-based interest. Thus, these federal and state authorities should not have used the fraudulent term "interest-averse", but "riba-averse according to X, Y, Z Shariah religious authorities". In other words, by promoting what the "traditional" Shariah authorities consider "interest", the State is aligning itself not just with one particular religion, but one particular theological-legal choice within that religion. Granted, the Shariah authorities who so hold that riba is what we call interest have an absolute monopoly in the Shariah-Islamic world, that is no reason for a US governmental body to align itself with one group's religious choices over another. This is very much akin to the NY case we cited to in our earlier blog where the federal court held that a city could not pass "Kosher Anti-Fraud" laws which would accept as "truthful" a merchant's claims of "kosher" only when it satisfied Orthodox rules of kashrut.
We leave aside for the moment the even more important policy discussion, which we have carried on here at SANE for years, how and why a state agency would align itself with any form of Shariah which demands our conversion, subjugation or murder (and in that order)?
What we need to find out in the FOIA request is what criteria does the State Housing Authority use to "authorize" one version of "interest-averse" mortgages over another. Why the Devon Murabaha mortgage? How did the State learn that the target minority of African Muslims would accept a Murabaha contract where interest is called "profit PLUS" over say a contract blessed by SANE where we call the interest a "charitable donation" to a worthy cause (i.e., the bank, who in turn makes a donation to the IRS who in turn makes a donation to AIG who in turn offers SCF insurance). Surely Muslims have no problem taking out a loan if all they do is agree to give a donation to some worthy cause? We jest of course because Shariah-faithful Muslims will only accept a mortgage approved by a fatwa issued by a recognized Shariah authority--like Usmani who wants us all converted, subjugated or dead. This points out the problem with the State choosing which religion to support and which version of that religion to support.
On its face, the State of Minnesota has a problem and if it doesn't realize it now, we'll make sure it finds out.
Wednesday, February 11, 2009
Britain's Sharia Banking Explosion
February 11, 2009
Melanie Phillips: "As Britain’s government and banks congratulate themselves on the stunning growth of sharia banking in the UK, do any of them have the slightest understanding of what they are doing?"
"Cheer up – we’re about to be bought up by the Islamic world."
"Britain's a world-leader in sharia banking - but we haven't grasped the sinister and dangerous implications," by Melanie Phillips for the Mail Online, February 10:
Worried that Britain is going bankrupt? Cheer up – we’re about to be bought up by the Islamic world.
A report by International Financial Services London reveals that Britain’s Islamic banking sector is now bigger than that of Pakistan.
The study says that the UK has by far the largest number of banks for Muslims of any western country.
The UK now has five fully ‘sharia-compliant’ banks – providing products which prohibit interest payments and investment in alcohol or gambling firms in accordance with Islamic sharia law – while another 17 leading institutions including Barclays, RBS and Lloyds Banking Group have set up special branches or subsidiary firms for Muslim clients.
The $18billion (£12bn) in assets of Britain’s Islamic banks are said to dwarf those of Muslim states such as Pakistan, Bangladesh, Turkey and Egypt. And there are also 55 colleges and professional institutions offering education in Islamic finance in Britain – more than anywhere else in the world.
This development has been actively pushed by the government. When he was Chancellor of the Exchequer, Gordon Brown declared that he wanted London to become the global centre of Islamic banking. You can obviously see the attraction, especially in these straightened times. But the only thing our politicians and bankers appear to see is the seductive prospect of trillions of pound and dollar signs dancing before their bedazzled eyes.
What they refuse to acknowledge is the real price that is to be paid for this. They don’t understand that the spread of sharia banking in Britain and America is a significant part of the attempt to Islamise Britain and America. Acceptance of sharia finance furthers the Islamist objective of gradually legitimising Islamic sharia law more generally in the west.
The point which is being missed is that all who use it must conform to the dictates of sharia law. Sharia financial institutions may not be making this clear now – they don’t want to frighten people away – but at some point that IOU of sharia-compliance will be called in. This is how sharia-compliance will be spread to both the Muslim and non-Muslim population.
Any Western institution that endorses sharia-compliant products therefore effectively endorses the extremist ideology behind it of conquering the west for Islam, whether it knows it or not.
The most important point to grasp is that Islam recognises no authority superior to sharia. Sharia banks will therefore not recognise the superior authority of the law of the land. When trillions of pounds and dollars are locked into them, who will argue with them?
Even more troubling is the potential cover provided by sharia finance for the financing of terrorism. Sharia requires Muslims to tithe a percentage of their money to charity, called ‘zakat’.
But charity in Islam is more like solidarity. So some of this money donated to Islamic charities may well find its way to organisations promoting jihad and supporting suicide bombing including Hamas, Hezbollah, the families of Palestinian suicide bombers and Islamist madrassas in places like Pakistan. [...]
As Britain’s government and banks congratulate themselves on the stunning growth of sharia banking in the UK, do any of them have the slightest understanding of what they are doing?
Melanie Phillips: "As Britain’s government and banks congratulate themselves on the stunning growth of sharia banking in the UK, do any of them have the slightest understanding of what they are doing?"
"Cheer up – we’re about to be bought up by the Islamic world."
"Britain's a world-leader in sharia banking - but we haven't grasped the sinister and dangerous implications," by Melanie Phillips for the Mail Online, February 10:
Worried that Britain is going bankrupt? Cheer up – we’re about to be bought up by the Islamic world.
A report by International Financial Services London reveals that Britain’s Islamic banking sector is now bigger than that of Pakistan.
The study says that the UK has by far the largest number of banks for Muslims of any western country.
The UK now has five fully ‘sharia-compliant’ banks – providing products which prohibit interest payments and investment in alcohol or gambling firms in accordance with Islamic sharia law – while another 17 leading institutions including Barclays, RBS and Lloyds Banking Group have set up special branches or subsidiary firms for Muslim clients.
The $18billion (£12bn) in assets of Britain’s Islamic banks are said to dwarf those of Muslim states such as Pakistan, Bangladesh, Turkey and Egypt. And there are also 55 colleges and professional institutions offering education in Islamic finance in Britain – more than anywhere else in the world.
This development has been actively pushed by the government. When he was Chancellor of the Exchequer, Gordon Brown declared that he wanted London to become the global centre of Islamic banking. You can obviously see the attraction, especially in these straightened times. But the only thing our politicians and bankers appear to see is the seductive prospect of trillions of pound and dollar signs dancing before their bedazzled eyes.
What they refuse to acknowledge is the real price that is to be paid for this. They don’t understand that the spread of sharia banking in Britain and America is a significant part of the attempt to Islamise Britain and America. Acceptance of sharia finance furthers the Islamist objective of gradually legitimising Islamic sharia law more generally in the west.
The point which is being missed is that all who use it must conform to the dictates of sharia law. Sharia financial institutions may not be making this clear now – they don’t want to frighten people away – but at some point that IOU of sharia-compliance will be called in. This is how sharia-compliance will be spread to both the Muslim and non-Muslim population.
Any Western institution that endorses sharia-compliant products therefore effectively endorses the extremist ideology behind it of conquering the west for Islam, whether it knows it or not.
The most important point to grasp is that Islam recognises no authority superior to sharia. Sharia banks will therefore not recognise the superior authority of the law of the land. When trillions of pounds and dollars are locked into them, who will argue with them?
Even more troubling is the potential cover provided by sharia finance for the financing of terrorism. Sharia requires Muslims to tithe a percentage of their money to charity, called ‘zakat’.
But charity in Islam is more like solidarity. So some of this money donated to Islamic charities may well find its way to organisations promoting jihad and supporting suicide bombing including Hamas, Hezbollah, the families of Palestinian suicide bombers and Islamist madrassas in places like Pakistan. [...]
As Britain’s government and banks congratulate themselves on the stunning growth of sharia banking in the UK, do any of them have the slightest understanding of what they are doing?
Tuesday, December 30, 2008
Shari'a Finance At The Fed
Hugging Shari'a Finance at the Fed
By Alyssa A. Lappen
FrontPageMagazine.com | 12/10/2008
The first market day after President-elect Obama announced plans to appoint Federal Reserve Bank of New York president Timothy Geithner as Secretary of the U.S. Treasury, U.S. equities rose 6.5%. Pundits praised his experience handling crises and understanding of the troubled economy. But possibly, the market hoopla was premature, or even unwarranted. Some analysts seek his retirement.
As turmoil built, Geithner criticized Wall Street's self-regulatory system, negative incentives and market forces, sought tighter supervision and berated insufficient “derivative securities” regulation and “credit-default” swaps allowing investors to “insure” against loses---only to fail. The Treasury Department's former attaché to the International Monetary Fund had overseen U.S. responses to the 1990s Mexican, Indonesian and Korean bailouts. But at the Fed, Geithner did not use regulatory powers to check abuses, or advocate for more regulation, impartial supervision or new laws. He even concluded that markets were improving---and after Bear Stearns' collapse confessed, nobody “understands [the causes] yet.”
Worst of all, since Nov. 2003, Geithner let dangerous new Islamic and shari'a-based securities, markets and financial institutions gain business currency---despite the Fed's role in U.S. monetary policy, currency distribution, government securities markets, legal supervision, regulatory enforcement, bank and capital markets investigation, foreign accounts and a payments mechanism handling over $4 trillion daily in funds and securities transfers. Not to mention Fed officials' admitted lack of understanding.
On July 1, 2004, eight months after Geithner assumed command, the New York Fed hosted Asim Ghanfoor (sic), AG Group founder and managing director, to address its Seventh Annual Global Economic Forum on “ABCs of Islamic Financing” and Islam's increasing global financial role. A month later, a href="http://www.globalterroralert.com/faisalgillletter.pdf">Senators Charles Grassley and John Kyl identified Ghafoor as a representative of Boston's terror-funding Boston's Care International, the Global Relief Foundation (GRF) and the Al Harimain Islamic Foundation, which the U.S. Treasury specially designated a terrorist organization in September 2004 and again in June 2008. Given Ghafoor's connections, how could the Fed have featured him, much less warmly accepted Islamic finance?
In fairness, the New York Fed began authorizing obscure shari'a banking institutions, structured shari'a issues, and opaque Islamic securities trading long before Geithner arrived. “Islamic bankers have been quite ingenious in developing financial transactions that suit their needs,” New York Fed first vice president Ernest T. Patrikis told an Islamic Finance conference in May 1996. “We bank supervisors, too, can be ingenious and will want to work with any of you should you decide that you want to engage in Islamic banking” in the U.S.
The dangers of Islamic finance should have been apparent. From 1996 on, all 12 Federal Reserve banks received, and were charged to enforce many Treasury Department Office of Foreign Assets Control circulars designating Islamic groups and banks as terrorist-financing institutions, organizations and individuals. In 1998, OFAC warned the Fed against transactions with Osama bin Laden and his affiliates, in 1999 froze Taliban assets, in 2002 reminded banks to check customers against known terrorist lists and in 2003 warned against trading with any unnamed counter-party.
Meanwhile, had the Fed only noticed, there were warning signs elsewhere too. In 1999, Saudi scholar Mohammad Nejatullah Siddiqi proposed at Harvard that banning interest would “cure the ills of contemporary finance,” “create a safer, saner financial world,” incorporate the “institution of waqf [Islamic trust]” in economics and create “morally inspired” behavior. In 2001, Siddiqi openly labeled shari'a finance a revolution-driver---an “universal endeavor” to replace “excesses of capitalism.”
Alarm bells should have gone off at a New York Fed event on Nov. 21, 2002, furthermore, where shari'a banking proponent Wafiq Fannoun described Islam as “Peace through submission to Allah (God), however, “revelation-based [the Qur'an, Hadith] ... complete way of life” --- that is, a system of religious law proscribed by the U.S. Constitution from inclusion in secular legislation or regulatory systems. Equally at odds with Constitutional law and Western capitalism are other Islamic notions he described---namely that Allah is both creator and “owner” of all material things, and that “individuals” may not possess “natural resources important to society.” as “alternative financing for Muslims” and others recognizing individual ownership rights.
True, most of that happened before Geithner ran the New York Fed. But after he took the helm in November 2003, the bank missed several still more critical red flags on Islamic banking.
First came Basel II Capital Accord, supposedly designed to strengthen the “regulatory capital framework” for big international banks. Authorities increasingly expected to trust banks to internally assess their own credit and operational risks. However, in July 2004 Switzerland's Bank for International Settlements (BIS) reported, 53% of Middle Eastern bank supervisory staffs lacked the necessary training to meet Basel II's December 2007 deadline. Middle Eastern banks originated and still predominate in Islamic banking. Nevertheless, by 2007, they still needed historical data to fashion reliable risk models but instead counted on “heavy” collateral and “exceptional” economic conditions to eliminate risks.
Islamic institutions had manufactured “special purpose entities” (SPEs)---renamed, “special-purpose vehicles (SPVs)”--- such as coincidentally helped destroy Enron. These legal devices restructured “interest-bearing debt, collecting interest [as] rent or [a] price mark-up,” Rice University Islamic economics chairman Mahmoud el-Gamal warned in May 2007. “Interest-based” Islamic finance equaled “shari'a arbitrage,” concerned only “religious identity” and merely employed Western securitization methods to transform liquid, traceable cash flows from interest-bearing debt into illiquid, opaque assets.
Shari'a banking, though, had far fewer regulatory and accounting protections than sub-prime mortgages---and like “portfolio insurance” in 1987, mortgage-backed bonds in 1994, and sub-prime mortgages in 2008, could also cause huge market declines. Islamic banking purveyors admitted shari'a regulations could “override commercial decisions;” didn't “standardize” documentation; and used complex “inter-creditor agreements” and “off-balance sheet financing.”
Even hosting hosting Islamic financier Asim Ghafoor, a representative to three terror-funding organizations, on July 1, 2004 apparently gave no one inside Geithner's Fed reason to pause from its rush to further accommodate shari'a banking.
In March 2005, New York Fed general counsel Thomas C. Baxter Jr. asserted the Constitutional “wall of separation between church and state” Thomas Jefferson had described was “not absolute.” Chief Justice Warren Burger had in 1984 suggested that the Constitution “affirmatively mandates accommodation, not merely tolerance, of all religions,” Baxter told an Islamic financial industry “Legal Issues” seminar. “[S]ecular law should ... accommodate differing religious practices,” he indicated, apparently even if that meant specially excepting Islamic banking from secular laws and regulations.
In April 2005, New York Fed executive vice president William Rutledge admitted that the bank was “in no position to take a stance on shari'a interpretation.” He also claimed the bank would hold Islamic finance to “the same high licensing and supervision standards” as conventional banks.
Despite the New York Fed's role as a legal supervisor of Islamic banking, neither Rutledge nor Geithner noticed, however, that shari'a banking, a 20th century “tradition” invented by the Muslim Brotherhood, can't be severed from Islamic law---statutes that Mohammed initiated, which caliphs, scholars and jurists developed over the last 1,400 years. They hold that shari'a grants Muslims (the ummah) supremacy over all others---along with all land and property to hold in trust for Allah. Thus as Fannoun effectively told the Fed in Nov. 2002, land or property, once conquered or acquired by Muslims (or for Allah), can't generally revert to their original owners. Shari'a commands Muslims to wage jihad warfare until they subdue all “infidels” under universal Muslim rule, as Ibn Khaldun avowed in the Muqaddimah (trans., Franz Rosenthal, Princeton Univ. Press, 9th printing, 1989, p. 183).
Confiscating possessions from non-believers exacts “revenge,” wrote jurist Abul Hasan al Mawardi (d. 1058). Qur'an 57:2 argued, “To Him belongs all dominions of the heavens and earth.” Qur'an 59:7 echoed, “That which Allah giveth as spoil [war booty] unto his Messenger…” Allah authorized 2nd Islamic Caliph, Umar Ibn Khattab, to confiscate property by force, fulfilling an Islamic trust, or ruling under Allah’s law. It was thereby just to take anything from nonbelievers, (The Laws of Islamic Governance, Taha Publishing, 1996, pp. 207-251) including all territories Islam ever controlled.
Apparently, Fed officials also neglected to investigate the alliances and beliefs of shari'a advisors and their affiliates in the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Financial Services Board (IFSB) standards agencies.
The shari'a-based Islamic Development Bank established the AAOIFI in 1990 to set Islamic finance standards. Its trustees include executives of Kuwait Finance House, Saudi Arabia's Dallah al Baraka Group and al-Rajhi Banking & Investment Corporation---all implicated in al-Qa’ida and other terror-funding---and Sudanese (and until recently Iranian) officials, both U.S. Treasury-sanctioned countries.
Former Malaysian Prime Minister Mohamed Mahathir in 2002 christened IFSB “a universal Islamic banking system” and “a jihad worth pursuing….” Its board members include the terror-funding Iranian, Sudanese and Syrian central banks and Palestinian Monetary Authority.
Yusuf Qaradawi, an U.S.-designated foreign terrorist barred entry since 1999 for example, supports wife-beating, suicide bombings, murder of American military forces and female suicide “martyr operations.” A large shareholder of Al Taqwa Bank, Qaradawi also chairs the recently designated terrorist-funding Union of Good “charity,” Qatar National Bank, its al-Islami subsidiary, Qatar Islamic Bank, and Qatar International Islamic Bank---and follows AAOIFI standards he helped create.
Similarly, Dow Jones Islamic Market Indexes (DJIM) shari'a board uses “stringent and published” methods to determine “compliance of index-eligible companies.” But its industry screens, financial ratios and biographies omit advisors’ affiliations or beliefs. Dow Jones Citigroup Sukuk Index (DJCSI)’s shari'a board certifies Islamic asset-backed bonds if structures meet “AAOIFI standards” and shari'a principles, but don't mention AAOIFI history or governance.
Until July 2008, shari'a banks, the Dow Jones Islamic Index board and an North American Islamic Trust (NAIT) fund also employed a 20-year veteran of Pakistan’s Shari'a Supreme Court, former judge Taqi Usmani, who taught at the Taliban spawning ground, Jamia Darul Uloom Karachi, headed the AAOIFI religious board, endorsed suicide bombing, and in 2007 advised U.K. Muslims to impose shari'a when their numbers suffice.
Shari'a finance advisor Muslim Brother Yusuf Talal DeLorenzo advised Pakistan's tyrannical Zia ul-Haq from 1981 to 1984, and ran the Virginia Islamic Saudi Academy educational program cited in 2008 for using hateful Islamic texts. Trained at Karachi's terror-espousing Jamia Al Alomia Al Islamia, he served the Muslim Brotherhood International Institute of Islamic Thought (IIIT) and from 1989, was secretary to the MB's Fiqh Council of North America.
Perhaps Treasury Secretary-designate Geithner seriously meant to keep Rutledge's promise to grant Islamic financiers no special favors. But allowing shari'a finance to exist at all is itself a special favor.
Moreover, on November 23, 2008 Geithner, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke agreed to add another $20 billion taxpayer-gilded bailout to Citibank's previous $25 billion bailout---and offer $306 billion in new loans to cover Citi's losses on soured real estate debts and securities.
Only three days earlier Citigroup uber-shareolder Prince Alwaleed bin Talal, a godfather of Islamic finance, had announced plans to up his stake in America's largest (failing and “underpriced”) bank from 4% to 5%. On March 20, 2006, the Saudi Kingdom Holding Co. CEO was “honored for humanitarian contribution to Islam” at a “glittering gala to celebrate excellence in Islamic Finance” that also featured terror-financier and Dallah al-Baraka founder and president Saleh Abdullah Kamel.
--------------------------------------------------------------------------------
Alyssa A. Lappen is a former Senior Fellow of the American Center for Democracy, former Senior Editor of Institutional Investor, Working Woman and Corporate Finance, and former Associate Editor of Forbes. Her website is www.AlyssaaLappen.org. Hugging Shari'a Finance at the Fed
By Alyssa A. Lappen
FrontPageMagazine.com | 12/10/2008
The first market day after President-elect Obama announced plans to appoint Federal Reserve Bank of New York president Timothy Geithner as Secretary of the U.S. Treasury, U.S. equities rose 6.5%. Pundits praised his experience handling crises and understanding of the troubled economy. But possibly, the market hoopla was premature, or even unwarranted. Some analysts seek his retirement.
As turmoil built, Geithner criticized Wall Street's self-regulatory system, negative incentives and market forces, sought tighter supervision and berated insufficient “derivative securities” regulation and “credit-default” swaps allowing investors to “insure” against loses---only to fail. The Treasury Department's former attaché to the International Monetary Fund had overseen U.S. responses to the 1990s Mexican, Indonesian and Korean bailouts. But at the Fed, Geithner did not use regulatory powers to check abuses, or advocate for more regulation, impartial supervision or new laws. He even concluded that markets were improving---and after Bear Stearns' collapse confessed, nobody “understands [the causes] yet.”
Worst of all, since Nov. 2003, Geithner let dangerous new Islamic and shari'a-based securities, markets and financial institutions gain business currency---despite the Fed's role in U.S. monetary policy, currency distribution, government securities markets, legal supervision, regulatory enforcement, bank and capital markets investigation, foreign accounts and a payments mechanism handling over $4 trillion daily in funds and securities transfers. Not to mention Fed officials' admitted lack of understanding.
On July 1, 2004, eight months after Geithner assumed command, the New York Fed hosted Asim Ghanfoor (sic), AG Group founder and managing director, to address its Seventh Annual Global Economic Forum on “ABCs of Islamic Financing” and Islam's increasing global financial role. A month later, a href="http://www.globalterroralert.com/faisalgillletter.pdf">Senators Charles Grassley and John Kyl identified Ghafoor as a representative of Boston's terror-funding Boston's Care International, the Global Relief Foundation (GRF) and the Al Harimain Islamic Foundation, which the U.S. Treasury specially designated a terrorist organization in September 2004 and again in June 2008. Given Ghafoor's connections, how could the Fed have featured him, much less warmly accepted Islamic finance?
In fairness, the New York Fed began authorizing obscure shari'a banking institutions, structured shari'a issues, and opaque Islamic securities trading long before Geithner arrived. “Islamic bankers have been quite ingenious in developing financial transactions that suit their needs,” New York Fed first vice president Ernest T. Patrikis told an Islamic Finance conference in May 1996. “We bank supervisors, too, can be ingenious and will want to work with any of you should you decide that you want to engage in Islamic banking” in the U.S.
The dangers of Islamic finance should have been apparent. From 1996 on, all 12 Federal Reserve banks received, and were charged to enforce many Treasury Department Office of Foreign Assets Control circulars designating Islamic groups and banks as terrorist-financing institutions, organizations and individuals. In 1998, OFAC warned the Fed against transactions with Osama bin Laden and his affiliates, in 1999 froze Taliban assets, in 2002 reminded banks to check customers against known terrorist lists and in 2003 warned against trading with any unnamed counter-party.
Meanwhile, had the Fed only noticed, there were warning signs elsewhere too. In 1999, Saudi scholar Mohammad Nejatullah Siddiqi proposed at Harvard that banning interest would “cure the ills of contemporary finance,” “create a safer, saner financial world,” incorporate the “institution of waqf [Islamic trust]” in economics and create “morally inspired” behavior. In 2001, Siddiqi openly labeled shari'a finance a revolution-driver---an “universal endeavor” to replace “excesses of capitalism.”
Alarm bells should have gone off at a New York Fed event on Nov. 21, 2002, furthermore, where shari'a banking proponent Wafiq Fannoun described Islam as “Peace through submission to Allah (God), however, “revelation-based [the Qur'an, Hadith] ... complete way of life” --- that is, a system of religious law proscribed by the U.S. Constitution from inclusion in secular legislation or regulatory systems. Equally at odds with Constitutional law and Western capitalism are other Islamic notions he described---namely that Allah is both creator and “owner” of all material things, and that “individuals” may not possess “natural resources important to society.” as “alternative financing for Muslims” and others recognizing individual ownership rights.
True, most of that happened before Geithner ran the New York Fed. But after he took the helm in November 2003, the bank missed several still more critical red flags on Islamic banking.
First came Basel II Capital Accord, supposedly designed to strengthen the “regulatory capital framework” for big international banks. Authorities increasingly expected to trust banks to internally assess their own credit and operational risks. However, in July 2004 Switzerland's Bank for International Settlements (BIS) reported, 53% of Middle Eastern bank supervisory staffs lacked the necessary training to meet Basel II's December 2007 deadline. Middle Eastern banks originated and still predominate in Islamic banking. Nevertheless, by 2007, they still needed historical data to fashion reliable risk models but instead counted on “heavy” collateral and “exceptional” economic conditions to eliminate risks.
Islamic institutions had manufactured “special purpose entities” (SPEs)---renamed, “special-purpose vehicles (SPVs)”--- such as coincidentally helped destroy Enron. These legal devices restructured “interest-bearing debt, collecting interest [as] rent or [a] price mark-up,” Rice University Islamic economics chairman Mahmoud el-Gamal warned in May 2007. “Interest-based” Islamic finance equaled “shari'a arbitrage,” concerned only “religious identity” and merely employed Western securitization methods to transform liquid, traceable cash flows from interest-bearing debt into illiquid, opaque assets.
Shari'a banking, though, had far fewer regulatory and accounting protections than sub-prime mortgages---and like “portfolio insurance” in 1987, mortgage-backed bonds in 1994, and sub-prime mortgages in 2008, could also cause huge market declines. Islamic banking purveyors admitted shari'a regulations could “override commercial decisions;” didn't “standardize” documentation; and used complex “inter-creditor agreements” and “off-balance sheet financing.”
Even hosting hosting Islamic financier Asim Ghafoor, a representative to three terror-funding organizations, on July 1, 2004 apparently gave no one inside Geithner's Fed reason to pause from its rush to further accommodate shari'a banking.
In March 2005, New York Fed general counsel Thomas C. Baxter Jr. asserted the Constitutional “wall of separation between church and state” Thomas Jefferson had described was “not absolute.” Chief Justice Warren Burger had in 1984 suggested that the Constitution “affirmatively mandates accommodation, not merely tolerance, of all religions,” Baxter told an Islamic financial industry “Legal Issues” seminar. “[S]ecular law should ... accommodate differing religious practices,” he indicated, apparently even if that meant specially excepting Islamic banking from secular laws and regulations.
In April 2005, New York Fed executive vice president William Rutledge admitted that the bank was “in no position to take a stance on shari'a interpretation.” He also claimed the bank would hold Islamic finance to “the same high licensing and supervision standards” as conventional banks.
Despite the New York Fed's role as a legal supervisor of Islamic banking, neither Rutledge nor Geithner noticed, however, that shari'a banking, a 20th century “tradition” invented by the Muslim Brotherhood, can't be severed from Islamic law---statutes that Mohammed initiated, which caliphs, scholars and jurists developed over the last 1,400 years. They hold that shari'a grants Muslims (the ummah) supremacy over all others---along with all land and property to hold in trust for Allah. Thus as Fannoun effectively told the Fed in Nov. 2002, land or property, once conquered or acquired by Muslims (or for Allah), can't generally revert to their original owners. Shari'a commands Muslims to wage jihad warfare until they subdue all “infidels” under universal Muslim rule, as Ibn Khaldun avowed in the Muqaddimah (trans., Franz Rosenthal, Princeton Univ. Press, 9th printing, 1989, p. 183).
Confiscating possessions from non-believers exacts “revenge,” wrote jurist Abul Hasan al Mawardi (d. 1058). Qur'an 57:2 argued, “To Him belongs all dominions of the heavens and earth.” Qur'an 59:7 echoed, “That which Allah giveth as spoil [war booty] unto his Messenger…” Allah authorized 2nd Islamic Caliph, Umar Ibn Khattab, to confiscate property by force, fulfilling an Islamic trust, or ruling under Allah’s law. It was thereby just to take anything from nonbelievers, (The Laws of Islamic Governance, Taha Publishing, 1996, pp. 207-251) including all territories Islam ever controlled.
Apparently, Fed officials also neglected to investigate the alliances and beliefs of shari'a advisors and their affiliates in the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Financial Services Board (IFSB) standards agencies.
The shari'a-based Islamic Development Bank established the AAOIFI in 1990 to set Islamic finance standards. Its trustees include executives of Kuwait Finance House, Saudi Arabia's Dallah al Baraka Group and al-Rajhi Banking & Investment Corporation---all implicated in al-Qa’ida and other terror-funding---and Sudanese (and until recently Iranian) officials, both U.S. Treasury-sanctioned countries.
Former Malaysian Prime Minister Mohamed Mahathir in 2002 christened IFSB “a universal Islamic banking system” and “a jihad worth pursuing….” Its board members include the terror-funding Iranian, Sudanese and Syrian central banks and Palestinian Monetary Authority.
Yusuf Qaradawi, an U.S.-designated foreign terrorist barred entry since 1999 for example, supports wife-beating, suicide bombings, murder of American military forces and female suicide “martyr operations.” A large shareholder of Al Taqwa Bank, Qaradawi also chairs the recently designated terrorist-funding Union of Good “charity,” Qatar National Bank, its al-Islami subsidiary, Qatar Islamic Bank, and Qatar International Islamic Bank---and follows AAOIFI standards he helped create.
Similarly, Dow Jones Islamic Market Indexes (DJIM) shari'a board uses “stringent and published” methods to determine “compliance of index-eligible companies.” But its industry screens, financial ratios and biographies omit advisors’ affiliations or beliefs. Dow Jones Citigroup Sukuk Index (DJCSI)’s shari'a board certifies Islamic asset-backed bonds if structures meet “AAOIFI standards” and shari'a principles, but don't mention AAOIFI history or governance.
Until July 2008, shari'a banks, the Dow Jones Islamic Index board and an North American Islamic Trust (NAIT) fund also employed a 20-year veteran of Pakistan’s Shari'a Supreme Court, former judge Taqi Usmani, who taught at the Taliban spawning ground, Jamia Darul Uloom Karachi, headed the AAOIFI religious board, endorsed suicide bombing, and in 2007 advised U.K. Muslims to impose shari'a when their numbers suffice.
Shari'a finance advisor Muslim Brother Yusuf Talal DeLorenzo advised Pakistan's tyrannical Zia ul-Haq from 1981 to 1984, and ran the Virginia Islamic Saudi Academy educational program cited in 2008 for using hateful Islamic texts. Trained at Karachi's terror-espousing Jamia Al Alomia Al Islamia, he served the Muslim Brotherhood International Institute of Islamic Thought (IIIT) and from 1989, was secretary to the MB's Fiqh Council of North America.
Perhaps Treasury Secretary-designate Geithner seriously meant to keep Rutledge's promise to grant Islamic financiers no special favors. But allowing shari'a finance to exist at all is itself a special favor.
Moreover, on November 23, 2008 Geithner, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke agreed to add another $20 billion taxpayer-gilded bailout to Citibank's previous $25 billion bailout---and offer $306 billion in new loans to cover Citi's losses on soured real estate debts and securities.
Only three days earlier Citigroup uber-shareolder Prince Alwaleed bin Talal, a godfather of Islamic finance, had announced plans to up his stake in America's largest (failing and “underpriced”) bank from 4% to 5%. On March 20, 2006, the Saudi Kingdom Holding Co. CEO was “honored for humanitarian contribution to Islam” at a “glittering gala to celebrate excellence in Islamic Finance” that also featured terror-financier and Dallah al-Baraka founder and president Saleh Abdullah Kamel.
--------------------------------------------------------------------------------
Alyssa A. Lappen is a former Senior Fellow of the American Center for Democracy, former Senior Editor of Institutional Investor, Working Woman and Corporate Finance, and former Associate Editor of Forbes. Her website is www.AlyssaaLappen.org. Hugging Shari'a Finance at the Fed
Monday, November 10, 2008
Jihad With Money
Beware this Saudi deal to help bail out Britain. It comes with a devastating IOU
Melanie Phillips UK Mail Online
Last updated at 11:55 PM on 09th November 2008
With all eyes fixed upon the political excitements in the U.S, few have paid much attention to a trip made by the Prime Minister several thousand miles in the opposite direction.
A week ago Gordon Brown, accompanied by his new best friend the Business Secretary Lord Mandelson, went cap in hand to Saudi Arabia and the Gulf states to ask them to help bail out the stricken economies of the West by pumping billions into the International Monetary Fund.
It is more than a little strange that the British Prime Minister should have apparently taken it upon himself to speak on behalf of the IMF. But the real concern is that asking for help from Saudi Arabia is not like tapping your friendly neighbourhood bank manager for a bigger overdraft.
No, this loan comes with a devastating IOU — nothing less than a big slice of control over Britain and the West by a regime at the heart of the attempt to bring about the Islamisation of the free world.
Granted, this country is facing a truly grave financial crisis. But does this mean we should remortgage the future of the West to those whose most radical elements are actively engaged in seeing it destroyed?
Alarming
I have long been concerned by Britain’s failure to acknowledge the true nature of the threat from global Islamism. This latest move is yet more alarming evidence of that process.
Saudi Arabia is at the root of the Islamic onslaught against the West. It is Saudi’s Wahhabi form of Islam which, along with its Shi’ite counterpart in Iran, aims to restore the dominance of Islam in the world and destroy rule by ‘unbelievers’.
It is Saudi money which has fuelled the enormous spread of Wahhabi mosques, preachers and educational institutions in this country, delivering the message of holy war and radicalising countless thousands of British Muslims.
And it is this Saudi ideology which was the inspiration for Al Qaeda.
True, Al Qaeda turned upon Saudi itself on account of its ties with the U.S. As a result, Saudi regards Al Qaeda as its mortal enemy, and as such co-operates with Britain and the U.S in combating it.
But sometimes, to rephrase the old adage, our enemy’s enemy is not actually our friend, but our enemy as well.
Saudi Wahhabism seeks to conquer the West through a pincer movement comprising violence on the one hand and cultural infiltration and takeover on the other.
At the very least, Saudi Arabia speaks with the most lethal of forked tongues, and we should actively be seeking to diminish its influence over our affairs.
But instead our Prime Minister is effectively offering it yet more opportunity to control us.
Mr Brown claimed he did not want such investment to be used to gain political influence. But Lord Mandelson blurted out the truth when he acknowledged that the Saudis and other Gulf states would expect a bigger role in global institutions in return.
Takeover: The Islamic world has already bought Manchester City football club.
This should be enough to chill the British marrow. Islamic influence is already spreading in Britain and the West, way beyond Muslim communities themselves.
The Islamic world is buying a financial stake in increasing numbers of Western institutions. Among its latest acquisitions are Manchester City Football Club, which was sold to the ruling family of Abu Dhabi, and Barclays Bank, which has secured an almost £6 billion capital injection from Abu Dhabi and Qatar.
Extremist Islamist ideas are also being spread through Islamic study centres attached to our universities. According to Professor Anthony Glees, eight universities — including Oxford and Cambridge — have accepted more than £233.5 million from Saudi and Muslim sources since 1995, spreading radicalism and helping create within Britain two separate identities and sets of allegiance.
'Bribery'
Shockingly, Saudi blackmail has also forced Britain to suspend its own rule of law by ditching the bribery investigation into the arms deal between Saudi Arabia and BAE systems, in response to an explicit threat made by the Saudi authorities that, if the case continued, ‘British lives on British streets’ would be at risk.
Those aren’t my words, they are from Britain’s former ambassador to Saudi Arabia, Sir Sherard Cowper-Coles.
Thus, the Islamists are already pulling British strings through the supremely manipulative combination of the threat of violence and the lure of unbridled wealth.
Apparently oblivious to all this, however, Mr Brown has pledged to make London the global centre of Islamic banking. Accordingly, Britain’s major banks are eagerly embracing sharia finance, on the basis that it is a source of vast wealth.
What they fail to realise is that sharia is also a project for Islamising society, and wherever it is embraced it will use its position to do precisely that. The assumption is that sharia banking — which has at its heart the prohibition of interest — accords with ancient Islamic religious principles. Not so.
Sharia banking was devised by mid-20th century Islamist ideologues specifically to further their strategy for global Islamic rule by creating separate administrative systems.
Muslims are required to donate a proportion of their income to charity, including the money that goes through the sharia banking system.
Yet in many instances, the clerics deciding where this ‘charity’ money should go are the spiritual godfathers of terror, such as Sheik Yusuf Qaradawi, who supports suicide bombing in Iraq and Israel, and Sheik Muhammed Taqi Usmani, who has admitted he ran a madrassa that supported the Taliban, yet who sits on the sharia supervisory board of the Dow Jones Islamic Index Fund.
It’s no surprise, then, that many charitable donations end up being channelled straight into terrorist organisations such as Hamas and Hezbollah.
But apart from being a global money-laundering exercise for terrorism, sharia banking is also a beachhead in the attempt by radical Islam to infiltrate British and Western society.
'Seductive'
The key point is that sharia does not recognise the superior authority of the secular law of the land.
Sharia financial institutions may not be making this clear — they don’t want to frighten people away — but at some future time they may do so. This is how they will endeavour to spread sharia beyond their own territory.
There are already examples of sharia regulations over-riding commercial decisions. Citibank, for example, launched the Saudi American Bank (SAB) in Jeddah and Riyadh. In 1980, the Saudis abruptly seized the SAB, denied Citibank all future profits and ordered it to train Saudi staffers because the bank was judged insufficiently Muslim.
When trillions of pounds and dollars become locked into Islamic banking and Saudi and other Islamic institutions, who will be in a position to argue with the Islamists when they finally call in their IOUs?
But our politicians and financiers seem blind to this prospect — because they are mesmerised by the seductive prospect of so much wealth.
Moreover, the British establishment does not believe that what we are being subjected to is a religious war. That is why their response to the steady encroachment of Islamic radicalism in our society is so weak.
And that is why I fear the British Prime Minister is in danger of selling this country to those who are intent upon undermining our most treasured freedoms.
More than giving hostages to fortune, he is enabling fortune itself to hold Britain hostage.
Melanie Phillips UK Mail Online
Last updated at 11:55 PM on 09th November 2008
With all eyes fixed upon the political excitements in the U.S, few have paid much attention to a trip made by the Prime Minister several thousand miles in the opposite direction.
A week ago Gordon Brown, accompanied by his new best friend the Business Secretary Lord Mandelson, went cap in hand to Saudi Arabia and the Gulf states to ask them to help bail out the stricken economies of the West by pumping billions into the International Monetary Fund.
It is more than a little strange that the British Prime Minister should have apparently taken it upon himself to speak on behalf of the IMF. But the real concern is that asking for help from Saudi Arabia is not like tapping your friendly neighbourhood bank manager for a bigger overdraft.
No, this loan comes with a devastating IOU — nothing less than a big slice of control over Britain and the West by a regime at the heart of the attempt to bring about the Islamisation of the free world.
Granted, this country is facing a truly grave financial crisis. But does this mean we should remortgage the future of the West to those whose most radical elements are actively engaged in seeing it destroyed?
Alarming
I have long been concerned by Britain’s failure to acknowledge the true nature of the threat from global Islamism. This latest move is yet more alarming evidence of that process.
Saudi Arabia is at the root of the Islamic onslaught against the West. It is Saudi’s Wahhabi form of Islam which, along with its Shi’ite counterpart in Iran, aims to restore the dominance of Islam in the world and destroy rule by ‘unbelievers’.
It is Saudi money which has fuelled the enormous spread of Wahhabi mosques, preachers and educational institutions in this country, delivering the message of holy war and radicalising countless thousands of British Muslims.
And it is this Saudi ideology which was the inspiration for Al Qaeda.
True, Al Qaeda turned upon Saudi itself on account of its ties with the U.S. As a result, Saudi regards Al Qaeda as its mortal enemy, and as such co-operates with Britain and the U.S in combating it.
But sometimes, to rephrase the old adage, our enemy’s enemy is not actually our friend, but our enemy as well.
Saudi Wahhabism seeks to conquer the West through a pincer movement comprising violence on the one hand and cultural infiltration and takeover on the other.
At the very least, Saudi Arabia speaks with the most lethal of forked tongues, and we should actively be seeking to diminish its influence over our affairs.
But instead our Prime Minister is effectively offering it yet more opportunity to control us.
Mr Brown claimed he did not want such investment to be used to gain political influence. But Lord Mandelson blurted out the truth when he acknowledged that the Saudis and other Gulf states would expect a bigger role in global institutions in return.
Takeover: The Islamic world has already bought Manchester City football club.
This should be enough to chill the British marrow. Islamic influence is already spreading in Britain and the West, way beyond Muslim communities themselves.
The Islamic world is buying a financial stake in increasing numbers of Western institutions. Among its latest acquisitions are Manchester City Football Club, which was sold to the ruling family of Abu Dhabi, and Barclays Bank, which has secured an almost £6 billion capital injection from Abu Dhabi and Qatar.
Extremist Islamist ideas are also being spread through Islamic study centres attached to our universities. According to Professor Anthony Glees, eight universities — including Oxford and Cambridge — have accepted more than £233.5 million from Saudi and Muslim sources since 1995, spreading radicalism and helping create within Britain two separate identities and sets of allegiance.
'Bribery'
Shockingly, Saudi blackmail has also forced Britain to suspend its own rule of law by ditching the bribery investigation into the arms deal between Saudi Arabia and BAE systems, in response to an explicit threat made by the Saudi authorities that, if the case continued, ‘British lives on British streets’ would be at risk.
Those aren’t my words, they are from Britain’s former ambassador to Saudi Arabia, Sir Sherard Cowper-Coles.
Thus, the Islamists are already pulling British strings through the supremely manipulative combination of the threat of violence and the lure of unbridled wealth.
Apparently oblivious to all this, however, Mr Brown has pledged to make London the global centre of Islamic banking. Accordingly, Britain’s major banks are eagerly embracing sharia finance, on the basis that it is a source of vast wealth.
What they fail to realise is that sharia is also a project for Islamising society, and wherever it is embraced it will use its position to do precisely that. The assumption is that sharia banking — which has at its heart the prohibition of interest — accords with ancient Islamic religious principles. Not so.
Sharia banking was devised by mid-20th century Islamist ideologues specifically to further their strategy for global Islamic rule by creating separate administrative systems.
Muslims are required to donate a proportion of their income to charity, including the money that goes through the sharia banking system.
Yet in many instances, the clerics deciding where this ‘charity’ money should go are the spiritual godfathers of terror, such as Sheik Yusuf Qaradawi, who supports suicide bombing in Iraq and Israel, and Sheik Muhammed Taqi Usmani, who has admitted he ran a madrassa that supported the Taliban, yet who sits on the sharia supervisory board of the Dow Jones Islamic Index Fund.
It’s no surprise, then, that many charitable donations end up being channelled straight into terrorist organisations such as Hamas and Hezbollah.
But apart from being a global money-laundering exercise for terrorism, sharia banking is also a beachhead in the attempt by radical Islam to infiltrate British and Western society.
'Seductive'
The key point is that sharia does not recognise the superior authority of the secular law of the land.
Sharia financial institutions may not be making this clear — they don’t want to frighten people away — but at some future time they may do so. This is how they will endeavour to spread sharia beyond their own territory.
There are already examples of sharia regulations over-riding commercial decisions. Citibank, for example, launched the Saudi American Bank (SAB) in Jeddah and Riyadh. In 1980, the Saudis abruptly seized the SAB, denied Citibank all future profits and ordered it to train Saudi staffers because the bank was judged insufficiently Muslim.
When trillions of pounds and dollars become locked into Islamic banking and Saudi and other Islamic institutions, who will be in a position to argue with the Islamists when they finally call in their IOUs?
But our politicians and financiers seem blind to this prospect — because they are mesmerised by the seductive prospect of so much wealth.
Moreover, the British establishment does not believe that what we are being subjected to is a religious war. That is why their response to the steady encroachment of Islamic radicalism in our society is so weak.
And that is why I fear the British Prime Minister is in danger of selling this country to those who are intent upon undermining our most treasured freedoms.
More than giving hostages to fortune, he is enabling fortune itself to hold Britain hostage.
Wednesday, November 05, 2008
Sharia Finance
Sharia finance expert warns Obama to avoid Islamic finance
by Dave Eberhart for NewsMax, November 5:
Frank Gaffney of the Center for Security Policy warns that the president-elect should avoid financing his great society with tainted Islamic-correct petro dollars, saying their strings might be attached inextricably to the nation’s worst extremist enemies.
With Barack Obama’s victory Tuesday sucking the oxygen from the air, few are focusing on Thursday, the day the U.S. Treasury Department will embrace the so-called “Shariah-Compliant Finance” or SCF.
If “Shariah” doesn’t ring any bells other than sounding foreign and somewhat ominous, it is simply the “religio-political-legal code authoritative Islam seeks to impose worldwide under a global theocracy,” Gaffney said.
The Treasury Department will host a “seminar for the policy community” entitled “Islamic Finance 101,” and it’s all about getting warm and fuzzy with SCF. Co-sponsoring the event is the Islamic Finance Project at Harvard Law School.
Harvard has benefitted mightily from the infusion of millions of dollars from a Wahhabi Saudi prince and his government, Gaffney said.
Yes, it’s all about money.
U.S. financial institutions, reeling from the credit crunch, are hungrily eyeballing more than $1 trillion in petrodollars, including Shariah-compliant bonds, mutual funds, mortgages, insurance, hedge funds, and real estate investment trusts.
Dow Jones Corp. has even created its own index for Islamic-correct investments: the Dow Jones Islamic Index, according to The Coalition to Stop Shariah.
Enter Uncle Sam, the always cash-strapped giant that must feed at any convenient trough these days, regardless of what strings are attached.
And what a trough it is. The global Shariah market is growing at a 15 percent pace, courtesy of the oil boom and resurgence in Islamic fundamentalism, according to the Center for Security Policy. It’s expected to more than double during the next 10 years.
Attractive chunk of available change and maybe even an imperative, but some watchdogs are ringing alarm bells.
Investors Business Daily recently examined Shariah-compliant finance and its involvement with investments and other transactions that have been structured to conform to the orthodox teachings of Islamic law.
“That means they can’t charge or earn interest, the cornerstone of our credit-driven economy,” the business publication advised. “Nor can they take any stake in ‘haram,’ or forbidden, industries, including meat and beverage producers (if they process any pork or alcohol); entertainment; gaming; and interest-based financing.
“Wall Street is jumping into this hot new market oblivious to the risks not just to the bottom line, but to national security. It knows little about Shariah law and is turning to consultants to create ‘ethical’ products to sell.
“Lost in the hype over these Muslim-friendly funds is that they must ‘purify’ their returns by transferring at least 3 percent into Islamic charities, many of which funnel funds to terrorists.”...
by Dave Eberhart for NewsMax, November 5:
Frank Gaffney of the Center for Security Policy warns that the president-elect should avoid financing his great society with tainted Islamic-correct petro dollars, saying their strings might be attached inextricably to the nation’s worst extremist enemies.
With Barack Obama’s victory Tuesday sucking the oxygen from the air, few are focusing on Thursday, the day the U.S. Treasury Department will embrace the so-called “Shariah-Compliant Finance” or SCF.
If “Shariah” doesn’t ring any bells other than sounding foreign and somewhat ominous, it is simply the “religio-political-legal code authoritative Islam seeks to impose worldwide under a global theocracy,” Gaffney said.
The Treasury Department will host a “seminar for the policy community” entitled “Islamic Finance 101,” and it’s all about getting warm and fuzzy with SCF. Co-sponsoring the event is the Islamic Finance Project at Harvard Law School.
Harvard has benefitted mightily from the infusion of millions of dollars from a Wahhabi Saudi prince and his government, Gaffney said.
Yes, it’s all about money.
U.S. financial institutions, reeling from the credit crunch, are hungrily eyeballing more than $1 trillion in petrodollars, including Shariah-compliant bonds, mutual funds, mortgages, insurance, hedge funds, and real estate investment trusts.
Dow Jones Corp. has even created its own index for Islamic-correct investments: the Dow Jones Islamic Index, according to The Coalition to Stop Shariah.
Enter Uncle Sam, the always cash-strapped giant that must feed at any convenient trough these days, regardless of what strings are attached.
And what a trough it is. The global Shariah market is growing at a 15 percent pace, courtesy of the oil boom and resurgence in Islamic fundamentalism, according to the Center for Security Policy. It’s expected to more than double during the next 10 years.
Attractive chunk of available change and maybe even an imperative, but some watchdogs are ringing alarm bells.
Investors Business Daily recently examined Shariah-compliant finance and its involvement with investments and other transactions that have been structured to conform to the orthodox teachings of Islamic law.
“That means they can’t charge or earn interest, the cornerstone of our credit-driven economy,” the business publication advised. “Nor can they take any stake in ‘haram,’ or forbidden, industries, including meat and beverage producers (if they process any pork or alcohol); entertainment; gaming; and interest-based financing.
“Wall Street is jumping into this hot new market oblivious to the risks not just to the bottom line, but to national security. It knows little about Shariah law and is turning to consultants to create ‘ethical’ products to sell.
“Lost in the hype over these Muslim-friendly funds is that they must ‘purify’ their returns by transferring at least 3 percent into Islamic charities, many of which funnel funds to terrorists.”...
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