Maybe the only thing worse than getting in bed with the financial jihadists is to get in bed with the financial jihadists, only to find out they don’t want you.
That may be the situation Goldman Sachs finds itself in with regard to its Islamic bond (sukuk) program.
It seems Goldman got the blessing from several Shariah scholars when they started up their $2 billion sukuk program, but since then a couple of key Shariah scholars in Saudi Arabia and Dubai have expressed doubts as to the compliance of Goldman’s scheme. This could end up being the equivalent of a “scarlet letter” on the program, putting Goldman Sachs in the unenviable position of holding the bag. If that happens, world demand for sukuk could suffer, and as far as we’re concerned at SFW, that would be a good thing.
Over the past year, the focus of the global financial jihadists has clearly shifted to sukuk with efforts being made to intimidate and cajole various world central banks into issuing sovereign debt in sukuk format in order to gain access to Islamic petrodollars.
This is certainly not the first time that Shariah scholars have raised doubts about the Shariah-compliance of sukuk. Back in 2009, Mufti Taqi Usmani, who is one of the Islamic world’s most prominent Shariah Finance advisers, declared that most sukuk were in fact NOT Shariah-compliant. His opinion held the industry back for some time.
Our message to Goldman Sachs: “When you lay down with dogs, you’re bound to get fleas.”
Personally, I think Taqi Usmani criticized certain sukuk structures so that more complicated structures could be foisted on consumers by the banks that were paying Usmani’s salary..