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Alyssa A. Lappen: Congress should outlaw shari’a finance
A spate of conferences in the U.S. recently on Islamic banking – i.e. shari’a finance – signals a worrisome American blindness to the budding industry’s inherent dangers. Among the perils of shari’a finance, according to a January analysis by Moody’s Investors Service are: A central role in investment decisions for shari’a scholars who are actually Islamic clerics; investors being forced to accept weak positions; short track records of major investors; multiple complex asset types; risky interest rates and new ventures; plus a lack of transparency combined with corporate management and risk control in the hosting Third World countries. Like other financial rating agencies, Moody’s currently profits from assessing Islamic financial instruments. But it missed the biggest risk of all—the ideological risks of shari’a, or Islamic law. Even Islamic banking promotions admit that the industry’s documentation is not standardized, its inter-creditor agreements can be complex and it frequently employs off-balance sheet financing. Moreover, shari’a regulations override commercial decisions. Citibank, for example, launched Saudi American Bank (SAB) in Jeddah and its Riyadh branch in 1955 and 1966 respectively, apparently without considering business risks under shari’a. The Saudis abruptly seized SAB in 1980, denied Citi all future profits, and ordered the bank to train Saudi staffers. Why? Because under shari’a, the bank was judged insufficiently Muslim. Secular laws alone don’t govern shari’a finance. Although a 20th century Muslim Brotherhood (MB) invention, it cannot be severed from the body of Islamic statutes that Mohammed initiated and caliphs, scholars and jurists developed over 1,400 years. Shari’a also underlies Muslim Brotherhood economic reforms. Police discovered the group’s central plan, “Towards a Worldwide Strategy for Islamic Policy,” or “The Project” in the Lugano villa of MB chief financial officer Yusef Nada in November 2001. Muslim Brotherhood spiritual leader Yusef Qaradawi based the 12-point handbook on shari’a interpretations of MB founder Hassan al-Banna, who in 1928 envisioned a caliphate (Islamic state) to impose shari’a law worldwide. The Project orders Muslims to do “parallel work to control local power centers”—and create “special Islamic economic, social and other institutions” and “necessary economic institutions” to fund spreading fundamentalist Islam. Shari’a finance builds such “parallel” Islamic economic institutions. Consider the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB). Both write global shari’a finance regulations (fatwas). AAOIFI members include the central banks of designated terrorist states Iran and Sudan—and the Saudi Dallah al Baraka Group, al-Rajhi Banking & Investment Corporation, Kuwait Finance House, all implicated in funding al Qaeda, according to former U.S. counter-terror official Richard Clarke in testimony before the National Commission on Terrorist Attacks upon the U.S. IFSB members include the central banks of Iran, Sudan, Syria, and the terror-funding Palestinian Monetary Authority (PMA). Worse, Shari’a laws grant the Islamic ummah (Muslim nation) supremacy over all others—along with all land and property, to hold in trust for Allah. Under shari’a, land or property conquered or acquired by Muslims cannot generally revert to its original owners. Possessions confiscated from non-believers are “a way of exacting revenge,” writes 11th century jurist Abul Hasan al Mawardi whose Laws of Islamic Governance many Muslims still consider valid. In other words, classical Islamic jurisprudence and Qur’anic passages alike, reflect the thinking evidenced in the MB’s 20th century Project. According to Al-Mawardi, Allah authorized Second Caliph Umar Ibn Khattab to confiscate property in three ways—by fulfilling a trust to Islam, by force, or by ruling under Allah’s law. Thus, it is “just” to take anything from nonbelievers. Far from benefiting mankind, as Islamic banking proponents claim, shari’a advocates a supremacist ideology commanding Muslims to wage jihad war until they subdue all “infidels” and “unbelievers.” Muslims must “convert everybody to Islam either by persuasion or force” and “gain power over other nations,” writes 14th century Tunisian jurist Ibn Khaldun in “The Muqaddimah.” And economic jihad fulfills the mandate of Qur’an 49:15: “Strive for the cause of Allah with your wealth and your lives,” reiterated in 61:10-11. Congress should thoroughly investigate shari’a finance, declare it unconstitutional and therefore illegal. Alyssa A. Lappen, a senior fellow at the American Center for Democracy, is a former senior editor of Institutional Investor, Working Woman and Corporate Finance. Her website is http://www.alyssaalappen.org. |
