A firm called Ethical Asset Management in the UK is launching a Sukuk fund for individual investors.
This is fairly unremarkable, but the designation “ethical” is worth commenting on.
Ethical is a subjective term. To most Westerners, there is little or nothing ethical about Shariah. On the contrary, many of the tenets of Shariah are decidedly barbaric and offensive to Western values, particularly values of freedom and liberty.
The same goes for Shariah finance.
First there is the whole problem of zakat. A portion of zakat goes toward funding violent Jihad. This has been documented in Shariah law texts and the 9/11 Commission Report, as we explained in an earlier post:
And if that wasn’t enough, it might be pointed out that the largest Shariah-compliant financial institutions in the world are Iranian state-owned banks that are under US and EU sanctions for their activity involving the funding of Jihadist terrorism and Iran’s nuclear and ballistic missile programs.
There is much that is unethical about Shariah-compliant finance.
But perhaps the most unethical aspect is the whole use of the term “ethical.”
The term “ethical” is now used in the Shariah Finance industry to mask the term “Shariah” from regulators and investors. This is a deliberate effort to capture the assets of non-Muslim investors in Shariah-compliant instruments. One example of this deceptive practice comes from one of America’s most prominent Shariah scholars, Sheikh Yousef Talal DeLorenzo.
DeLorenzo on avoiding the use of the term Shariah in SCF-related business:
“In order to be more readily understandable to regulators in Muslim minority countries, such as the U.S. and Europe, there is nothing wrong in using another term, like Ethical Advisory Board.”
Of course, the reality is, using the term “Ethical” to conceal the Shariah aspect of institutions and instruments is unethical itself.
This is seen in action today. Shariah-compliant institutions and financial instruments employ Shariah scholars on Shariah advisory boards to ensure that all activities and investments abide by Shariah law.
Below is a link to the Amana Group of Mutual Funds’ prospectus. No where in the prospectus will you find the term “Shariah” in any of the spelling forms that are used. And the fact that the fund uses an advisory board at all is buried deep in the prospectus. However, nowhere is the nature and complement of this board revealed:
This lack of transparency is unethical in and of itself.