About Shariah-Complaint Finance

Shariah-Complaint Finance (SCF) is a category of investment or financial transactions that is conducted or structured in such a way as to be considered by Islamic authorities to be “legal,” “authorized” or “pure” (halal) pursuant to shariah. Whether a given transaction is deemed “compliant” depends on the approval of one or more Islamic scholars – men who are recognized by such authorities as possessing the requisite knowledge of shariah and who are engaged to serve on a shariah advisory board for the purpose of vetting each deal.

Proponents of shariah-compliant finance often convey the impression that SCF is an “ethical” financial system whose roots and practice are to be found in the Quran, hadiths and traditions of early Islam. In fact, it was invented out of whole cloth in the mid-20th Century by Muslim Brotherhood figures like Sayyid Qutb and Sayyid Abul A’la al-Mawdudi. Its purpose was to provide yet another method to penetrate and undermine Western societies by stealthily insinuating shariah into their capitalist free markets. To this end, the Ikhwan seized upon what was, in fact, a biblical injunction against usury and transformed it into a prohibition on charging or earning any interest.

According to the SCF industry, other “impure” activities that must not be allowed to sully financial transactions involve pork, gambling, tobacco, music, drugs, pornography and Western defense. (N.B. Transactions involving Muslim militaries are not considered haram, just those of the United States and its allies, unless they benefit Muslims.)

The shariah-compliant finance industry did not amount to much until the beginning of the present century, when – thanks to the increased price of oil – vast foreign reserves created leverage for the oil-exporting nations, their ruling elites and sovereign wealth funds to demand increasingly SCF options in exchange for recycling their petrodollars. Meanwhile, Western capital market managers and government officials saw an opportunity to repatriate those funds. A number of the most skilled among them set about devising various ingenious gambits that simply obscured, rather than actually dispensed with, compensation for the time-value of money.

As long as some shariah authority can be persuaded to bless the construct, it can be marketed as shariah-compliant. Since, without exception, such authorities seek to promote shariah’s triumph, they have every incentive to allow the maximum penetration of Western capital markets and have approved an array of mortgages and other lending mechanisms, bonds and investment vehicles that, on close inspection, are artifices for concealing what amounts to interest by any other name.

Shariah-Compliant Finance’s Benefits for the Jihadists

The shariah-compliant finance industry provides multiple benefits to the stealth jihadists. For starters, it has created a new instrument for forcing non-shariah-adherent Muslims to conform to their program. Once Western capital markets and governments began accommodating themselves to shariah-compliant finance, such Muslims would be denied the excuse that they previously had to utilize, of “necessity,” interest-related finance (for mortgages, bonds, investments, etc.) – namely, simply because no oth- er option existed.
Another benefit to the Ikhwan and its allies: SCF enables the “shariah advisors” to penetrate Western companies that retain their services, often essentially at board level. Once installed as the arbiters of what is halal and what is haram (impure), these champions of shariah are able to gain insights into investments under consideration, shape deals, and discourage those of which they do not approve.

It stands to reason that from such influential positions, the advisors may be able to have a say not only over transactions involving Muslims, but others, as well. At some point, the mere threat to withdraw approval of large pieces of a bank’s lending portfolio, for example, because another part of the enterprise is doing business with, say, Israel, may be sufficient to enforce what amounts to a boycott of the Jewish State. Needless to say, playing such a role would greatly magnify the opportunities shariah-compliant finance provides, in the words of Muslim Brotherhood spiritual leader Yousuf al-Qaradawi, to wage “jihad with money.”

That is especially so since SCF affords at least two other ways to advance the stealth jihad, besides directly or indirectly influencing Western financial transactions. In accordance with the Islamic obligation to perform zakat, promoters of shariah-compliant finance seek to facilitate and control such charitable donations. Qaradawi and other Muslim Brotherhood operatives calculated that by building automatically deducted zakat into their various deals, the advisors could obtain and channel vast sums to approved “charities” in accordance with shariah.

Since three of the eight causes that shariah approves for philanthropy indirectly involve supporting jihad and its perpetrators and another one explicitly does so, SCF amounts to a way to dress up substantial opportunities for illegal material support for terror as a protected religious practice of tithing.

The same can be said of funds derived from the “purification” of financial transactions initially deemed to be shariah-compliant but subsequently determined to be haram, instead. By sluicing the profits in this way from investments, financial instruments, etc., that were once deemed acceptable, the shariah advisors are able at their discretion to increase still further the sums available for their favorite charities. The latter tend to be shariah- compliant, stealthy – and at least in some cases, actually violently – jihadist “charitable organizations.”

‘Agents of Influence’

For some time now, despite the aforementioned, serious problems, Wall Street has been marketing SCF as little more than a kind of “hot,” “new” product for American pension funds, insurance companies and corporations. Investment banks and other financial institutions have been hiring Muslim religious authorities to sit on corporate SCF advisory boards that directly influence the investment of billions of U.S. dollars.

By so doing, Wall Street has welcomed Islamic Law into the American financial sector. Among major international firms with a presence on Wall Street that now offer SCF products are: AIG, Bank of America, Citicorp, Goldman Sachs, J.P. Morgan Chase, Merrill Lynch, Morgan Stanley Capital, and Wacho- via/Wells Fargo.

What is even worse, the U.S. Department of the Treasury also has been officially promoting SCF throughout the U.S. banking and financial system. For example, in November 2008, Treas- ury featured a training class for U.S. government employees in association with the Islamic Finance Project at Harvard Law School. Dubbed “Islamic Finance 101,” the one-day seminar was intended to familiarize officials from “U.S. banking regulatory agencies, Congress, Department of Treasury and other parts of the Executive Branch” with what the Treasury termed “an increas- ingly important part of the global financial industry.

The Treasury Department and other agencies of the U.S. government have been warned repeatedly and in detail that – whether it is called “Islamic Finance” or the more clear “Shariah- Compliant-Finance” – SCF is used to legitimate and facilitate the penetration of Shariah. As such, it is inherently antithetical to American law.

Unfortunately, to date, neither Treasury, the Securities and Exchange Commission, the Federal Reserve Board, nor the rest of the federal government has recognized this reality about either shariah or SCF, the financial component of jihad. In fact, in response to a brief, a senior official actually had the temerity to say to a critic of SCF, “I don’t know what shariah law is, but it can’t possibly be what you say it is.”

The willful blindness of Treasury officials regarding the threat to U.S. national security posed by Islamic Law constitutes professional malpractice, at a minimum.

AIG: A Case Study

In September 2008, at the height of the U.S. financial cri- sis, the U.S. government used more than $180 billion of taxpayer funds to buy 79.9 percent of the preferred shares of American In- ternational Group (AIG) – a massive insurance company deemed “too big to fail.” That purchase made every American taxpayer a part-owner in a company that aggressively promotes SCF. Indeed, AIG is the largest purveyor of shariah-compliant insurance products in the world, thanks to its so-called Takaful (or SCF) division that has sold such shariah-based insurance products since 2006. Its Sun America, AIG Financial Services Corp. and other divisions also deal in shariah financial instruments.

In December 2008, the Michigan-based Thomas More Law Center and attorney David Yerushalmi, a litigator expert in security transactions and shariah-compliant financing, filed a lawsuit against the Treasury Department and the Federal Reserve Board alleging that AIG is promoting Islam in violation of the First Amendment’s Establishment clause. This constitutional provision requires the separation of church and state.

Clearly, in the case of AIG, the state is actively promoting a religious program: shariah. For example, AIG’s division for SCF products (which changed its name from AIG Takaful to CHARTIS Takaful (a.k.a. Enaya) in November 2009 and scrubbed its website of shariah references) has explicitly promoted shariah, not just its SCF products.

In addition, in accordance with Islamic Law, AIG’s Shariah-compliant business units must not invest funds in any enterprise that does business with religious entities that are not Muslim. As noted above, AIG’s Shariah-compliant business units may invest in a Muslim-owned arms factory that sells exclusively to Muslim armies – but not one that is owned by Christians or Jews, or that sells weapons to Christians or Jews.

In these and myriad other ways, the U.S. government and taxpayers are effectively made participants by their ownership of AIG in a global campaign to subjugate the world to shariah Islam. While most U.S. taxpayers are completely unaware that they have been embroiled in such activities, officials at the Department of the Treasury, Federal Reserve and Security Exchange Commission have a professional obligation to know. So, too, do those charged with oversight of these agencies on Capitol Hill.

Closely related to the objectionable U.S. ownership of a shariah compliant entity is the fact that the Islamic legal authori- ties that sit on AIG’s board of advisors for shariah compliance are themselves either advocates of jihad in the name of shariah or are the students and disciples of such authorities. Specifically, AIG’s takaful advisors include Mufti Imran Usmani, who is the “son, student, and disciple”of Mufti Taqi Usmani. The elder Usmani sat on the Dow Jones Islamic Index shariah advisory board for some 10 years beginning in 1999 during which time, he called on Western Muslims to rise up in violent jihad.

In short, it is clear that the U.S. government, and in par- ticular the U.S. Department of the Treasury, is engaged – wittingly or unwittingly – in conduct calculated to introduce shariah not just into the U.S. banking and financial system, but into the society more generally. Given the wealth of information available to these officials (and explicated throughout this report) about the critical threat posed by shariah to the existing U.S. system of law, their behavior that as the effect of promoting a legal system demonstrably antithetical to the Constitution can only be described as reckless and malfeasant.
Whether reckless out of ignorance or willfully malfeasant, these officials must be held to their oaths of office and, in particular, their sworn obligation to defend, uphold and protect the American legal system as established by the Constitution.