Sharia finance uncovered

This month we read that UK Muslim footballer Papiss Cisse, estimated to earn in the region of £40,000 per week, was refusing to wear the branded training kit, as well as the match day shirt because it is against his religious beliefs. Other Muslim Newcastle United players have not taken this stance toward donning a Wonga shirt; the payday loan firm that won the club's new sponsorship deal. But it appears Cisse has a greater commitment to sharia compliance than his co-religionists.

His refusal to wear the payday loan firm's insignia is based on his belief that sharia does not allow Muslims to benefit from lending money; that sharia compliance forbids interest to be paid on bank accounts or added to mortgages. Such a strong stand by Cisse may seem a little ironic given his willingness to wear the previous shirts sponsored by Virgin Money and his exorbitant salary no doubt being the product of the same interest bearing system he opposes.

However, with promises of no interest and the concept of ethical investment being hailed as the greatest selling feature of Islamic sharia finance in Australia, perhaps it is worth considering both those claims.

Sharia compliant finance is simply finance that complies with Islamic sharia law. It is the financial arm of a foreign and religious body of law. This is the first important issue. In order to facilitate sharia finance locally, there must be legal compliance to a body of religious law that transcends national boundaries and commercial law, essentially deferring to the quasi state of Islam. Rather than simply offering another financial product, this unfortunately supports Islamist ideals and the concept of the Islamic Caliphate.

Indeed, the philosophical origins of sharia finance date back to the 1920's and the founder of the Muslim Brotherhood Hassan al-Banna. He promoted the concept of 'financial jihad' and the Muslim Brotherhood have promoted this as a means to undermine western markets and economies; something that one would expect to be at odds with Australia's national interest. Chairing the 2002 Islamic Financial Services Board (IFSB) meeting, then Malaysian Prime Minster Mohamed Mahathir stated, 'A universal Islamic banking system is a jihad worth pursuing to abolish this slavery (to the West).'

The claim to being a means of ethical investment begs the question 'whose ethics?' One of the highest sharia finance regulatory bodies is the Bahrain based Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). It is my understanding that Australia has adopted AAOIFI standards. However the AAOIFI International Chairman is Mufti Taqi Usmani and is a known supporter of violent jihad, promoting sharia law in the West, and has run a Pakistani madrassa that has trained thousands of Taliban. While Dow Jones no longer employs Usmani, he is still chairman of AAOIFI, the umbrella organization guiding Australian investment. It should not be surprising that Italian economist Loretta Napoleoni states 'Islamic Banks…are the life-line of Wahhabi insurgency, they are the feeder of Islamist armed groups, without them terror-donations could not reach the end users scattered around the world'.

However it's not just the connection to terrorism that undermines the claims to ethical investment. Sharia finance involves a theological proposition and at the heart of this is a doctrine that views the non-Muslim world, its people and systems, as unclean. Sharia finance must be purified from this contamination - a term publicly promoted - and is done so by investment in Muslim only charity. Most would agree that indiscriminate charity is more ethical than charity that discriminates against another person's belief or religion, viewing this as defilement. The values undergirding sharia ethics itself are not consistent with the UN Declaration of Human Rights, but rather the Cairo Declaration of Human Rights subject to sharia law. The prohibitions against investment in the pork and hospitality industries merely boycott legitimate Australian industries and validate a belief that these are unethical in nature, as is the expectation of increased return on investment. Should our government acquiesce to this?

Perhaps the greatest consideration in promoting this financial product under the guise of being ethical is the legitimacy of the claim that it is 'interest free'. As many sharia finance practitioners affirm, interest is merely rebadged as fees, rental or profit. According to Islamic economics, finance and management chairman of Rice University Mahmoud el-Gamal, "All Islamic finance today is interest based". Islamic banking, merely "shari'a arbitrage " is "first and foremost about religious identity".

Given this financial product is identity based, has philosophical origins intent on undermining western interests, is known to sponsor terrorism, discriminates against people in need of charity and legitimate Australian businesses, and veils the cost of banking by redefining interest, perhaps our government should consider, just as the UK Muslim footballer did, if this is an identity they wish to sponsor and wear.