Exposing Shariah Finance

Many companies in the United States did business with Germany during the rise of Nazis in the 1930s, and some of them continued to do so even after the USA went to war with Germany in 1941. Banks and other institutions continued to hold Nazi-derived assets and launder money for Hitler’s government. Questionable transactions were concealed and protected by the influence of prominent and well-connected individuals on Wall Street and throughout the business community.

The same is true for Shariah Finance, one of the primary vectors through which the Great Jihad is currently injecting radical Islam into Western culture.

In wartime, it’s inevitable that some people will do business with the enemy — if companies stand to make a lot of money from an activity, then the activity will tend to take place. It’s up to the government to police business activity and punish businesses that profit from dealing with the enemy, because there is little incentive for businesses to police themselves.

However, the situation gets murky when the war is undeclared and the enemy is unnamed.

Banks that offer Islamic financial instruments aren’t trading with the enemy, because the enemy is “terrorism”, and they’re not doing business with “terrorism”, after all. They’re just cutting deals with various Middle Eastern countries who are “our staunch allies in the war on terror”.

The fact that a few wealthy sheikhs with terrorist connections happen to sit on the boards of some of the Shariah Finance institutions — why, that’s no big deal, is it? Business is business.

One can even make the case that the CEO of a corporation has both a moral and a fiduciary obligation to engage in Islamic-compliant transactions. The duty of a corporate officer is to maximize profit for his shareholders, and if there’s one thing for certain, it’s that Shariah Finance stands to make a lot of money for the institutions that engage in it.

The blame for our failure to address this problem can be laid at the feet of our government, particularly the Treasury Department, which has so far declined to act on a deadly serious threat to our national security that has crept into the country through our financial institutions.

A comprehensive look at the issue can be found in today’s Frontpage Magazine, in an interview with Alex Alexiev by Jamie Glazov.

Some excerpts:

Alexiev: …Shariah Finance as a phenomenon, indeed an industry, is already well-established and growing rapidly.

The first thing to note about Shariah-compliant finance (SCF), which is a derivative of Islamic economics, is that both are essentially invented, bogus concepts. Neither one had been practiced or even mentioned much in Muslim history before the 1940s, when the radical Pakistani Islamist Abul Ala Mawdudi made them up. In doing that, his objective was entirely political and had very little to do with either economics or finance, subjects about which he knew nothing. His objective, very simply, was to convince the Muslims that Islam was a complete system of guidance in life in all things temporal or sacral and that the West had nothing useful to offer the Muslims. This was an essential part of his agenda for Islamization, which he pursued vigorously for decades. The fact that the first Islamic bank took thirty years to materialize after that is just another proof of the fabricated nature of the concept.

In theory, SCF is supposed to make it possible for Muslims to conduct financial transactions while observing shariah prohibitions against lending at interest (riba), uncertainty (gharar) and forbidden products and activities such as pork, alcohol, gambling, entertainment etc. In reality, while there are practices in conventional capitalist finance that do not involve interest (venture capital or investment in stocks, for instance) or uncertainty (government bonds), it is simply impossible to have finance and banking that avoid both. So in order to be able to justify peddling conventional products in shariah garb, SCF practitioners and their accomplices, the shariah experts that must bless these transactions, engage in all kinds of more or less transparent legal fictions, ruses, gimmicks and deceptive techniques. Ironically, in doing that, they engage in the age old Islamic practice of legal fictions, known as hiyal, which was originally designed to make it possible to do business transactions while circumventing shariah injunctions, that didn’t make much sense even in the early days of Islam.

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Let me give you just a couple of examples. The most common SCF transaction is called murabaha which is the equivalent of a conventional bank loan to finance a purchase. What makes murabaha ostensibly Islamic is that the bank supposedly purchases the good and takes a degree of risk on while holding it prior to selling it to the customer on repayment terms, including a mark-up (interest) for the service. In practice, both operations happen simultaneously, the client is also asked to purchase insurance and there is zero risk for the bank. In fact, the bank also charges in advance penalties for late payment that are refunded if the loan is paid on time. In everything but name, this is a standard interest loan except that it is invariably more expensive. A similar thing happens with home mortgages where the bank purchases the home and finances it by requiring ‘rental’ payments in a transparent scheme called ‘diminishing musharaka.’

After engaging in semantic acrobatics to deny that what’s involved is interest-based mortgage lending, the bank then turns around and tells its clients to take the interest deduction on their tax return, and the IRS authorities, bless their compassionate hearts, fully oblige them.

FP: This brings us to Wall Street.

Alexiev: Yes. The involvement of Western financial institutions in SCF is both essential for the progress it has made to date and a major reason why it has become a major threat to our capital markets and the nation’s security. It is essential, because shariah finance has not done well among the Muslims.

[…]

And these Western banks jumped into the SCF fray for one reason only and that is the lure of many tens of billions in transaction fees from an industry that currently has near a $1 trillion under management. This is understandable, but what is neither understandable nor excusable is their willingness to close their eyes and not ask any questions about the nature of SCF, let alone do real due diligence on their Middle East partners or the dozens of hard line Islamists they hire as shariah advisors. Unfortunately for Wall Street, SCF is a house of cards no sturdier than the sub-prime mortgage fantasy world and it will come to the same end, once it becomes clear to the investing public to what extent these Western institutions have exposed themselves to huge liabilities ranging from willful non-disclosure and fraudulent misrepresentation to material support for terrorism.

The advent of Shariah Finance in the United States would not be possible without the help of academic institutions, which launder the ideas behind shariah as effectively as banks launder money.

There may be a connection between this assistance and the recent massive endowments lavished on major universities by the Saudis. But it’s also possible that talk-shops like Harvard are only too happy to continue their well-established practice of undermining the institutions of Western Civilization, even if they have to do it for free.

According to Mr. Alexiev:

This coming weekend, for instance, Harvard University is holding a big international conference on shariah finance organized by a center for shariah studies at the law school funded by Saudi money some years back. If you went there, Jamie, you’ll sit through dozens of presentations by well-paid shariah apologists on all imaginable SCF topics, but I’ll bet you $100 to $1 that not a single one will touch on the murderous core teachings of this troglodyte doctrine. This is akin to holding a conference on Nazi ideology and limiting the discussion to their successful programs to eliminate unemployment and build autobahns and kindergartens, without once mentioning that Nazism is first and foremost about genocide.

This is what makes this whole industry reeking of dishonesty or worse. I say worse, because if you start studying it as I have, you get this uncomfortable feeling that you are dealing with something bordering on a conspiracy to prevent the public from really seeing what’s going on. One of the latest trends in SCF, for example, is to stop using the term shariah altogether and replace it with ‘ethical.’ And so now you have various outfits springing up which tell you that they are in the business of ethical investment and you need to look closely to figure out that it is shariah finance that they peddle after all. Even that venerable flagship of free enterprise, the Wall Street Journal, recently co-sponsored a conference on “Islamic Ethical Investment.” Bob Bartley must be turning in his grave.

There’s much more information about Shariah Finance in the rest of the Frontpage Magazine interview.

The only cure for this and so many other jihadic infestations in our culture is to open them up to the light. Ordinary people won’t stand for this kind of infiltration when they become aware of it, so let the sunshine in!

The MSM will never treat the issue truthfully if it mentions it at all, and our government is at least a passive collaborator. So it’s up to the rest of us to do the best we can. Spread the word. Tell a friend. Write your congressman.

Jihad has opened many doors to the West, but this is one that can be closed.


Hat tip: KGS.