Island Could Play Vital Islamic Finance Role
Business Bermuda says the island is poised to play “a vital role” in Islamic Finance, a Bahrain newspaper reports today [Nov. 24].
Organisation CEO Cheryl Packwood told the “Gulf Daily News” she has already committed to coming back to the country’s next World Islamic Banking Conference and hopes to bring Bermuda’s Minister of Business Development along for the 2012 edition.
“This is my fifth visit to Bahrain in the past four years but in the past we have been here for Islamic fund conferences,” Ms Packwood said.
“We clearly see that a financial centre like Bermuda has to have a role in the growing world of Islamic finance and clearly Bahrain is the centre where you need to be in this industry.
“We have been very excited about what we have seen and heard at this event. I thing it has been fantastic and for us it has been a major success.
“Bermuda is a growing centre in the West for Islamic finance and there is a great deal to be gained from a closer working relationship with colleagues in Bahrain,” she added.
PricewaterhouseCoopers director of asset management and chairman of Bermuda’s Islamic finance task force Belaid Jheengoor believes there is more growth to be seen.
“Global Islamic finance is fairly new, only having been in existence for the last 25 years and the market currently stands at about $1 trillion,” he said.
“Numerous studies by global industry leaders say this $1 trillion, within the next three to five years, could grow to be anything north of $3 trillion to $6 trillion.”
At the Bahrain conference, Ms Packwood and Mr. Jheengoor took part in the panel discussion “Upgrading Regulatory Frameworks and Risk Management Capabilities: New Approaches to Ensure Stability and the Successful International Development of Islamic Finance.” [pictured below]
The panel session, moderated by Nadine Hani, anchorwoman for Al Arabiya News Channel, discussed the improvements necessary for the current regulatory framework. The panel also examined new international regulatory developments and new dimensions in risk management and compliance.
Cheryl Packwood said : “Bermuda has historically been renowned internationally for its world class standards of regulation, something which has stood us in great stead in our ambition to become the Western hub for Islamic finance.
“Honesty and ethics are at the core of the way Bermuda does business, much like the Islamic Finance industry and this is crucial when discussing improvements to regulatory frameworks.”
Mr. Jheengoor also represented Bermuda with Fawaz Elmalki, director at Conyers Dill & Pearman, at the “New Frontiers – New Opportunities Exploring New International High-Growth Markets for Islamic Finance, Country Focus Roundtable”.
The panel discussed Bermuda’s appetite for Islamic finance and the initiatives it has taken in recent years, such as the creation of guidance notes by the Bermuda Monetary Authority on Islamic Collective Investment Schemes facilitating the establishment of Islamic investment funds in Bermuda.
Mr.Jheengoor commented: “Bermuda has built strong ties with the GCC in recent years, including signing a Double Taxation Agreement with Bahrain which provides structuring opportunities for both conventional and Shariah compliant investors accessing the GCC.
“Its regulatory structure already provides mechanisms which cater to the specific requirements of Shariah compliant services and structured finance transactions, such as sukuk and Shariah compliant funds as well as takaful and retakaful insurance structures.
“It was mentioned during the discussion that if a non- regional country wants to be taken seriously as an Islamic centre it should issue a sukuk; the first sukuk to be issued by a top ten Fortune 500 US company was structured using a Bermuda limited liability exempted company as an Ijarah sukuk to finance global portfolio of aircraft leases. This transaction is proof of the benefits that businesses outside of the region can gain from Shariah-complaint investors.”
The Country Focus Roundtable also discussed the potential for Islamic finance in non-Islamic countries such as Bermuda.
Mr. Elmalki said: “Islamic finance is no longer a niche industry. At a time when conventional financial services are being hit by the financial crisis, Islamic finance is a growing component of the international financial system.
“Bermuda is gaining a steady stream of international business in the establishment and management of Shariah-compliant companies, partnerships and trusts. It is now a primary jurisdiction for sukuk issuances backed by aircraft.”
Representatives of Business Bermuda, including Peter Hughes, Group Director at Apex Fund Services, Nicolas Angio, Managing Director of Apex Fund Services Bahrain and UAE, joined Cheryl Packwood at the Business Bermuda booth in talking to leading members of the Islamic finance industry from across the world to explore the potential for Islamic finance in Bermuda and the Island’s advantages over its onshore competitors.
Mr. Jheengoor also took part in two panel sessions, as part of a pre-conference event hosted by the IIFM, “Trends in Global Sukuk Market”, focussed on the latest developments and growing trends in the industry as well as sukuk structures, ownership rights, the role of SPV’s and standardisation requirements in sukuk.
The second session explored the prospects and challenges in “Collateralized Repo in Islamic Finance” including the regulatory and legal environment, challenges in margin maintenance and structuring challenges as well as the types of securities suited for collateralization. The panel also discussed the effects of capital treatment, Basel III and the role of the custodian bank in Islamic finance.
Business Bermuda is a business organization of Bermuda resident service providers that provide quality banking, legal, accounting, re/insurance, financial, trust, management and e-commerce services and products to the international client.
The organisation works with the private sector and Government to develop and promote the island as one of the world’s foremost centers for international business.
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- Island Could Play Vital Islamic Finance Role - ADVICES FINANCE – ADVICES FINANCE | November 24, 2011
I have a few questions: Does Britain and the US know that Bermuda is courting money that could be labelled as tainted as funds being used to support Terrorism? Has anybody thought about the implications if Bermuda gets labelled as supporters of such? Is it possible Bermuda could be targetted by anti-Islamic measures? Honestly do we need this liaison…I am terrified by the thought and don’t like it.
I’m not sure why you would assume that Islamic Finance is any more tainted ‘as funds being used to support terrorism’? Just because it has ‘Islamic’ attached to it? Western Finance systems certainly are tainted with supporting terrorism though, both in active support of state-sponsored terrorism (US/NATO attacks in Pakistan, Yemen, Somalia, to name a few, or, for example, the Iraq war and threats of an Iranian war, let alone the support for Apartheid in Palestine).
A greater concern for me is our working with the blood-soaked Bahraini’s who’s dictatorship and violent crack-down on pro-democracy demonstrators is far from anything Islamic. Islamic Finance is supposed (by definition) to be based on ethics (notably the rejection of usury (interest)) – to give legitimacy or support to dictators like the Bahrainis is unethical. Can we build an ethical financial model working with such dictators?
You have to concede the word “Islamic” -rightly or wrongly conjures up very different images to post-911 survivors and allies of the United States.
And yes, you raise a valid comment regarding the forging of relationship with dictators who violently surpress pro-democracy movement.
I concede that such may be the case, but the logic behind it is wrong (in that it is generalising and prejudicial). We should be actively combatting such equations.
On the flip-side, I am sure that amongst many Islamic countries Christians are considered terrorists now as a result of the US frequent invocation of Christian imagery in their recent wars (particularly Iraqis), and Judaism today is too often conflated with the zionism of Israel (itself a mistaken interpretation of the Promised Land which was always a state of being, not a physical piece of land).
The hallmark of this government is flexibility when it comes to ethics.
I am providing some research obtained from the internet for those who have no idea about Shariah compliant business that Bermuda is seemingly trying to get into bed with Baharain. Feel free to do your own research:
Sharia Compliant Finance : Financing Our Own Demise?
by Gadi Adelman, Joy Brighton
March 3, 2010
http://www.weeklyblitz.net/584/sharia-compliant-finance-financing-our-own-demise
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Weekly Blitz
Sharia Compliant Finance
What is Sharia Compliant Finance (SCF)? This is the question I seem to be hearing all too often. As I had explained in my article “One Nation under Allah,” “Sharia deals with all aspects of day-to-day life, from family issues to sexuality, hygiene, politics, economics, banking, business, contracts and social issues, and more.”
Put simply, Sharia is the law of the land in Iran and Sudan and for groups such as the Taliban, al Qaeda, Hamas and Hezbollah. Allow me to refresh your memory on the “religion of peace.” According to “The Reliance of the Traveler, the classic manual of Islamic sacred law” which is considered the authoritative Sunni Sharia rulebook, the following is a selection of some Sharia laws:
Offensive, military Jihad is a religious obligation.
Inferior status for all non-Muslims (known as “dhimma”).
Capital punishment for slandering Islam.
Capital punishment for apostasy (leaving Islam).
Women may not leave the house without husbands’ permission; beating disobedient women, polygamy, forced child marriage, and stoning of adulterers are permitted.
Slavery is legal.
Lying (“taqiyya”) to infidels is permitted.
Capital punishment for homosexuals and lesbians.
Just as Sharia is not about religion, but rather politics and power, Sharia banking is not about banking: it is about politics, economics, and power – which explains why Iran was the first and remains the only one of two countries in the world today (Sudan being the second) that mandates 100 percent Sharia banking. When Khomeini deposed the Shah in 1978, secular law and human rights went out and Sharia law, oppression and zealot mullahs came into every aspect of life, including the banking system. Prior to 1978, the entire world including the Middle East practiced traditional, Western banking. Today, Iran remains the market leader in Sharia Finance and the market leader in terror finance and terror in general.
Would AIG, Citigroup, Dow Jones, HSBC, UBS, Visa and Mastercard have become involved with something called Apartheid Finance? Or Nazi Finance? Of course not. So why are they involved with Sharia Finance? Have these firms stopped reading the newspapers? Don’t they know that Sharia-driven Iran is building nuclear weapons and funding the Sharia-driven Taliban who is killing our own young men and women soldiers? Or that our President is putting economic sanctions on Sharia-driven Iran?
Or is it just all about the money? Oil money generates Sharia investment fees and Sharia trading commissions, and sells Sharia insurance policies with fat premiums.
But the danger to our national security is this: the hallmark of Iranian Banking (i.e., Sharia banking) is the hiring of mullahs or sheiks in order to have some control over banking practices and the mandate to send some profits off to “Sharia charities” (a process known as Zakat). Hiring Sharia sheiks gives these groups standing in the banking world and brands “Sharia” as perfectly ethical. Sending money to charity? What could be more ethical, and everyone is concerned about ethics these days.
Wrong. Four of the most sought-after “Sharia authorities” in the industry, listed below, reads like a Who’s Who of Terrorists. They all sit on the board of the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) or the board of IFSB (Islamic Finance Standards Board). And guess who sits on these boards? IFSB members include the central banks of Iran, Sudan, and Syria (all designated state sponsors of terrorism) and the Palestinian Monetary Authority (PMA), which is widely documented since its inception to be a funder of terrorism.
Sheik Yusuf Al-Qaradawiis on the Board of AAOIFI, the Bank Al-Taqwa (shut down in 2001 by the U.S. Treasury for terror funding) and many other Middle East banks. Qaradawi, has been banned from entering the United States of America since 1999 and the United Kingdom since 2008 because of his ties to terrorism. He created a 57-member network of charities called the “Union of Good,” which is designated as a sponsor of terrorism by the U.S. Government. In July 2003 in Stockholm, at a conference arranged by the Muslim Association of Sweden, he expressed his support for suicide attacks against Israeli civilians which he called a “necessary Jihad.” Perhaps this is why he described Sharia charity dollars as “Jihad with Money” in an interview with the BBC in 2006. During an address to the Journalists Syndicate in Cairo (Associated Press, September 2, 2004) he stated, “Fighting American civilians in Iraq is a duty for all Muslims… Americans in Iraq are all fighters and invaders. There is no difference between a civilian and a military American in Iraq”. Lastly, just to show how ‘charitable’ he really is on July 7, 2004, in an interview with BBC TWO’s Newsnight he said, “Allah Almighty is just; through his infinite wisdom he has given the weak a weapon the strong do not have and that is their ability to turn their bodies into bombs as Palestinians do.”
Mufti Muhammad Taqi Usmaniis the Chairman of AAOIFI and is, or has been a paid Sharia Sheik on the Board of HSBC, Dow Jones, Citigroup and Guidance Financial. He is the Founder and Director of Jamia Uloom madrassa, the second largest madrassa in Pakistan, which “boasts close ties to the Taliban” according to International Crisis Human Rights Group. He was the Deobandi Cleric to the Taliban in 2001. According to a comment piece in The Times (UK), September 8, 2007 Usmani “believes that aggressive military jihad should be waged by Muslims ‘to establish the supremacy of Islam’ worldwide.”
Imran Ashraf Usmaniis on the Boards of AAOIFI; AIG, HSBC, Citigroup, Lloyds TSB Bank (UK) and Credit Suisse Bank. Imran is the son of Sheik Taqi Usmani, schooled in the same Jihadist Pakistan madrassa. Banks are replacing Taqi Usmani with his son, Imran, as his father’s Jihadist background is being publicized.
Sheikh Yusef Talal DeLorenzois on the boards of AAOIFI; IFSB, Barclays Capital, Dow Jones, Guidance International, Sharia Capital and Blackrock. He is an American convert to Islam who dropped out of Cornell and was educated at the same Jihadist Darul Uloom madrassa as the Usmani father and son team. He was also an advisor to Pakistan President Zia al-Haq 1981–1984 during the creation of the Taliban. He is the past Director of Education for the Islamic Saudi Academy, which has been condemned for its hate curricula by the Congress-appointed U.S. Commission on Religious Freedom. DeLorenzo was the secretary of the Fiqh Council of North America (FCNA) which The Investigative Project has linked to Islamist extremism and terrorism. It was Sheikh DeLorenzo who said using the word “ethical” was a better description than “Sharia” for Western bankers to understand.
So what do these sheiks actually do? One of their jobs is to ensure that somehow money from Sharia investments gets sent off to charity. The problem is that their definition of charity and the definition of charity according to most Americans are polar opposites.
In Webster’s, charity is defined as “generous actions or donations to aid the poor, ill, or helpless.” Conversely, on the HSBC Amanah Website in its list of Sharia “charity” is “fi sabilillah.” This is defined in the Reliance of the Traveler, the Classic Manual of Islamic Sacred Law (Umdat Al-Salik), p. 272, as follows:
“those fighting for Allah, meaning people engaged In Islamic military operations for whom no salary has been allotted in the army, or volunteers for Jihad without remuneration. They are given enough to suffice them for the operation, even if affluent: of weapons, mounts, clothing, and expenses.”
Further, the distribution of Zakat through Sharia or Iranian investments is not left to the choice of the investor, regardless if they are Muslim or non-Muslim. Instead the process of giving to charity is directly imbedded in the structure of the Sharia bond or mutual fund. The investor has no choice. And deciding which charity receives the funding is left to the sole discretion of the hired Sharia Sheiks of the bank (or Mullahs in Iran).
Wait a minute. Let me understand this, charitable payments go to the army? For people who are fighting for Allah? For Jihad? Is that really true? You’re damned right! According to Sharia Islamic law, money for charity will be given to fight for Allah. And as previously demonstrated time and again, Muslim jihadist-terror organizations are indeed prominent Zakat recipients. In fact, the U.S. Government has classified 27 Islamic charities as terror organizations; most recently, the Holy Land Foundation in Dallas, Texas, was convicted of financing terrorism in 2008 and had been charged with funneling $12 million dollars to Hamas.
How much revenue might be generated by the tiny but growing strong Sharia Finance market today? The Oasis Fleming Sharia fund of the UK reported in 2007 that it made $34.9 million in profits and distributed $3.3 million of this to Sharia charities. That’s a phenomenal 9.42% income to Islamic “zakat” or charity, and it is discretely named as “non-permissible income” on its income statement. There is approximately $1 trillion of Sharia assets managed all over the world today (with 30 percent of it managed by Iranian banks). Assuming a return of 10 percent on these investments, that translates to $9.42 billion going to Sharia charities in 2010. Some might go to feed the needy, some to mosques, and some to CAIR. Oh, and yes, some to groups such as al Qaeda, the Taliban and other terrorist organizations.
Sharia finance is expected to grow 12 – 15 percent annually… so year in and year out, more and more dollars will go to fund the political movement of Sharia as lived by the Government of Iran, the Taliban and others. In fact, the Cozen O’Connor Law Firm brought a suit in 2003 (now in the Supreme Court), on behalf of nearly three dozen insurers including Chubb, Ace and Allstate alleging that the funding for the 9/11 attacks in which nearly 3,000 Americans were murdered came directly from Islamic charities which acquired their Zakat donations in part thru Islamic banks. Many Islamic banks are named in this suit, including the Dubai Islamic Bank.
Funny how our government seems to be talking about sanctioning Iran while, at the same time, stopping the Taliban (with the blood of our own young people). The SEC is urging stricter regulations to avoid another sub-prime disaster. The U.S. Treasury and 32 central banks are considering stopping business with the shady Iranianbanking system which doesn’t comply with global banking standards of transparency and money-laundering. Yet Sharia Finance, the financial system of Iran, is rolling full speed ahead right into neighborhoodbranches of AIG, Citi, HSBC, Goldman Sachs, Prudential and UBS.
As I have said and written many times before; enough is enough, open your eyes, get involved, tell your friends, family and colleagues and your Congressmen and Senators too. Sound the alarm!
The problem of Sharia compliant finance, just like Sharia itself, will not just go away. Unless we demand that our representatives and the companies mentioned above do something to stop Sharia Compliant Financing, it will only get worse.
Consider this next time you do business with one of these companies: what is your money being used to do?
Just to point out that the religious law of the Old Testament has many similar features (including glorification of genocide in the treatment of the Philistines and ostracism of Gentiles), and elements of the New Testament could easily be read as advocating various forms of Crusades.
Many of these religious books have any number of archaic and (by todays standards) barbaric exhortations. Just because the great religious traditions of Judaism, Christianity and Islam originated from these does not mean that they should be judged by their worst elements. Central to all of them is respect for life, do unto others as one would have done unto oneself, judge not lest ye be judged and respect for the world (in as much as humanity is cast as a ‘guardian’ or ‘steward’ of creation). There is a Jewish and a Christian economic ideology, in addition to the Islamic, and much of them share the central opposition to usury (interest). Jewish and Christian economics have, however, been replaced by Western Finance, which is largely based on credit and interest; Islamic Finance seeks to restore this opposition to usury though. What passes for Islamic Finance and how much they actually reject usury in practice, that’s another story.
Also to add that there are numerous Christian terrorist groups, such as the various militias in the US, the most famous of their attacks being the Oklahomah bombing. And recently we saw the Christian terrorism of Brevik in Norway which highlighted the growth of the far-right, de facto neo-Nazi Christian groups such as the so called Knights Templar.
I don’t disagree with the points that you raise. It is a question of what side of the fence do you get your perspective of the view.
Bringing this conversation back to local news – I doubt the people leading this move have the aptitude, the understanding, the research necessary to engage Bermuda as country into a world that is outside of our mainly Christian-Judeo roots. We in this country as a whole simply cannot fathom some of the tenets of the Sharia Law. My view is that these few people who are engaging in this could be placing Bermuda in position outside of our understanding. We are mixing religious ideology with commerce. Intuitively, this is a bad concoction because in a dispute, neither party can really understand each other view points, no matter what they profess in the early stages of the romance.
Takng it to the extreme, if a Islamic scholar who is also respected by the local Muslim community issued a fatwa (that was unfavourable) on a member of the Organization CEO, what burdon would that place on the local community? Would they be conflicted especially if there were some family connections? What other issues are being potentially raised with this uneasy marriage of religious ideology and it were so great, why aren’t other countries chomping at the bit to do business with the Sharia Compliant Businesses?
apols for typos
In short, I say – let’s not be blinded by the money to be made. Like everything else, if it sounds too good to be true, then it is probably not good and not true. We should have learned from the Madoff scandal.
Um. Not sure how the ‘Madoff scandal’ fits as a comparison to Bermuda’s liasing with other financial juristictions, being that they’re completely different…
Agreed… but from the analogy of if it looks too good – it may not good and many people (who were directly and indirectly dealing with Mr. Maddoff) suffered from being involved with that brand of business.