The Lure of Easy Money: Islamic Finance in the Age of Capitalism
Money. Money makes the world go round, or, well, any direction you want if you own it. So, when it comes to easy money, boy, it makes the world go haywire! Easy money – that is earned without the sweat and toil, normally, required for earning a livelihood. Who wouldn’t, at least, be tempted by it?Society and its priorities change with the seconds of the change in time. Whereas morality and integrity were of utmost significance at a time in an obscure past, the priority of society, today, is amassing heaps of wealth. One may question, why not? If, having more zeros after a figure in your bank statement, surely, means having a greater influence and a vaster dominion over the world, then why are you playing the guilty conscience card on us?Well, but, I say, wasn’t it us, in the first place, to form a direct proportion between wealth and influence in the world? You, seriously, cannot tell me that this is how it has been since time immemorial! About time we embarked on some insightful journey, wouldn’t you say?If money was really directly proportional to influence, then the exemplary case of the second caliph of Islam, Umar ibn al-Khattab r. a., for instance, would be a scientific anomaly!It was in 637 AD that after a prolonged siege of Jerusalem, the Muslims finally took the city. While Heraclius, the Byzantine Emperor, had fled, Sophronius, the Greek Orthodox patriarch, surrendered the city on the condition that no one was to be harmed. The terms were observed and the patriarch gave the key to the city to Umar ibn al-Khattab r.a.Umar r. a. entered Jerusalem, to sign the peace treaty, with humbleness, walking in by foot alongside his servant who was comfortably being conveyed by a camel. Umar r. a. and the servant had been travelling by foot and on the camel in turns (Muir: 135).When Sophronius met the Ameer-ul-Mo’mineen, Umar r.a., one of the most influential men in the history of Islam and the rest of the world, he was dressed in his travel-stained battle tunic, while Sophronius was attired in sumptuous robes. Sophronius was very surprised to find the Commander of the Muslim world dressed in anything but royal clothes and even questioned Umar r.a. about the simplicity of his apparel, to which he replied that Allah SWT doesn’t “demand extravagance”.The Patriarch then explained that he did not wear all the regalia to adorn himself but to ‘check the confusion and anarchy in the world’ and he was “God’s office”. In other words, for the sake of appearances, he had to portray in his dressing that he was a representative of God. It is, indeed, the concept of appearances that has confused us as to what influence is in actuality. That confusion has, consequently, led to forgetting the reason behind the creation of lofty appearances earlier in time, even if it was a result of flawed thinking.Sam Polk, a former hedge-fund trader and founder of a non-profit organisation, Groceryships, brilliantly scrutinized the reality of the addictive rat race of amassing money in a New York Times article saying that the money-spawning Wall Street, in reality, is “a toxic culture that encourages the grandiosity of people who are desperately trying to feel powerful”.Thus, today, the focus of our society has been reduced merely to the goal of generating easy money. Money that is easily earned does not worry about the path or means chosen for reaping it. Every professional field has ample of evidence with this regard, in fact, every professional field has become an example of this problem.Whether it is a doctor prescribing extra medications or recommending unnecessary laboratory tests to earn extra commission; or a judge ‘fixing’ a case with a politically influential defendant in return for a nomination to be elected to the District Court; or even a teacher passing a failing student, who goes to his/her house for private tuitions; or the role of media in selectively portraying jigsaws of a scenario that misrepresents the entire picture of truth to please governments and ruling powers of the world; the evil of easy money tempts and ensnares us with its shiny traps in every sphere and every nook and corner of our lives.Deep down everyone knows between right and wrong. Every one of us feels a pang of guilt when we are about to board the bus leading to bribery, dishonesty, greed, et cetera. The effects of friction between our conscience and our choice are terser, initially. However, with time and continuality, the friction smoothens out and choosing a wrong, but an easier path, to our goals doesn’t seem to disconcert us.In fact, calculated steps are taken by big businesses and governments to erase the divide between what is the right or wrong method and/or means of earning an honest livelihood, as it, ultimately, means expansion and prosperity for them in this chain reaction. So is the case with Islamic finance and the concept of Sukuk – Sharee’ah bonds.A conventional bond is a certificate which, as per the terms set, when once bought from the issuer requires the issuer to pay the holder of the bond the face value in addition to the agreed amount of interest when it reaches maturity, or to pay other benefits, such as prizes given by drawing lots, or payment of a fixed amount, or any rebate. It is an asset-based investment, where the holder of the bond, strictly, does not have ownership of any tangible assets associated with the investment they made, save the certificate.According to the Islamic Fiqh Council, having any kind of dealing with bonds of the above stated terms is haraam (forbidden) no matter whom it is issued by and no matter what name it is given as a disguise, according to the Sharee’ah (Islamic law), because they are riba-based loans, and riba (interest) is haraam in Islam.The reason why Islam strictly forbids dealing in interest in any arrangement is because it is deemed an exploitation. In Islam, if a person contributes towards the capital of any business, they should be entitled to ownership of the associated assets and an equal bearer of the profits and loss of the assets they are backing.There have been Muslims, who, despite knowing that interest is forbidden in Islam, have voluntarily dealt in it, because of the lure of easy money. However, there has been a great number of Muslims, who have consciously avoided going down this path, adhering strictly to their religious doctrines. This, evidently, was a big loss for banks and businesses that were interest-oriented. Therefore, to include that large section of the Muslim population that avoided dealing in interest-based money, the big fish in the world of finance, came up with the idea of “Islamicizing” banks and other concomitant businesses, and as a result, bonds, too.What started off with a façade of a sincere attempt at creating Islamic banks, which was a huge success among the Muslim masses, very soon overtly degenerated into the capitalist pothole. The only difference that remains today betwixt common banks and Islamic banks is the inclusion and/or exclusion of the term Islamic. The products on offer at Islamic banks are the same that are offered by a conventional bank, barring the difference in English and Arabic terminology.Semantics does not really qualify as a stamp of religious approval and, frankly, accounts to nothing. A spade is a spade no matter what colour it comes in. The fact is that 97% of the world’s money is intangible, created not by the governments, but by banks when loans are made. That money is only visible in our bank statements. Therefore, if banks were creating Islamic finance products, it obviously was not going to be based on tangible cash, as it only existed in electronic form.Correspondingly, Sukuk (bonds) are also one of the concomitant features of “Islamic” banking and have been extensively endorsed by many Islamic banks. The market of Sukuk has rapidly augmented in recent years with a net worth of billions of dollars. So much so, that CNBC called the year 2014 as the year of Sukuk bonds.Traditionally, what differentiated Sukuk (bonds) from conventional bonds was that the buyer of Sukuk became its legal owner of a portion of an/some asset sold by the issuer. The buyer is then allowed to rent that portion of the asset(s) to the issuer.Consequently, the assets should be tangible, with physical substance rather than an intangible asset. Perceptibly, this concept is much more secure than that of the conventional bond dealing with electronic money – a substitute for hard cash.It was not that the concept of Sukuk was drastically different than conventional bonds that made it such a hit, but, predominantly, the fact that they were backed by religious scholars that ignited its phenomenal growth. Since Sukuk issuers did not follow this traditional concept but a tweaked concept of Sukuk bonds, where the buyer does not get ownership of the assets that he/she buys. The namesake Sukuks were just as intangible as the conventional bonds, which is in violation of the Sharee’ah.According to a Bloomberg’s report, Sheikh Muhammad Taqi Usmani, chairman of the Bahrain-based Accounting & Auditing Organization for Islamic Financial Institutions (AAOIFI), an authentic authority on Islamic finance, stated that 80% to 85% of Sukuk issued were not in compliance with the Sharee’ah.But, as stated earlier, corruption and its infesting claws have reached every capillary of the human world, and thus, in order to procure the respectability of religion and beguile the uninformed Muslim, and, of course, the partially tempted Muslim, Islamic approval is bought from dishonest and immoral, shady ‘scholars’. As per a BBC report, a Dubai-based investment banker revealed that the same products that are offered at conventional banks and businesses are created, however, for them to be Sharee’ah compliant, the banks keep trying their luck with Islamic scholars by calling them up one after the other, until finally, one cedes into the easy income in the form of a handsome bribe and sells his services that include, the glowing Fatwa (seal of Sharee’ah approval).Even the method of gaining an approval is not an example of ingenuity, just like the products. Obtaining approval via bribery in the financial market has been in existence since a long time. You can draw a parallel with the way investment banks bribe rating agencies to award their conventional bonds with a triple A rating.In consequence, with the endorsement of this ‘legal’ deception, the same conventional banking products, albeit with a new dress of Arabic terminology and religious sanction, are sold to millions of this fresh, unexplored sector of the Muslim population, which was difficult to access prior to this stroke of imitativeness.Nonetheless, all is not gloomy. What still remains with us is of great significance and that is the liberty of choice.Times are tough, we have to walk on tiptoes to safeguard ourselves from falling victims to the lure of easy money, yet we have the independence of making our decision, whether it is to yield into the materialistic world or honour our sense of conscientiousness.We will be beset with fraudulence and trickery every step of the way, whether exploiting us in a disguise of religious sanctity, or through some other agency that appeals to our sense of right and values. But then again, essentially, we have been bequeathed with the faculty of thought, analysis, and making calculated decisions. What decisions we make will be decisive of who we are as individuals.The Panama Papers incident should make us question whether the ‘influential’ public figures of today were successful in earning respect for themselves through their scheme of making easy money. That should serve as a reminder and what we should ask ourselves before giving into ways of generating easy money is: whether it really is going to make us more influential, or not? Whether earning money through someone else’s hard work, actually, accounts for anything, or not? Whether influence exists without values, without honesty, without honour and integrity? Whether influence really is directly proportional to the accumulation of wealth?