Shariah financing growing popular in the West
American bankers and investors are increasingly dipping thier toes in the opaue world of Shariah financing, a sector that has grown to $1.6 trillion in assets worldwide over the past three decades. Anne Ryan, Rene Alston
CHICAGO — Ahmed Irfan Khan was poised to transform his family’s small but successful slaughterhouse into a specialty-meat selling juggernaut.
Just one thing stood in his way: His faith.
Khan’s thriving business in Chicago’s old stockyards — which sells halal meat — protein slaughtered in a way prescribed by Islamic law — might have made him attractive to Main Street investors. But his strict adherence to his Muslim faith made going down that path complicated.
Under Islamic law, collecting or paying interest is prohibited, making it difficult for Khan to borrow the roughly $2 million needed to expand his company, Barkaat Foods.
But Khan was ultimately able to get the capital for his business — and stay true to his faith — with the help of a traditional bank and a boutique venture capital firm willing to hammer out arrangement that Khan said was “Shariah compliant.”
“This shows there are ways to follow your principles,” said Khan, who plans to use the money to double the size of his 40-person operation. “Other entrepreneurs are going to be inspired by this.”
Big and small investors are increasingly dipping their toes in the world of Shariah-compliant financing, a sector that has grown to more than $1.6 trillion in assets worldwide over the past three decades. It’s one that analysts see as having the potential for even greater growth as the Muslim population grows in the U.S. and Europe.
Earlier this month, Luxembourg issued a $254 million, five-year Islamic bond, known as sukuk. Meanwhile, Hong Kong last month completed its first sale of Islamic debt raising $1 billion. That came after Britain in June became the first Western nation to issue sukuk, an Arabic word that roughly translates as “certificates.”
Sukuk act much like traditional bonds, delivering payments to investors until maturity.To comply with Sharia, the bonds have to be tied to some sort of physical asset. Instead of interest, investors are being rewarded with a share of the profit derived from the asset.
Goldman Sachs and HSBC are among western financial service behemoths that have introduced sukuk in recent years. And in the U.S. for the last decade, a number of banks have been arranging for mortgages and auto loans for their Muslim clients that are permissible under Islamic law.
Outside the U.S., Shariah finance is making huge strides from London to Kuala Lumpur. Assets held by Islamic banks continue to grow by more than 15% per year, and analysts predict the potential size of Islamic financial markets could reach several trillion dollars in a matter of years, according to a Council on Foreign Relations report on Islamic finance published earlier this year.
“It’s a fairly global phenomena,” said Ibrahim Warde, an expert on Islamic finance at Tufts University. “Islamic finance in general has benefited from the financial crisis largely because Islamic institutions have done better than the conventional ones. One of the fundamentals of Islamic finance — beyond not just charging interest — is there must be a direct connection in between the financial product and the real economy. That’s made it more attractive.”
In addition to the no-interest requirement, all parties to the deal agree that the money changing hands will be spent on activities that promote social good and the banks and investors pledge to return a portion of their profits to Muslim charity.
There are also prohibitions on money from deals being used to promote or sell certain products, such as alcohol, pornography and pork.
In the Barkaat deal, the Chicago-based venture capital firm Prairie Street Capital borrowed from Ohio’s FirstMerit bank on standard terms. Prairie Street then entered into what is known in Arabic as a murabaha, a deal that is effectively structured as a lease-to-own agreement. The firm rents back equipment and the building to Barkaat at a marked up rate.
A Chicago investment bank, Sikich, assisted Barkaat in brokering the deal.
Michael Barry, president of Prairie Street Capital, said his firm was enticed by Barkaat, even as the Midwest has seen several mainstream meat producers go out of business in recent years. With the U.S. Muslim population projected to grow by 35% in the next 20 years, Barkaat was uniquely positioned, Barry said.
“We saw a business that we felt good about owning, we felt good about being part of,” Barry said. “It’s a business we can add value to and we could make money with. It’s what drove us to the decision.”
Khan, whose first career was in IT, knows first-hand the demand for his product. When his family moved to Chicago from Bombay in the mid-1980s, they struggled to find halal meat.
For years, he looked for slaughterhouses, like the one he eventually bought in 2009, that would let him come in and slaughter his own lamb or goat, so that he could be assured his family was eating authentic halal meat.
Already, Khan is selling his meat directly to thousands of Muslim customers throughout the country, who buy his lamb, goat and veal, and have it shipped to them. (With the $2 million cash infusion, he plans to buy new equipment and retrofit parts of his slaughterhouse, so that he can begin slaughtering cattle as well.)
While most of his customers shop online, many come to check out his facility in person. Earlier this month, hundreds of Muslim families came to his slaughterhouse to kill lambs themselves to mark the holy day of Eid al-Adha.
Non-Muslims are also his customers, with much of his product being sold to a Wisconsin meat company that sells high-end organic meats to grocers.
“There’s a good chance that piece of lamb you are buying at Whole Foods is halal, even though it’s not branded as halal,” Khan said.
Some critics, including the conservative Center for Security Policy, warn that Americans should be wary of Shariah-compliant financing. They charge that certain aspects of Shariah are draconian, including requirements that women seek permission from their husbands before doing something as mundane as getting a driver license and calls for capital punishment for those who slander Islam.
“Islamists are attempting to impose Shariah Compliant Finance (SCF) on Western institutions to use our own financial strengths against us,” the group writes on its blog dedicated to the issue, Shariah Finance Watch. “The most serious problem with SCF is that it legitimates and institutionalizes Shariah law… a theo-political, legal doctrine violently opposed to Western values.”
Chris Geier, partner-in-charge at Sikich, the investment bank that helped broker the Barkaat deal, said such criticism is unfair.
“This is a company in the U.S., legally domiciled, approved by the USDA to do business the way they are doing it,” Geier said of Barkaat. “We try to help companies and support their business plan and therefore support this economy. It is done without a belief about what they do religiously.”
Khan said he’s unfazed by the criticism, and instead said his deal shows that American financial institutions are beginning to see Islam in granularity that they hadn’t before.
“It’s progress when you can find a way to do business and stay true to your beliefs,” he said.
MEET the anti-racism heroes who came to the aid of two Muslim women as they were being attacked in a bigoted tirade in Newcastle.
The friends, who were skating at Newcastle West when they intervened to help the mother and daughter on Monday night, say more people need to take a stand against ‘‘weak’’ and ‘‘cowardly’’ vilification.
Scott William Papworth, 27, has denied verbally attacking the women and threatening to kill those who came to their aid, claiming he was only one of numerous people in the vicinity and that he had been acting in self-defence against the skating group.
It’s alleged he swore at the women and told them: ‘‘We are Westerners and you’re not meant to be here.’’
Mr Papworth, of Bingleburra outside Dungog, pleaded not guilty to five charges in Newcastle Local Court on Tuesday, including that he intimidated and stalked the women, assaulted one of the men who came to their aid and stole two mobile phones.
Mr Papworth was refused bail after magistrate Ian Cheetham described the verbal assault as ‘‘made on a racial basis upon persons who were innocently going about their business’’.
Prosecutor Sergeant Karl Moir urged the magistrate to consider the charges ‘‘in the present climate’’.
‘‘We are not just looking at a vacuum here,’’ he told the court.
In a statement tendered to court, police alleged the two women were wearing traditional Muslim hijabs as they drove along Smith Street about 7pm on Monday.
A man allegedly approached their vehicle and said, ‘‘We are Westerners and you’re not meant to be here’’ and then he punched the driver’s side wing mirror.
The daughter drove five metres and got out to fix the mirror. But as she tried to get back in the car, police allege the man forced the left side of his body into the car, took hold of the steering wheel and put his foot on the accelerator for about 10 seconds. The car was in park and didn’t move.
The statement said Patrick Burgess, James Turvey and four other men saw what had happened and became concerned for the women’s safety.
As they approached the car they heard the man yell out ‘‘you Musi c—s’’. Police allege the man turned on the six friends and threatened to kill them. The man allegedly stole two of their mobile phones and ran off but was struck by a skateboard thrown by one of the friends. He later allegedly punched Mr Burgess.
‘‘He was saying the worst things [to the women], racist profanities [then] he started swinging at each of us while we were trying to defuse situation as best we could,’’ Mr Burgess told the Newcastle Herald.
Mr Burgess said he felt ‘‘so disgusted’’ the women had been subjected to the abuse.
‘‘People need to know that this is not OK,’’ he said. ‘‘The way this situation has gotten is so not acceptable, and people need to start taking action and actively condemning this sort of activity.
‘‘It’s the indifference of good people that is bringing us down.’’
The case comes at a time of increasing community unrest and concern that Australia’s mission against Islamic State in Iraq is fuelling attacks on Muslims in Australia.
Mr Turvey said he felt ‘‘frustrated’’ that other people had driven past while the attack was taking place.
‘‘If you look at YouTube videos of verbal or physical assaults on public transport, there’s grown men … guys I’m sure on the weekend are watching footy talking about how tough they are – but when people are being abused or bullied on the streets these people are so quick to turn a blind eye,’’ he said.
The statement said Mr Papworth was arrested a short distance away and claimed to police that three young men had been set upon by the skaters and that he was acting in self-defence.
‘‘The accused stated he was unaware of any Muslim lady or any incident involving a vehicle,’’ the statement said.
Solicitor Bryony Barber said her client denied being the racist attacker, telling the court he was in town to go to the beach and visit his sister and was one of numerous people in the vicinity.
Mr Cheetham said Mr Papworth represented an unacceptable risk and refused him bail.
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Pakistani Muslims Form Human Chain To Protect Christians During Mass (PHOTOS) The Express Tribune | By Web Desk / Aroosa Shaukat Posted: 10/08/2013 10:43 am EDT Updated: 10/08/2013 12:07 pm EDT Share 11116 Tweet 1205 0 Email 282 Comment 2183 Hand in hand as many as 200-300 people formed a human chain outside the St Anthony’s Church adjacent to the District Police Lines at the Empress Road, in a show of solidarity with the victims of the Peshawar church attack two weeks back, which resulted in over a 100 deaths. The twin suicide attack on All Saints church occurred after Sunday mass ended and is believed to be the country’s deadliest attack on Christians. Read whole story on The Express Tribune here ALSO ON HUFFPOST: Close Amazing Mosques 1 of 51 WikiMedia Next Previous Next MORE: Interfaith Lahore Christianity Islam St Anthonys Church Pakistan Human Chain
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In Channel 4′s Islam: the Untold Story, aired 28 August, British writer Tom Holland – garbed Indiana Jones-style in billowing shirt and trusty hat – treks across the Arabian desert, talking to local Bedouins, and inspecting historical artefacts to investigate the origins of Islam. Muhammed, he concludes, probably never came from Mecca, but from Transjordania; the Qur’an and its teachings are largely borrowed from local religious traditions, Christianity, Judaism, Zoroastrianism; and it is questionable whether ‘Islam’ ever really existed as a distinctive, coherent faith during Muhammed’s reign. Rather, the religion of Islam was an innovation of the Arab empires, cynically manufactured to legitamise its expansion by conquest over much of what we now know as the Middle East.
To vindicate this thesis – based largely on his new book, In the Shadow of the Sword – Holland interviews a handful of sceptical Western scholars of Islam. But his narrative is replete with elementary, often laughable, errors. Perhaps the most glaring is his insistence that Mecca is only mentioned once, ambiguously, in the Qur’an – evidence for Holland that the Prophet never came from Mecca. But this is a strange inaccuracy, for the Qur’an mentions Mecca clearly: “And He it is Who held back their hands from you and your hands from them in the valley of Mecca after He had given you victory over them.” (48:24) He then makes much of the Qur’an’s references to “Becca”, as if this must be a completely different place, oblivious to the fact that in South Arabic, the language used in the south of the Arabian peninsula during the time of Muhammed, the sounds b and m were interchangeable – as documented in 1973 by Princeton University Arabist, professor Philip Hitti.
Holland also argues that the Qur’an’s frequent references to vines and olives points to the existence of an agricultural society. Mecca was barren and lacked agriculture; therefore, hey presto!, Muhammed’s message originated elsewhere. The inference is truly bizarre: neighbouring Medina, where Muhammed emigrated fleeing persecution in Mecca – and where he continued to receive a large bulk of the revelations of the Qur’an – was a thriving “agricultural settlement, with widely scattered palm groves and armed farmsteads.”
Holland’s other pillar of evidence is equally meaningless. Holland visits the site of Sodom, and highlights the Qur’an’s statement that its readers “pass by them in the morning and at night” (47:133-8) Flabbergasted, Holland asks: “What is it doing here – a thousand kilometres from Mecca?” That the Meccans were frequent travelling traders who would have routinely passed through this area – as widely documented by scholars such as William Montgomery Watt in the Encyclopedia of Islam (2008) and Ira Lapidus in his Cambridge University study (1988) – appears to be lost on Holland.
Holland’s lack of familiarity with the wider literature in Western scholarship on Islam is thus painfully obvious to serious historians. Early on, Holland speaks of the study of history in Western universities as based on “scepticism and doubt” – in contrast, presumably, to Muslim historians, who simply shape ‘facts’ to fit their faith. The problem is that even though Holland looks dapper in his Indiana outfit, he is not really a historian – and in his latest work, it shows.
Although for the last nine years Holland has written popular history, the bulk of his writing is fiction – including titles such as The Vampyre (1995), Supping with Panthers (1996), The Sleeper in the Sands (1998), and The Bone Hunter (2001). Yet he has no qualifications in history, and cannot even speak Arabic – which is why he employed a Syriac and Arabic-speaking researcher.
It is perhaps not surprising, then, to find him – in true Indy-style – adopting a 1930s colonial mindset early on, informing viewers that: “To the ancients, the Arabs were regarded as notorious savages.” As if to hit this point home, the only people he finds to endorse orthodox accounts of Islam’s origins are Bedouin Arabs living in the desert. At one symbolic point, Holland prays amongst them, then suddenly – for no apparent reason – extracts himself from the congregation in the middle of the prayer only to peer, wonderingly, around him, as if to underscore the questionable origins of one of Islam’s most sacred rituals.
Strangely, the only other Muslim who makes an appearance to represent the ‘canonical’ view of Islam’s origins is Seyyed Hossein Nasr, Professor of Islamic Studies at George Washington University. Troubled by what he conceives as gaps in the historical record, and inconsistencies between the scriptural account and hard evidence on the ground, Holland is confidently informed by Nasr that such an absence of evidence is irrelevant for Muslims who recognise the limits of reason in the face of transcendental realities.
But Channel 4′s sole selection of Nasr as representative of the orthodox historical account is disingenuous. Although he is a renowned philosopher specialising in comparative religion, Islamic esoterism, philosophy of science, and metaphysics, Nasr has contributed little on the minutiae of Islamic history. Through such selective production values and imagery, the film strikes a stark contrast between Western logic and Muslim belief. Muslims are portrayed as steeped in a strange, backward irrationality – out of touch with the modern world with its newfangled, super-scientific methods of historical analysis, and immune to the impact of reason when it comes to longstanding beliefs.
What Channel 4 viewers aren’t told is that the theories Holland regurgitates are not only heavily contested in the wider Western scholarly community, they were almost completely discarded some decades ago. One of their core proponents, Patricia Crone, makes a regular talking-head appearance in the film (as well as being heavily referenced in Holland’s book among others). Holland essentially resurrects their ideas – published back in the 1970s – with unnerving gullibility, accentuating the “black hole” of evidence on early Islam where one should expect abundance.
But, unbeknownst to Channel 4 researchers, he is simply wrong. Petra Sijpestein, Professor of Arabic at Leiden University, remarks: “In the writings of 12 years after the death of Muhammad, Muslims are referred to as a separate religious group, first using the term muhajiroun, migrants who had left hearth and home with a purpose, or Saracens, descendents of Sarah and Abraham. And from around 730AD, terms like Islam, Muslims and specific religious customs such as zakat (charity) were already being practiced and described.”
Yet Holland is a man on a mission. Uncritically parroting the Crone thesis that “there is no hard evidence for the existence of the Koran in any form before the last decade of the seventh century” – he infers that the Arab empires self-servingly concocted Islam as a radically distinct faith. For one thing, there are numerous Qur’anic manuscripts from the first century of hijra, which possess no significant textual deviations. But worse, apart from the fact that Islam has never presented itself as an entirely new religion (rather as a continuation and confirmation of the Jewish and Christian traditions), this theory has almost no currency at all in the very Western universities that Holland claims to admire.
As noted by the late Robert Seargeant, Sir Thomas Adams Professor of Arabic at Cambridge University, Crone’s argument “is not only bitterly anti-Islamic in tone, but anti-Arabian. Its superficial fancies are so ridiculous that at first one wonders if it is just a ‘leg pull’, pure ‘spoof’.” No wonder that the theory of a “reconstructable past” which “relies only on sources outside of Islam”, has “been almost universally rejected” according to Gordon Newsby, Professor of Middle Eastern Studies at Emory University. This is because, says David Waines, an Islamic Studies professor at Lancaster University, it is “far too tentative and conjectural (and possibly contradictory).”
Serious debate on Islamic historiography is welcome – including re-evaluation of hadith (oral traditions of the Prophet), and re-assessing regressive elements of ‘Shari’ah Law‘ belonging to the cultural conventions of Arab dynasties. Channel 4‘s film distracts from this urgent task by popularising outmoded anti-Arab theories, long ago dismissed by most serious Western academic institutions as Eurocentric Orientalist fictions.
Follow Dr. Nafeez Mosaddeq Ahmed on Twitter: www.twitter.com/nafeezahmed