Israel attacks Gaza aid fleet (19 people were killed and dozens injured)

Israel attacks Gaza aid fleet
Available at:

Al Jazeera’s report on board the Mavi Marmara before communications were cut. Israeli forces have attacked a flotilla of aid-carrying ships aiming to break the country’s siege on Gaza. At least 19 people were killed and dozens injured when troops intercepted the convoy of ships dubbed the Freedom Flotilla early on Monday, Israeli radio reported.

The flotilla was attacked in international waters, 65km off the Gaza coast. Avital Leibovich, an Israeli military spokeswoman, confirmed that the attack took place in international waters, saying: “This happened in waters outside of Israeli territory, but we have the right to defend ourselves.” Footage from the flotilla’s lead vessel, the Mavi Marmara, showed armed Israeli soldiers boarding the ship and helicopters flying overhead.

Al Jazeera’s Jamal Elshayyal, on board the Mavi Marmara, said Israeli troops had used live ammunition during the operation.

Aftermath of Israel’s attack on Gaza flotilla

The Israeli military said four soldiers had been wounded and claimed troops opened fire after demonstrators onboard attacked the IDF Naval personnel with live fire and light weaponry including knives and clubs”. Free Gaza Movement, the organisers of the flotilla, however, said the troops opened fire as soon as they stormed the convoy. Our correspondent said that a white surrender flag was raised from the ship and there was no live fire coming from the passengers. Before losing communication with our correspondent, a voice in Hebrew was clearly heard saying: “Everyone shut up”.

Israeli intervention

Earlier, the Israeli navy had contacted the captain of the Mavi Marmara, asking him to identify himself and say where the ship was headed. Shortly after, two Israeli naval vessels had flanked the flotilla on either side, but at a distance.
Organisers of the flotilla carrying 10,000 tonnes of humanitarian aid then diverted their ships and slowed down to avoid a confrontation during the night. They also issued all passengers life jackets and asked them to remain below deck.

Al Jazeera’s Ayman Mohyeldin, reporting from Jerusalem, said the Israeli action was surprising. “All the images being shown from the activists on board those ships show clearly that they were civilians and peaceful in nature, with medical supplies on board. So it will surprise many in the international community to learn what could have possibly led to this type of confrontation,” he said.

Meanwhile, Israeli police have been put on a heightened state of alert across the country to prevent any civil disturbances. Sheikh Raed Salah,a leading member of the Islamic Movement who was on board the ship, was reported to have been seriously injured. He was being treated in Israel’s Tal Hasharon hospital. In Um Al Faham, the stronghold of the Islamic movement in Israel and the birth place of Salah, preparations for mass demonstrations were under way.


Condemnation has been quick to pour in after the Israeli action. Mahmoud Abbas, the Palestinian president, officially declared a three-day state of mourning over Monday’s deaths. Turkey, Spain, Greece, Denmark and Sweden have all summoned the Israeli ambassador’s in their respective countries to protest against the deadly assault. Thousands of Turkish protesters tried to storm the Israeli consulate in Istanbul soon after the news of the operation broke. The protesters shouted “Damn Israel” as police blocked them.

“(The interception on the convoy) is unacceptable … Israel will have to endure the consequences of this behaviour,” the Turkish foreign ministry said in a statement.

Ismail Haniya, the Hamas leader in Gaza, has also dubbed the Israeli action as “barbaric”. Hundreds of pro-Palestinian activists, including a Nobel laureate and several European legislators, were with the flotilla, aiming to reach Gaza in defiance of an Israeli embargo.

The convoy came from the UK, Ireland, Algeria, Kuwait, Greece and Turkey, and was comprised of 800 people from 50 nationalities. But Israel had said it would not allow the flotilla to reach the Gaza Strip and vowed to stop the six ships from reaching the coastal Palestinian territory.

The flotilla had set sail from a port in Cyprus on Sunday and aimed to reach Gaza by Monday morning. Israel said the boats were embarking on “an act of provocation” against the Israeli military, rather than providing aid, and that it had issued warrants to prohibit their entrance to Gaza. It asserted that the flotilla would be breaking international law by landing in Gaza, a claim the organisers rejected.

(Note (s): What we can do besides our Doa’?

(i) Write to your MP:;

(ii) Write/Call the BBC: The complaints line is down so call their foreign desk instead at 02086249111, or go to;

(iii) Protest: London: outside 10 Downing Street, 2pm Monday 31st May, Manchester: Outside the BBC, Oxford Road, 5pm, Sheffield: Outside the Town Hall, Town Centre, 12 noon

(iv) Write to Foreign Office:,,

(v) Write to the Prime Minister or Foreign Secretary
David Cameron, Prime Minister https://email. number10. aspx
William Hague, Foreign and Commonwealth Office MSU.PublicIn@

“Peace will not come out of a clash of arms but out of justice lived and done by unarmed nations in the face of odds.” Mahatma Gandhi


  • Free Palestine Demonstration at Trafalgar Square, London


    Investment Dar battle with Blom adds sharia risk – Moody’s

    Investment Dar battle with Blom adds sharia risk – Moody’s

    by Shaheen Pasha Available at:—moodys

    A legal wrangle between Kuwait’s Investment Dar and Lebanon’s Blom Bank has raised sharia risk in the Islamic finance industry, ratings firm Moody’s said in a research note on Wednesday. Blom Bank sued Dar for $10.7 million in a British court last year, seeking the principal it invested plus a 5 percent return, as was structured in an Islamic deal it concluded with the company in 2007.

    Dar said it would not pay as the fixed return constituted interest which it said was not sharia compliant and broke the company’s own charter.

    A judge ruled that while Dar should repay the principal, it had an arguable defence regarding the extra profit. While the case has not yet concluded, legal experts and Islamic bankers have been debating its significance for the industry.

    Moody’s senior credit officer Khalid Howladar said that the ratings firm will closely the watch the case as the final outcome may set a precedent. In the note, Howladar wrote: “Such precedent when coupled with legal opinions will likely form part of our rating analysis of such instruments and institutions.”

    He added that the case highlights the need for the industry to improve its due diligence when structuring such Islamic transactions. He said that Moody’s may require clear documentation demonstrating that sharia risk has been addressed before it rates sukuks and Islamic institutions in the future. Documentation may include disclosure of approvals from company sharia boards and a signed waiver in the contract disallowing a sharia related defence. (Reuters)

    “The person who risks nothing, does nothing, has nothing, is nothing, and becomes nothing. He may avoid suffering and sorrow, but he simply cannot learn and feel and change and grow and love and live.” Leo F. Buscaglia

    Best Regards

  • London

    Malaysia establishes programs to train on Islamic banking

    Malaysia establishes programs to train on Islamic banking

    Available at:

    (MENAFN – Khaleej Times) The Central Bank of Malaysia and the Malaysian government have established programmes to educate central banks in other parts of the world on regulating Islamic financial systems.

    The local universities in Malaysia will also offer programmes to educate and train bankers on Islamic financial products, Tan Sri Dr Zeti Akhtar Aziz, Governor of Bank Negara, Malaysia said while addressing one of the sessions at the sixth World Islamic Economic Forum here on Thursday.

    Emphasising that Islamic financial products are innovative and competitive she said about 50 to 70 per cent Islamic financial products are used by non-Muslims in Malaysia while multinationals have issued sukuk bonds from the Malaysian bond market and this is a testament to the success of Islamic financial products.

    Humphrey Percy, Chief Executive Officer, Bank of London and the Middle East said even though the global Muslim population was about 1.6 billion only 14 per cent use banks while Islamic finance represents less than one per cent of global
 finance systems.

    He said Islamic financial institutions are faced with several challenges which have to be addressed before their financial products can be marketed at global level.

    The challenges include lack of education on Islamic financial products in Western countries and the narrow range of products offered in Islamic financial markets with few instruments that hedge and manage risks, Humphrey argued.

    “Another major challenge is the lack of standardisation of terms among countries offering Islamic financial instruments,” he said. He said London was an emerging Islamic financial market and the largest in Europe but currently there is little room for growth as most central banks in Europe do not have the ability to regulate Islamic financial instruments.

    John Sandwick, specialist in Islamic Wealth and Asset Management, Switzerland said that $65 trillion worth of funds are under wealth management funds and of this amount only $ 2.5 trillion are owned by Muslims with most of the wealth being invested in deposits, bonds, stocks and real estate and less than two per cent in equity.

    He pointed out that the Swiss banking system handles about $200 billion worth of funds but the country does not have an Islamic finance system.

    He said traditional methods of wealth management are part of the problem as most of the wealth in the Muslim world was invested in real estate which has lost its some of its value due to the global economic crisis.

    “These funds could have been invested in sukuk and other Islamic financial instruments but these are not available in most European nations,” he said.

    Khalled Abdullah-Janahi, Vice Chairman Ithmar Bank, Bahrain agreed that there is a need to educate regulators and bankers on Islamic financial products. There is also a need to regulate investors and depositors to direct their fund managers to invest in Islamic financial products.

    Mumtaz Khan, Chief Executive Officer of Maybank MEACP Pte Ltd Singapore said in order to move Islamic financial products forward, there was a need to put in place a new world order with more equitable distribution of wealth.

    “The Group of 20 is one of the platforms for the new world order but there are only three Muslim nations in this group; Saudi Arabia, Turkey and Indonesia. The global financial system is still defined by the International Monetary Fund and the World Bank’’, Mumtaz recalled.

    “The Islamic Development Bank is not a key player in the G20 or the G8. There is a need for the WIEF, IDB and Malaysia to be part of the G20 as many Islamic institutions based in Malaysia have strong ties with the West, Islamic nations, India and China. This group will be able to bring Islamic finance to the same global level as other global financial players,” he said.

    “The difference between school and life? In school, you’re taught a lesson and then given a test. In life, you’re given a test that teaches you a lesson.” Tom Bodett

    Best Regards

  • Lake District National Park, Cumbria, England

    A role for sports in Islamic finance?

    A role for sports in Islamic finance?

    By Rushdi Siddiqui, Special to Gulf News Available at:

    Dubai: His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, made an extraordinary comment last month, “… we are conducting feasibility studies to evaluate the costs and benefits of a bid [for the 2020 Olympics].” Qatar submitted a bid to host the 2022 World Cup, and bid committee Chairman, Shaikh Mohammad Khalifa Al Thani, said, “… A World Cup in Qatar will be a new World Cup, bringing people and different cultures together in the name of football…”

    I’ve been involved in sports for 40 years tennis, bicycling and basketball and, after reading such comments, a question comes to mind: what role should Islamic finance play in ‘local’ sports, besides offering Islamic mortgages for villas and apartments in, say, Dubai Sports City or ‘guidance’ on appropriate attire and logo/emblem?

    Sports builds friendship bridges across cultures, countries and faiths by uniting people, be it the Olympics or World Cup, and Islamic finance needs to be involved in a variety of capacities. It will not only be part of the necessary brand building exercise by showing the progressive side of this embryonic industry and encourage more media stories from the business section to the main section but also show leadership in addressing local health issues with sports.

    GCC Sporting Events

    In the GCC/Malaysia, which are hubs for Islamic finance, there are international sporting events — such as in tennis and golf, Formula One and Asian Games which are attended by bankable customers. However, are the Islamic banks major (or even minor) sponsors? Do Islamic banks support any of the local or regional teams and star athletes with their name on their stadiums or jerseys, as commonly found in, say, US and UK? The young and old, rich and poor follow sports passionately, hence, an opportunity to not only affiliate Islamic banks to international ‘halal’ entertainment, but also recruit and add to customer base.

    Naming rights

    A Dubai metro train station having naming rights from an Islamic bank, while interesting, may not have the same impact as naming, as say, KFH, DIB or Al Hilal Football Stadium. Regional banks have acquired companies, via proprietary capital allocation, including high end car company (Aston Martin), in the G-20 countries — either via Islamic financing or with an Islamic tranche, where target companies are within the permissible precepts of Islamic Sharia.

    In the west, leisure sport companies like Callaway, Wilson (subsidiary of Amer Sports), with Callaway in the S&P Islamic equity indexes, are not national security issues [may be local icons], and have changed hands a few times. Hence, an interesting Islamic finance acquisition consideration, with the possibility of also listing on a GCC exchange.

    Unlike technology or finance companies, challenging business to understand, sports companies are an easier explanation. Obviously, a thorough vetting, under the watchful eye of the Sharia Board on operations, non-compliant subsidiary ownership/revenue, athlete endorsement will be necessary. With sporting companies come athletes, like Nike’s entourage of Tiger Woods and David Beckham, who are corporate brand-building ambassadors.

    Best examples

    One of the best examples of a global athlete (in good standing) is the Chinese basketball superstar Yao Ming of the Houston Rockets who raised the profile of basketball and his endorsed products in China. In basketball and football, retired Muslim international superstars like Kareem-Abdul Jabbar and Hakeem Olajuwon, and Zinedine Zidan are still global brand names, and Islamic banks should reach out to build sports academy in the region for the local youth and expatriate community.

    Take this one step further and have exhibition games from teams in the National Basketball Association and the National Football League in the US, Premier League, games in UAE, Qatar, Bahrain or Malaysia, and Islamic banks take part in funding for such ‘delegations.’

    Olympic sukuk

    Imagine a consortium of Islamic banks, from GCC, Malaysia, Indonesia, Pakistan and Turkey, issuing and listing a Triple A, multiple currency, long dated benchmark size UK Olympic and Brazilian World Cup Sukuk, that is, beginning of real standardisation! It would show the sukuk market’s resilience and reach, deployment of petro-liquidity for legacy projects for indebted countries looking for ‘sports’ funding, and make Islamic finance an important part of the global financial intermediation.

    It would build bridges of two way commerce to new geographies: funding opportunity in, say, natural resource-rich South America looking for liquidity, with liquidity looking for diversified opportunity. Shaikh Mohammad spoke of the ‘feasibility study’ on making a bid for the Olympics, and Islamic banks need to be part of the study.

    A good beginning is supporting selected Olympic sports and activities in the country, strategic acquisition of sports companies and obtaining appropriate brand ambassadors, in addition to having the collateral benefit off an enhanced image with cross sell appeal, potential recruits, new customer base, plus raise profile of local health issues with sports.

    “Sports is the toy department of human life.” Howard Cosell

    Best Regards

  • Brussels, Belgium

    Regulatory Framework of Shari’ah Governance System in Malaysia, GCC Countries and the UK


    Dear Readers,

    Alhamdulillah and I am very grateful to share with you my recent article entitled “Regulatory Framework of Shari’ah Governance System in Malaysia, GCC Countries and the UK” in the special issue of the Kyoto Bulletin of Islamic Area Studies on Islamic Finance (2010 March, Vol. 3 No.2). The Kyoto Bulletin of Islamic Area Studies is a refereed journal published by the Centre for Islamic Area Studies of Kyoto University. I presented this paper during the Kyoto-Durham Workshop on Islamic economic that took place in Kyoto, Japan last July. This article will also be published by Routledge in a book edited by Asutay, Kosugi and Sairally entitled “New Horizons in Islamic Studies” Series this year, InsyaAllah.


    Enjoy Reading!

    ….Uniquely, it is a sine qua non for the significant differences of Shari’ah governance system
    particularly from the regulatory overview as Malaysia represents model in mixed legal jurisdiction, GCC in Islamic and mixed legal environment and the UK in non-Islamic legal environment…… Hasan, (2010: 82).

    Best Regards

  • With Dr. Mehmet Asutay, Professor Kosugi Yasushi, Mr. Hylmun Izhar and Professor Abdul Ghafar Ismail at Kyoto University.

    Interview with Shari’ah Scholar

    Meet the Scholar

    Available at:

    Mufti Hassaan Kaleem is an eminent Sharia’a Scholar and a leading expert in the field of Islamic Banking and Takaful (Islamic insurance). He is trained by and continues to work closely with the leading Sharia’a Scholar, Sheikh Muhammed Taqi Usmani, Chairman of the AAOIFI Sharia’a Board. His involvement with Deloitte commenced in 2007 in an unprecedented move, to work alongside the Islamic Finance team, providing specialist Sharia’a input into Deloitte engagements.

    Q: So Mufti Hassaan Kaleem, tell us a bit about yourself?

    I continue to live and work in Karachi, Pakistan where I completed my Islamic studies at Jamia Darul Uloom Karachi, a world renowned institute for Islamic sciences. The institution is the largest and most renowned Islamic educational institution in Pakistan imparting deep knowledge of Islamic sciences and producing scholars in Sharia’a.

    Q: We hear a lot of statements that there is a shortage of qualified Sharia’a Scholars in the Islamic Finance industry, so what does it actually take to become a Sharia’a Scholar?

    Sharia’a guides Muslims in each and every aspect of their lives, it is comprehensive in its nature. To attain the level of knowledge which enables one to study and understand the original sources of Sharia’a and to comprehend the detailed literature developed over the centuries, takes many years. Naturally after that, like any other area gaining relevant experience is a must.

    Q: Can you give us details about the training you went through?

    After completing high school my specialized training commenced. This started with learning the Arabic language (essential given that it is the language of the original sources of Sharia’a, Quran and Sunnah). Arabic language is taught in great detail covering grammar, classical literature, writings and poetry. Additional subjects were then introduced including:

    * Fiqh (Islamic jurisprudence)
    * Usool Al Fiqh (Basic Principles of deriving Sharia’a rulings from the original sources)
    * Sunnah (the sayings, acts and approvals of the Prophet Mohammad peace be upon him)
    * Usool Al Hadith (principles of validation of narrations from the Prophet, peace be upon him)
    * Tafsir (commentary of Quran)
    * Usool Al Tafsir (principles of establishing commentary of Quran) and some other supplementary subjects.

    Each subject from this list is taught in levels that gradually increase in complexity. Fiqh is taught to a very advanced level where the basis of rulings, the different opinions of great scholars and their analytical arguments are discussed in detail. I was then required to complete four years of intensive studies in Fiqh. One cannot completely understand the process of deriving rulings from the sources and use of analogy unless they have a good understanding of Arabic and Usool Al Fiqh.

    In addition, a few related subjects are also taught such as Mantiq (Logic), astronomy and some special areas of mathematics. These subjects indirectly support the understanding of many principles and arguments in Fiqh.

    After completing this study over eight years, there are options for specialization in some areas. My specialization was in Ifta (Islamic case law) which took a further three years to complete. Understood simply Ifta is learning the practical application of Fiqh (Islamic Jurisprudence) during which the student has to study: the principles of giving verdicts; comprehensive Fiqh books; compendiums of contemporary and traditional Fatwa (scholarly verdicts); along with practice of writing verdicts under the guidance of senior experienced scholars of the field.

    Q: That is a very broad range of subjects, what made you decide to specialize in Islamic Finance?

    During my specialization and thereafter I took special training in Islamic finance and insurance which is a complete branch of Fiqh and Fatwa. To work as a Sharia’a advisor in Islamic finance requires in-depth knowledge of Fiqh and specifically skills of Islamic case law. By the blessing of Allah (the Most High) my previous studies and special training helped me a lot in this field.

    Q: Given that there are no recognized qualifications for Sharia’a scholarship in Islamic Finance, how can one determine if someone is in fact sufficiently qualified to be one?

    In my view the basic requirements for individuals considering becoming a Sharia’a advisor in Islamic finance are: in-depth study of Islamic sciences from a reputable institution; sufficient experience of teaching fiqh or undertaking considerable research work; substantial relevant theoretical and practical knowledge of banking and finance generally and Islamic finance specifically.

    Q: Can you give us some examples of financial institutions that you have been involved in and the boards that you sit on?

    Islamic finance activities can be broadly divided into three major areas: Banking; Insurance / Re-insurance and Islamic investment funds or similar activities. By the grace of the Almighty, I have had considerable experience of working in all these three areas as resident Sharia’a advisor or Sharia’a board member. Beside that I have had opportunities to work for different technical bodies and committees at the State Bank and Securities and Exchange Commission in Pakistan.

    Q: The role and work of Sharia’a scholars in Islamic Finance is often misunderstood, and is sometimes seen as being very secretive. Can you perhaps shed light on this and explain what happens at a typical Sharia’a Supervisory Board meeting?

    There is nothing secretive at all about how Sharia’a boards operate. AAOIFI has described how Sharia’a boards should function and what their possible terms of reference should be. Sharia’a boards function as any other authoritative body according to a code of conduct and all proceedings of the meetings are duly minuted. Before resolving any ruling the Sharia’a board will undertake detailed deliberation and will closely liaise with the management in this process. This is what standard practice should be, and I hope all Sharia’a boards abide by these standard practices.

    Q: Some people argue that there might be a conflict of interest between Scholars who sit on Sharia’a Supervisory Boards and are also remunerated by those same institutions, what is your view?

    The role of the Sharia’a board should not be seen any differently from the role of external auditors and lawyers. When there is no conflict of interest in the auditors’ and lawyers’ role despite being remunerated by the companies, there should be no conflict in the role of Sharia’a boards too. The Sharia’a board’s autonomy and its ability to operate without any influence from the management is undoubtedly important and should be ensured in all cases.

    Q: Do you believe the Islamic Finance industry is being hindered by a lack of Sharia’a standardization?

    I have heard this argument in almost every conference I have attended. When issues of Islamic finance came under discussion by non Sharia’a scholars they consider the lack of standardization in Sharia’a rulings as one of the hindrances in the progress of the industry. But to me it is a myth rather than a true reality. You will never find scholars considering it as a hindrance, because they know that difference of opinions based on correct arguments is very natural in those situations where there are no clear verdicts concerning them in Sharia’a. It is also a fact that when there is a need for a collective view, scholars do agree on common features and come up with something that is uniform for practical use. AAOIFI’s Sharia’a standards are seen amongst the scholars of the industry as a strong basis for standardization, even though all rulings within it are not attested by everyone in their personal capacity. I think these standards are evidence enough to refute this myth.

    Q: Deloitte are unique amongst professional services firms in directly engaging the services of a Sharia’a Scholar, what do you think are the advantages of this approach?

    I think having direct Sharia’a advice beside other necessary expertise is useful in that experts will be guided in all aspects of their structuring, consulting and tax advice from a Sharia’a point of view, so naturally the outcome will be very close to the one that would be acceptable to Sharia’a. In this way their advice will be more beneficial for their clients. It has been witnessed that a deal will go a long way and incur huge expenses but at the end it does not get Sharia’a approval or is not appreciated by the majority of Sharia’a scholars. Involvement of Sharia’a advice from the very outset of the process will help in avoiding such situations.

    Q: What kind of projects have you been involved in since joining the Deloitte team?

    I have been involved in a variety of projects like structuring deals, defining the complete road map of an institution, tax related structuring, internal audit and decoding of mysterious structures of Islamic finance! It has enabled me to gain exposure to complex and innovative areas of Islamic finance, and this is what I like most about my role.

    Best Regards

  • Keukenhof, Lisse, Holland

    Exclusive Interview with Prominent Shari’ah Scholars

    A Sharia scholar’s place on the board

    A recent report looks at some of the toughest issues facing Islamic finance
    By Rushdi Siddiqui, Available at:

    Funds-at-Work, a research-based strategy consultancy focusing on the investment industry, recently released “Shariah Scholars – A Network Analytic Perspective,” which links Sharia scholars to board positions. It is a more comprehensive study than previous Sharia scholar reports. Rushdi Siddiqui puts some challenging questions to four international Sharia scholars to get their view points:

    * Dr Hussain Hamid Hassan (HHH), eminent scholar and chairman of many Islamic financial institutions
    * Dr Mohammad Daud Bakar (MDB), international scholar and founder and managing director of Amanie Islamic Finance Consultancy and Education;
    * Yousuf Talal DeLorenzo (YTD), leading US scholar; and
    * Dr Mohammad Akram Laldin (MAL), Executive Director, ISRA, Malaysia.

    Research is an important area in Islamic finance and you are well aware of the Funds-at-Work study, linking scholars to Sharia boards. What is your impression of the study?

    HHH: The Islamic finance industry is young but growing. It needs specialists, not just in Sharia, but in law, accounting and feasibility studies.

    There are very few scholars who combine the qualifications and experience needed for this field.

    Therefore, it is only natural that they would carry a heavy load, for the industry is in need of development and the invention of new products which should be compliant with the Sharia, valid in civil law, and commercially viable.

    There just aren’t a sufficient number of specialists in these areas in light of the rapid growth and remarkable development of this industry.

    In time, the young will gain experience, and people will then seek them out, after the generation that preceded them has passed away; and they, in turn, will be succeeded by another generation of young practitioners. That’s the way of the world.

    Furthermore, this study was lacking in precision, for it ignored a great number of up-and-coming scholars who are working as members of these same Sharia boards along with their teachers, in order to learn from them. Why didn’t the study focus on them?

    It focused instead on the first generation, whose careers developed apace with the growth of the Islamic finance industry and the Islamic banking movement.

    The number of these [young scholars] far exceeds the number of senior scholars, who are now well over 60 years of age.

    How can the study demand that the new Islamic finance industry be led by the young to the exclusion of those with long experience, who are considered the fathers and theorists of the Islamic finance industry (IFI)?

    MDB: What is lacking in this research is the clear hypothesis of the research and in what way the readers could actually benefit from the research, as the data presented is quite extensive (although not necessarily accurate), but the data analysis needs to be improved.

    YTD: The goal of research is knowledge and its application. There are very likely a great deal of practical applications for the Funds-at-Work study and this is welcomed.

    Networking aside, there are far more important considerations, or there should be, in evaluating Sharia scholars and their work: Published work? Academic background? Affiliation with one juristic school?

    Experience and exposure to various financial products and instruments? Relationships with international legal firms? Ability to function effectively as team members and meet deadlines? Ability to represent, if necessary, IFIs in international or regional forums or even in informal situations?

    All of these are factors that may have varying degrees of importance for IFIs.

    MAL: I believe it is a good move to provide the market players with the information about their involvements.

    It will definitely assist the market player to engage the suitable Sharia advisor so as not to hinder their progress. I also strongly believe that we are not in shortage of Sharia advisors in the market. We do have competent people but not many are given the chance to serve on Sharia boards as some market players prefer to have certain scholars on their board. As a result you can find that some scholars sit on many boards.

    There is increasing conversation about scholars serving on multiple boards and how this might present a conflict of interest. Are you in agreement?

    HHH: It has never happened in the history of the Islamic finance industry that the members of any Sharia board divulged secrets that damaged an Islamic bank or an Islamic financial institution.

    They are the people most worthy of confidence and trust, for they are leaders and role models.

    History has not conveyed to us a single report of a scholar who issued a fatwa that was a secret which only the mustafti (questioner) was privy to, such that the mufti could not issue the same fatwa to someone else.

    This criticism is the result of ignorance about the nature of the duty of Sharia board members.

    They explain the rule of Allah in the issues presented to them, and their fatwas are not considered the property of the mustafti who asks them, such that the rule of Allah cannot be given to someone else.

    We would like to ask: How many times in the history of Islamic banking — which is more than 30 years old — has an Islamic bank complained about a member of a Sharia board that he gave the same fatwa to another bank which he had already given to the first bank?

    Indeed, the rule of Allah does not change just because the person asking about it has changed.

    It is a principle of the Sharia that a scholar is not allowed to conceal knowledge; rather, he has to bestow it upon whoever wants it, based on Allah’s statement: “You shall make it clear to people and not conceal it” (3:187).

    MDB: Conflict of interest is a term, albeit a technical one, which should be used in specific cases is often misunderstood.

    For all intents and purposes it disallows a person to be in a position whereby his decision (of doing or not doing) may be influenced by his own interest.

    Could a scholar sitting in various Sharia boards be perceived to be in that position? If established, then this practice should be avoided.

    What is the interest that is applicable to a scholar when issuing a fatwa?

    Perhaps, many understand that Sharia advisors are equal, or should be treated similar to board of directors, hence, the perception of conflict of interest. Scholars are essentially not in the position of serving as the board of director of a bank, for example.

    They are similar to other professionals such as lawyers, accountants, auditors, and actuaries.

    YTD: The problem I see is not a conflict of interest but one of capacity, in terms of both quantity and quality.

    A scholar who serves on multiple boards in addition to a fulltime teaching position at a university, for example, will have to be careful to balance his schedule so as to allot ample time for each of his responsibilities.

    That’s a matter of quantity; and each individual will have to make up his own mind as to what constitutes a reasonable workload. Some people simply have more energy than others. We have examples in our industry of scholars at advanced ages who serve on many boards; and continue to contribute in a positive manner. We also have examples of scholars who have cut back their commitments, or who have limited them to no more than a certain number.

    Insofar as quality is concerned, I think the industry is beginning to demand a greater degree of specialisation, even from its Sharia scholars.

    Thus, the concerns of equity fund supervision, of bank supervision, of takaful, leasing, real estate, infrastructure, private equity, home finance, commodity trading… all of these are different and require more than an introductory understanding, hence, the future will be toward specialisation because greater attention to detail will be required of scholars.

    MAL: Yes there are many who sit on multiple boards and I have no objection to this provided that the respected scholars are able to discharge their duties in efficient manner. As for the conflict of interest, I do not see any issue for individual scholars sitting on different boards.

    However, at present we see a number of scholars are operating Sharia advisory companies and if the person operates the company and at the same time provide advisory services, there might be some question regarding serving the interest of the company and providing independent Sharia views.

    This conflict of interest may rise to Sharia compliance risk as not enough time to review all documents, hence, a real risk management issue for IFIs. Are you in agreement?

    HHH: The Sharia boards undertake their duties regarding the transactions presented to them, based on their belief that all this is a religious duty which cannot be approached on the basis of whims. Rather, it requires penetrating and rigorous academic research.

    Their conscience and sense of duty prevent them from deliberately issuing a fatwa opposed to the Sharia; as for mistakes, they do occur.

    If one of them happens to make a mistake, he will be corrected by the other members of his own Sharia board or by another board altogether. At any rate, the Prophet Mohammad (Peace Be Upon Him) said that if someone makes ijtihad and is wrong he gets a single reward, and if he’s right he gets a double reward.

    And where are these risks that the Islamic banks have faced due to hasty or erroneous fatwas?

    Are they issued by the senior members rather than the junior members?

    The claim that Islamic banks are facing dangers due to the inability of the members of their Sharia boards to properly carry out their duties is a claim that is not based on reality or evidence.

    MDB: If this perception is established, it must not be restated as conflict of interest term, as its misleading.

    The issue of quality of works by advisors is the issue of the performance and not of the policy of having scholar on various boards.

    This issue should be addressed administratively and not from a policy and regulation perspective, unless the bad performance is rather a phenomenon in modern Islamic finance industry.

    YTD: If scholars do not have enough time to review documents, or if they require months to review documents and then need to schedule and reschedule before they can meet and take decisions, then something is clearly wrong.

    But the fault is not necessarily that of the scholars. When establishing a Sharia board, an IFI must be cognizant of the scholars’ other responsibilities.

    Even the matter of time zones should be taken into consideration. And the IFI will need to be diligent and proactive in its management of the Sharia board’s affairs so that meetings are scheduled well in advance of deadlines and time is managed effectively.

    Many problems can be avoided by making a realistic and practical selection of scholars for the IFI’s Sharia board.

    MAL: I agree that if a person sits on too many boards, he might not be able to scrutinise all the details of the transactions, documents etc and it will lead to what is termed as “Sharia compliant risk” for the market player. On this issue, I am not blaming the scholars solely. The market practitioners are equally responsible as they are the ones who approach the scholars and appoint them.

    With only a handful of scholars on so many boards, is there a risk to IF, especially looking at issues of age, health, and the travel demands of scholars?

    HHH: This is not correct, for at this time we have specialised leadership in the Islamic finance industry and we have hundreds of young people who are members of Sharia boards. Therefore, the task is not limited to a handful of scholars.

    The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has a Sharia Council comprised of 18 members. There is also the Islamic Fiqh Academy that is part of the Muslim World League and the International Islamic Fiqh Academy of the Organization of the Islamic Conference (OIC).

    Between them they have hundreds of scholars to whom issues of Islamic economics, Islamic finance and newly developed products are presented, and they issue fatwas and resolutions. So it is not true that those who undertake the issuing of fatwas in Islamic banks and institutions are a small handful of persons.

    I totally disagree that those who are leading the Islamic finance industry and its institutions, including banks, takaful companies, and financing and investment institutions, are a small number.

    MDB: The meaning of risk in this context is not clear. The risk is and should not be confined to the issues of age, health and travel commitments as these also apply to other sectors in life, be it financial or non-financial.

    YTD: Key man risk is always a problem in business. It is no different in our industry. Yet, at the same time, we all know that we need to do more to develop scholars for service in the Islamic financial services industry.

    MAL: This is a real issue and if we look at present there are gap between the senior and junior scholars. Many senior scholars are ageing and there are no replacements.

    There is a need to put a governance process to regulate the Sharia advisory services. In Malaysia we have started this process since 2005 when the Central Bank issues the guideline on Sharia Advisory services.

    One scholar is only allowed to sit on one board as to allow the grooming of new generation of scholars. As a result, we now have more than 100 scholars on our list and the number is increasing especially with many young graduates who are interested in pursuing this career.

    Should this type of study in IF be expanded to include law firms? Accounting/management consulting firms?

    HHH: Yes. It will soon become clear that specialised expertise in Islamic banking is less expensive than that of firms that offer diversified services to hundreds if not thousands of clients.

    Nor should we forget that our Arab and Islamic educational institutions have yet to concentrate on turning out graduates with qualifications and specialisations for careers in Islamic finance.

    MDB: On one hand, the research should not be extended to other sectors unless the hypothesis and the benefits of doing this research are made vividly clear. Otherwise, this research may lose [credibility and] respect. Other hand, for comparative purposes, the investigation and examination should also be conducted on other similar services such as law firms, auditing firms, and actuaries, for example, so the industry will be getting a more comprehensive view on this perceived conflict of interest issue.

    YTD: Yes.

    MAL: Yes it is needed so as to give the information to the market players.

    To address shortage of scholars, should scholars be compelled to have a junior (local) scholar (not well known) on the board so as to encourage apprenticeship and expand the supply of scholars?

    HHH: This is the actual situation. A large number of up-and-coming scholars work on the Sharia boards along with their teachers. This process is due to the initiative of the elder scholars, who search for those with outstanding abilities in the new generation and nominate them.

    However, we must emphasise one point: the danger of nominating an unqualified candidate. It is not appropriate, in the name of expansion, to appoint unqualified persons, for that will cause harm to the industry itself.

    Graduating from a Sharia college is not enough by itself, for there are thousands of graduates. It requires experience, personal ability and the combination of knowledge of the Sharia, civil law and accounting.

    MDB: In any industry, the practice of compulsion is not a healthy one. It is always about being passionate.

    As much as the junior scholars are encouraged to be part of the service, they must demonstrate the minimum capabilities and professionalism required to undertake this task. The task of the scholar and consultant is different from other tasks, such as being an academic as it requires a bit of everything: research, original thinking, understanding of the current market, and it is time consuming.

    YTD: I don’t think that compulsion is the solution. But I do think that IFIs should be encouraged to do so. And I also think that the junior scholar solution is a good one.

    I have also recommended a rotating scholar solution for SSBs such that one seat may given to a new scholar after the previous scholar has served a term of one or two years.

    MAL: Actually, it is not the scholars who should be compelled to do so, but the market player.

    This is because the market players determine who sits on the Sharia board and it is their responsibility to ensure that there is mixed of senior and junior scholars in their board.

    We have done this in Malaysia and it works as pointed earlier.

    In a recent event in Malaysia, Dr Mohammad Elgari presented a paper on Sharia governance. Is this the need of the hour?

    HHH: Governance, in the perfect sense of that term, does not exist outside of the Islamic financial system which is based on divine revelation as expressed in the Book (the Quran) and the Sunnah.

    No one in the industry can ignore that, or the [AAOIFI] Sharia standards. In addition, there is a further guaranteed level of governance and that is the presence of the Sharia supervisory board itself, made up of three, five or even seven scholars who perform their duties and opine collectively rather than as individuals.

    Beyond that, Islamic financial institutions adhere to their own standards, the fatwas issued by fiqh academies, and the teachings and rulings of the classical jurists.

    And then there is the academic community that monitors the work of our Islamic banks such that if ever a fatwa is issued which contradicts an Islamic teaching or principle, as a result of faulty reasoning or legal process, our academics will raise a hue and cry until the matter is corrected.

    MDB: This is a welcomed paper to address the quality of Sharia advisory services, applicable to both the scholars and the stakeholders of Islamic finance.

    The Sharia governance, as presented in the paper, argues for more transparency of the fatwa process and deliberations.

    As a matter of fact, this (the detailed process of fatwa issuance and its argument) should be the focus of research of modern researchers instead of the perceived conflict of interest by multiple board membership.

    The superiority of any Sharia board is the quality of arguments that lead to a strong and defendable fatwa by the board.

    YTD: His was a very important paper and it addresses a pressing need.

    As the industry matures, it becomes more and more important to have systems in place that ensure greater transparency and accountability.

    Such systems will play an increasingly important role of the future development of this industry and they must be promoted.

    MAL: I am one of the commentators on his paper and in many forums I have express my views that it is very important to have a comprehensive Sharia governance framework for Islamic finance.

    This shall be spearheaded preferably by the regulator. In Malaysia, ISRA have initiated the establishment of Association of Sharia Advisors (ASA) in order to regulate the Sharia advisory services.

    We are in the process of setting up this association and its function will be similar to other professional bodies such as the Bar Council and Medical Association that regulate the practices of its members.

    ASA will be the body that regulates the conduct and lays down the ethical code of the Sharia advisors and we will get the body to be the sole body that accredits Sharia advisors for them to practise in the market.

    ASA will also provide licence for the scholars to practise in the market.

    Funds-at-Work research is welcomed as it shows the landscape of scholars and boards, but needs expansion to include scholars’ total activities and work. And the study should be enlarged to include other stakeholders in the Islamic finance consulting role. Finally, Islamic institutions have not knowingly contributed to over-reliance on name-brand scholars, but must now actively contribute to governance and involve junior scholars to manage Sharia compliance risk, for expansion beyond natural borders.

    The interviewer is the Global Head of Islamic Finance, Thomson Reuters. The interview was conducted in his personal capacity and does not reflect the views of his organisation.

    “Scholars, learning from their mistakes of the past plan their present and future accordingly and enjoy success, peace and prosperity.” Atharva Veda

    Best Regards

  • Amsterdam, Holland