Shariah-Compliant Finance in America

Posted by johnhouk on Nov 19, 2009
 Shariah Compliant Finance (SCF) is an insidious marketing practice which is an arm of Islam in its agenda of bringing Islamic Supremacism to the globe.

Gary H. Johnson, Jr. has written another remarkable essay entitled, “Shariah-Compliant Finance in America.” The essay proclaims that SCF is more than a mere ethical alternative to the Capitalist paradigm of Free Market economics as the aspired model in America. Johnson writes that the Islamic Supremacism inherent in SCF ultimately runs contrary to the Liberty and Rights that are the foundation the American experiment initiated by the Founding Fathers.

There is a bit of criticism to what seems to be the primary arm in America trying to expose the insidiousness of SCF. The organization criticized is ACT! For America. The criticism is not because Johnson disagrees with exposing SCF rather the criticism with ACT! For America’s methodology in exposing SCF.

After reading Johnson’s essay I sense a confirmation that there are elements of the theo-political religion known globally as Islam utilizes a Fifth Column element to undermine Western society and thus the American society of Liberty and Freedom.

JRH 11/19/09
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Shariah-Compliant Finance in America
A report for ACT! for America – Rome, GA Chapter

Delivered by: Gary H. Johnson, Jr.
11/18/09 01:21 AM EDT
Red County

“The first essential is to understand that the aim of all authority in Islam is to ensure that all religion shall be Allah’s, and that the Word of Allah shall be all-high. For Allah – be He glorified and exalted! – created His creation for this purpose alone”

-Shaykh ibn Taymiya, The Institution of the Hisba


Overview

Shariah Compliant Finance (SCF) is not a new phenomenon. However, the globalization of SCF is a relatively recent development. The aim of Shariah Law is to establish the supremacy of Islam in a totalitarian socio-economic system of justice; i.e., an Islamic State, an emirate, an imamate or a caliphate. Therefore, a financial system which is compliant to the laws of Shariah is one whose contractual arrangements are based on enforcing the legal supremacy of Allah’s Word and Muhammad’s example. In short, SCF is a long frame economic jihad designed to undermine manmade constitutions, laws, borders and institutions. Presented as an “ethical alternative” to conventional banking methods, SCF is based on the Koranic injunction: enjoin good and forbid evil.

Brief History of Modern Shariah-Compliant Finance (SCF) in America
In the 1970s and 1980s, Shariah Compliant Finance arose as a niche market for those seeking alternative financing for every type of business venture. The 1990s saw a sharp increase in banking options around the Muslim world; and by 9/11, the MENA region was providing multiple styles of investments for the average Muslim on the street. As the push for globalization and transnational trade increased, the financial community valued the SCF option because it offered consultants and investment firms a cultural bridge to the previously untapped market of Muslims, which numbered over a billion people.

Though Shariah Compliant Finance was linked to the funding of the attacks on 9/11, the banking and insurance communities continued to push SCF as an ethical alternative to conventional fare and by the Holy Land Foundation trial, dozens of SCF organizations and front groups were found to be funding terrorism, if indirectly. Multiple organizations were found to be co-conspirators of HLF; albeit, they remained unindicted and continued to function.

Currently, the SCF industry operates in the trillions of dollars globally, and is fast moving from a niche market to the main stream as an “ethical” alternative to both conventional banking and conventional insurance. Presented as a religious necessity by multicultural elites in the Western world, Islamic banking tools are designed to remove the element of riba (interest) from capital investments as well as removing objectionable investments in things like pork, gambling, alcohol and weapons manufacture to guarantee a return on investment that is halal, or permitted by Allah, to Muslims. To guarantee that the investment is purified, a “zakat” fee is levied in which 2.5% of the investment is drawn from both the investor and the investment company and given to Mosques and Religious authorities to be distributed as Islamic charity (Da’wa). The Zakat tax is often untraceable, which allows the laundering of funds to Islamic Jihadi organizations to occur at an unknown rate. Due to this reality, Islamic banking often invests a small percentage of their funds in haram industries, or industries prohibited by Allah; however, as long as the total investment in these haram industries is less than 5% of the total investment, the zakat levy guarantees its halal status.

Hawaladar chains and Zakat charities are relatively untraceable mechanisms in the Muslim world that launders and purifies money, legally. The combination of the Hawala chain and the Zakat tax yields a veil over a small percentage of the Islamic financing world. However, considering that the industry is nearing two trillion dollars in business annually, it is likely that nearly one hundred billion dollars ($100,000,000,000) is operating through the Muslim underground with little to no oversight by the financial community or any international regulatory body. 9/11 cost about $500,000 to pull off. What is possible if only one tenth of this 100 billion dollars goes to al Qaeda’s jihad? Ten billion dollars = twenty thousand 9/11s.

Following 9/11, on October 25, 2001, the US Treasury Department, in coordination with the Customs Bureau began Operation Green Quest, uncovering multiple networks of illicit financing rings of Muslim Brotherhood members tied to terrorist organizations like HAMAS, and shutting down the Herndon, VA chain known as The SAAR Foundation, which was established by a Saudi Banker to spread Wahhabism in the United States. The 4th Circuit of Appeals in Richmond Virginia, as recently as September 24th, 2009 heard arguments behind closed doors regarding an Operation Green Quest inquest involving an officer of a Georgia chicken processing company called Mar-Jac Poultry named M. Yaqub Mirza, who was also an officer in The SAAR Foundation and a company called Ptech.

(http://www.mainjustice.com/2009/09/24/a-legal-battle-over-national-security-takes-place-out-of-view/)

However, the US Treasury Department is limited in its ability to sniff out and identify terrorist rings, mainly due to the inability to properly provide oversight to Zakat and Hawaladar and their beneficiaries effectively.

In addition, state sponsored terrorism, munitions smuggling, and WMD facilitation by the likes of Iran and Saudi Arabia and others like Syria and Libya are difficult to track, when their investments are ran through SCF organizations. Likewise, the mega sovereign wealth funds (SWF) of Sheikhs, Kings, Princes and Sultans throughout the Arab and Muslim world are also difficult to properly track due to their heavy involvement in Shariah Compliant Finance, the stock exchanges of individual Muslim States and the international investment community through offshore banking, though this reality was perhaps curtailed by the Obama administration in its current push to gain oversight on private accounts in Switzerland.

Tracking the origins of modern Shariah Compliant Finance is a difficult task, but unmistakeable footprints are left for those interested in monitoring the market and delving deeper into the practices of the industry. In order to follow it, though, it is important to realize which branches of the finance world SCF typically finds a foothold. Chiefly, SCF investments are found in the mortgage industry, the construction/manufacturing industry, the healthcare industry, the insurance industry, the equipment leasing industry, the education industry, the international logistics industry, technology sectors, and the telecommunications industry. Standard banking options are available for SCF checking and savings; however, these funds are generally pooled, as they are in the insurance industry, to invest on the Stock Markets of the world, primarily the DOW Islamic index companies and government backed securities…and the mercantile exchange, focusing on the mining and drilling industries and tangible assets in the form of precious metals and jewels, oil and gas.

Little is known or understood about the extensive involvement of Shariah Compliant Finance in the economy of the United States of America. However, in the mortgage industry, as early as 1993, LaRiba Bank in California was offering SCF options for Americans interested in alternative and ethical lending for housing, though the investments were not fully vetted or regulated in the United States. By 1996, recognizing a lack of financing options for American Muslims, a Toronto Islamic Co-op company turned its sights to Palo Alto, California, opening Ameen Housing Co-op. Interestingly, the ultimate justification and Shariah principles of Ameen Housing Co-op were laid out in a 1975 letter written by one, Abul A’ la Maudoodi, the founder of the Islamic Supremacist political organization Jama’at al Islamiya in Pakistan, who states, “To take and give interest is perhaps the greatest sin in Islam. Persons who commit this sin have been given an ultimatum of war from Allah and His Prophet.”

In 1997, the Office of the Comptroller of the Currency (OCC) granted the United Bank of Kuwait (UBK) the right to offer Ijara finance on a regulated basis, following the Samad Group, Inc.’s development of a Committee for Islamic Home Finance contract. By 1998, UBK’s New York offices were pushing Ijara leasing products in the United States and the UK, under the auspices of a company called Al Manzil.

In 2000, CAIR’s Minneapolis branch office pushed forward the plight of Somali Muslim refugees in Minnesota to the local offices of HUD and Fannie Mae, resulting in the sale of tranches of foreclosed houses under SCF guidelines approved by US and Qatari-based Shariah Advisors. LaRiba bank, then in early 2001, pushed Freddie Mac to underwrite a small bundle of Shariah Compliant Finance housing options through an Ijara Cash Window. Following closely on LaRiba’s heels, Guidance Financial, through its subsidiary Guidance Residential, LLC in Reston, Virginia pushed Freddie Mac to underwrite a $1 billion SCF diminishing Musharaka mortgage program. A Kuwaiti based company, SHAPE Financial Corp, through its Vienna, VA office then began processing Shariah compliant Ijara mortgages through U.S. Banks and U.S. Credit Unions. University Bank’s subsidiary, University Islamic Financial Corp. (UIFC) then became the first U.S. state chartered bank to offer a wide array of SCF products and tools for investors. Devon Bank in Illinois then followed suit. SHAPE, University, and Devon all offered Ijara and Murabaha programs for Islamic Mortgage investing…opening up the SCF market to the mainstream throughout America. Between 2003 and 2005, Fannie Mae and Freddie Mac were publicly offering Shariah Compliant Finance options, coinciding with a sharp uptick in the application of the 1973 CRA, which was designed to offer low income and minority communities with housing opportunities. Rahm Emanuel, Obama’s current Chief of Staff was on the board of directors of Freddie Mac at the time. The application for home loans for University Bank is the Fannie Mae application form. Today, as a result of this process, Shariah-Compliant Mortgages can be attained in virtually every state in America.

By 1995, Harvard University established the (HIFIP), the Harvard Islamic Finance Information Program to study the burgeoning Islamic Financial Markets and by 1996 a company named Failaka opened in Chicago, releasing monthly tracking reports about the goings on in Islamic Finance, particularly the equity fund market. In 1994, there were only 9 funds in operation. By 2005, there were over 120. By early 2009, Failaka was tracking over 300 funds. Harvard’s program on Islamic finance merged with its Islamic Legal Studies Program and created the Islamic Finance Project. By late 2008, the IFP was presenting an Islamic Finance 101 guide on Capitol Hill.

The oil spike in 2007 which saw a price of oil soar to over 140 dollars per barrel, combined with a green revolution in NGO advertising designed to promote a fossil fuel free energy independent future for America, brought America into a stark awareness of the fact that Islamic Finance was indeed a global force to be reckoned with. The largest transfer of wealth in history flowed from America to the Sovereign Wealth Funds and Islamic Banks of the OIC Nations in record time, triggering an explosion of both Sukuk and Takaful offerings by Shariah Compliant Banks, as well as a push to what are known as Derivative Swaps. This upsurge in SCF spending was then followed by a housing bust in America, and a crash of major lenders like Lehman Brothers, which was heavily vested in SCF tradable(s). AIG also hit the news with a record 180 billion dollar bailout. David Yerushalmi of the Center for Security Progress, the lead council for the Thomas More Law Center, and perhaps the most well-versed Western thinker on the topic of SCF, representing a former US military man, filed papers challenging the constitutionality of the TARP bailout due to the fact that AIG was heavily vested in Takaful insurance, which constituted a breach of the Establishment Clause of the U.S. Constitution. Frank Gaffney of the Center for Security Progress then organized a movement called Stop Shariah Now to counter the IFP’s Islamic Finance 101 to little avail. Brigitte Gabriel’s ACT! for America then began a campaign in earnest to bring the issue of SCF to the forefront; however, without a ready lobbyist on the Hill, the American people were not in a position to do anything but create and sign petitions and agitate for awareness.

The above brief history of modern Shariah Compliant Financing in America is but a sliver of the SCF activity in the world financial market. Thousands of American corporations, consulting companies, investment firms and banks are involved in transnational trade through Islamic portals. In order to understand the overall picture, we must first delve into the modern history of global SCF, its major players, regulatory boards, and conferences; however, to do so is far beyond the scope of this introduction to the Shariah Compliant World.

Closing Remarks

Shariah Compliant Finance is an economic jihad on Capitalism’s value system. In the simplest of terms, SCF is jihad with money. In full, SCF is an assault on Sovereignty and individual liberty. However, it must be reckoned that jihad is unlike any other enemy the Western world has ever faced.

Jihad gets stronger in victory. Jihad gains strength in defeat. Jihad consumes all if left unchecked.

Containing such an enemy requires the waging of a war of ideas. Defeating such an enemy requires a triumph of imagination.

A wise woman once said, “Ideas cannot be fought except by means of better ideas. The battle consists not of opposing but of exposing; not of denouncing but of disproving; not of evading, but of boldly proclaiming a full, consistent and radical alternative.”

The battle against SCF consists not of opposing it but of exposing it; not of denouncing it but of disproving it; not of evading it, but of boldly proclaiming a full, consistent and radical alternative. The bold, consistent, radical alternative to Shariah Compliant Finance is the capitalist model enshrined in the original founding documents of the United States of America. Capitalism is the exact opposite of SCF – it must be proclaimed. In the war of ideas, what must be decided upon are the targets of exposure and the method of the disproving.

Strategically, when determining the integrity of Shariah Compliant Finance as a Main Stream Economic model, two perceptible weaknesses are evident: (1) the Shariah Advisory Boards, and (2) the SCF regulatory mechanism.

Each company, if it seeks to maintain Shariah Compliance must have its methodology and investment mechanisms and investment portfolio fully vetted by a Shariah Advisory Board. Usually made up of three to five members, with one chairman, the Shariah Advisory Board representatives are necessary in business affairs. However, there are only about 300 or so qualified Shariah Advisors in the world. So, by necessity, Shariah Advisors sit on multiple boards and determine whether 100 to 200 different schemes a year are halal. It takes twenty to thirty years of study to reach this level of prowess; therefore, the Shariah Advisors are the most powerful minority of men in the SCF world.

The Regulatory Mechanism of SCF is currently up in the air. After 16 years of World Islamic Business conferences in the MENA region, an explosion in business in Dubai, Hong Kong, London, and Tehran, the SCF world is still attempting to determine its final architecture. In this capacity, the Shariah Advisors of the world are bickering over the final format of the regulatory structure. If we are lucky, it will take at least 3 to 4 years to sort out the final realities of the Shariah Compliant Finance model on the international stage.

The miniscule number of Shariah Scholars in the SCF world and the fact that the final regulatory schema has not yet been placed in stone suggests that this is the area in which the most flux exists in the future outcome of SCF practices. These two areas are the most volatile and weakest pieces of SCF at present. What is necessary, then, is a complete exposure of the irrational, anti-liberty, anti-capitalist, anti-American belief system of as many Shariah Advisors as possible. Each Advisor has a track record of academic work – once exposed, each Advisors work must be discredited, publicly…and disproven in print.

The best way for the Rome, Ga Chapter of ACT! for America to properly begin its confrontation with Islamic Supremacism and the SCF jihad, then, would be to acquire as much information on as many different Shariah Advisors as quickly as possible. ACT! for America has already focused on 3 primary Shariah Advisors: Qaradawi, DeLorenzo, and Usmani. Without a complete understanding of the ethical economic arguments made across the entire spectrum of Shariah Scholars, a complete analysis, and, by default, a proper prescription for activist pressures will remain a distant reality.

It is likely that Leicester, England – the home of the Islamic Foundation – will figure prominently in the debates of these jurists as the regulatory framework for SCF attempts to merge with Main Stream conventional banking, insurance, and investment mechanisms, internationally. Moreover, with the re-entry of the Islamic Establishment of Iran and its vast asset reserves into the developmental stages of the SCF movement, a Shia focus on justice will also provide an as of yet undetermined gravitas to the exercises of the over-burdened Shariah Advisor community, who until recently purveyed primarily the Sunni focus on the institution of the Hisba – and the rise of the Muhtasib, to act as steward of the Muslim world in lieu of a Caliphate.

At present, the chief failure of the Western world in the fight against Islamic Supremacism has been based on constant evasions incumbent on those chained to political and multicultural correctness. Victory against Shariah Law begins with a refusal to evade the reality of Islamic Supremacism. Victory is achieved by exposing and disproving, while proclaiming a full, consistent, radical alternative. Until now, due to the focus on building an organization of grassroots support, ACT! for America has made a cardinal mistake – it has moved from exposing the enemy to denouncing the reality of the enemy’s striving. ACT! for America’s lack of forward progress in the political, economic, educational, and activist fronts in its war against radical Islam is due to its failure to disprove the validity of the values at play at the root of all authority in Islam, and due to a lack of focus on developing and expounding a full, consistent, radical alternative to Shariah Law and SCF born of an ethical understanding of the nature of free men and women in a world of creation, inequality and competition.

I respect everything ACT! for America has achieved. My hat is off to Brigitte Gabriel and her staff. I am humbled by the activity of so many on behalf of freedom. However, with perhaps only 1,000 days left in the fight on SCF before the regulatory machine solidifies its international dhimmitude standards, might I suggest that ACT! for America needs to shift into high gear in its hiring of independent researchers for a solid wage while doing everything possible to slow the creation of the SCF framework by disproving the ethical driving force of each individual Shariah Advisor the world over.

“Freedom hath been hunted round the globe.” Perhaps more true today than in Thomas Payne’s age, only the courage of the heroes of today, who recognize that they are hunted and rise to declare their reason’s independence from the bonds of Shariah Law, stand between the light of liberty and totality’s dark cages. The manner of the heroes’ rise will determine the success of their movement or the collapse of their momentum. Properly framing legitimate grievances in a case of measured resentment against Islamic Supremacism is the task of the heroic movement’s leadership.
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 Copyright © 2009 Red County LLC
See Also “A Brief History of Islamic Economics.”

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