An important article comes our way from the Spears Wealth Management Survey. A few stunning quotations:
- “The most in-demand shariah scholars are paid $2,000 a day”
- “Some scholars charge around $1,000-$1,500 per hour of consultation — in addition to an annual bonus of between $10,000 and $20,000 per board seat”
- “Remuneration for a fixed shariah board membership can exceed $200,000 a year plus fees”
- “The top twenty shariah scholars in the world hold between fourteen and 85 board memberships each”
- ‘The top ten scholars in the world make up 40 per cent of all board memberships”
- The top five scholars “make up around 25 per cent of the entire boards across the globe”
- “The top two scholars share 51 per cent of their board memberships”
Read it all. As Shariah Finance Watch has pointed out for a long time, the sharia advisers are paid quite the pretty penny. But this piece really puts that in black and white, and points many of the broader flaws of governance in the sharia finance industry.
One cannot read this and still believe mainstream media assertions that sharia finance is somehow more ethical and less risky than conventional finance. Without even getting into the moral problems of anti-Semitism and jihadist sympathies of the sharia scholars, this sector—from a purely financial standpoint—is hopelessly marred by corruption, shakedowns, conflicts of interest, nepotism, and lack of oversight. Investors must take note.
I believe this article by Sophie McBain was first published around Apr. 26:
Islamic Finance’s ‘Scholar Problem': Why Are Shariah Scholars Paid So Much?
Dollars for Scholars
IT MAY BE an unusual career move, but becoming a shariah scholar for an Islamic bank is nice work if you can get it. A quick poll of bankers, lawyers and academics working in Islamic finance revealed unanimous agreement that shariah scholars — who approve every new Islamic banking transaction to certify its compliance to Islamic shariah law — are paid ‘a lot’, but few volunteered figures. Welcome to the opaque world of Islamic finance, and the fledgling industry’s ‘scholar problem’.
Among those who did give figures on shariah scholar salaries, there was considerable variation. Professor Rodney Wilson, a member of the Durham Centre for Islamic Economics and Finance, says that the most in-demand shariah scholars are paid $2,000 a day. Reuters has quoted an unnamed banker as saying that some scholars charge around $1,000-$1,500 per hour of consultation — in addition to an annual bonus of between $10,000 and $20,000 per board seat.
Dr Murat Ünal, CEO of Funds@Work, an investment consultancy and Islamic finance specialist, says that remuneration for a fixed shariah board membership can exceed $200,000 a year plus fees, while advising on a large transaction such as a sukuk (Islamic bond) can generate commission running into millions of dollars. If this still doesn’t sound generous enough, consider that Funds@Work’s pioneering research into shariah scholars and their networks has found that the top twenty shariah scholars in the world hold between fourteen and 85 board memberships each.
There’s a reason for the inconsistency of these accounts: shariah scholar payments don’t have to be made public. And while conventional bankers have found themselves the target of a forceful backlash against bonuses, the quieter but equally insistent voices calling for limits to the influence and payment of shariah scholars struggle to find a platform.
The concerns of those campaigning for changes to the current shariah scholar system are critical to a fast-growing industry, which has the potential to bring millions of Muslims into banking for the first time and which offers a thoughtful critique of mainstream finance. The Islamic finance industry is predicted by Deutsche Bank almost to double to $1.8 trillion by 2016, but its economic potential may never be fulfilled because of its serious governance problems, with power concentrated in a small, ageing and reticent elite.