Posts Tagged ‘takaful’


Bangladesh targets alleged Jamaat fronts

February 1, 2016

Businesses and nonprofit groups in Bangladesh are being scrutinized for their alleged connections to the dangerous Islamist movement Jamaat-e-Islami.  When asked by the Dhaka Tribune how the government of Bangladesh could determine whether or not such entities are connected to Jamaat, Finance Minister AMA Muhith rightly said, “Firstly, we will check the background of the members of board of directors in the institutions. Secondly, we will identify the source of funds of those firms.”

The Dhaka Tribune article included a graphic of “top firms linked to Jamaat men.”  However, please note that the relationship between these firms and Jamaat-e-Islami cannot be confirmed by Money Jihad at this time:

  • Islami Bank Foundation*
  • Ibn Sina Trust
  • Fouad Al-Khateeb Charity Foundation
  • Rabita al-Alam al-Islami
  • Agro Industrial Trust
  • Daily Sangram
  • Daily Naya Diganta
  • Manarat Interational University
  • International Islamic University Chittagong
  • Darul Ihsan University
  • Far East Ilsami Life Insurance Company Ltd
  • Takaful Islami Insurance Ltd
  • Keari Limited
  • Coral Reef Properties Ltd
  • Education Aid
  • Panjeri Publications
  • Allama Iqbal Sangsad
  • Maududi Research Sangsad
  • Al-Mutada Development Society
  • Center for Strategy & Peace Studies

* The Islami Bank Foundation is the “charitable” arm of Islami Bank Bangladesh Limited, the notorious terror-linked sharia bank.
Rabita al-Alam al-Islami is the Saudi-funded Bangladeshi branch of the Muslim World League.


Weekly word: wakala

December 7, 2011

Wakala is often defined as Islam’s version of power-of-attorney.

Brill said wakāla (or also wikāla), or “mandate, authorisation, is a contract (‘akd) by one contracting party, the muwakkil, commissions the other, the mandatory (wakīl) to perform some service for him.”*

In the context of sharia finance, one Muslim source elaborates:

Wakalah is a contract whereby somebody (principal) hires someone else to act on his behalf i.e. as his agent for a specific task. The agent is entitled to receive a predetermined fee irrespective of whether he is able to accomplish the assigned task to the satisfaction of the principal or not as long as he acts in a trustworthy manner. He would be liable to penalties only if it can be proved that he violated the terms of the trust or acted dishonestly.

In the case of a financial wakalah contract, clients give funds to the bank/company that serves as their investment manager. The bank/company charges a predetermined fee for its managerial services. Entire profit or loss is passed back to the fund providers after deducting such a fee.

This contract is used by some Islamic banks to manage funds on an off-balance sheet basis. The contract is more widely used by Islamic mutual funds and finance companies.

Wakala is used as the default model for takaful where a wakala fee is paid to the takaful administrator to oversee investments and payment of claims.  Wakala has been increasingly used as a structure of sukuk.

Unsurprisingly, “ethical” Islamic finance hits unsuspecting Muslim investors hard:  wakala fees are often very high and are not reduced even if the wakīl performs poorly.  Profits go back into the sharia finance industry, which keeps radical Islamist clerics on payrolls, to serve their ultimate purpose of destroying the Western financial system and secular rule of law.

* Brill, E.J., Encyclopedia of Islam, New Edition (Leiden:  E.J. Brill, 1996).


Islamic insurance risky except to sharia advisers

November 16, 2011

Wednesday word:  takaful

Sharia law bans conventional insurance policies because Muslims think insurance involves uncertainty, gambling, and interest charges.  The substitute that the sharia financiers have come up with to replace insurance is takaful.  Dar & Moghul define takaful this way:

Islamic cooperative insurance is not a contract of buying and selling, where a party offers and sells protection and the other party accepts and buys the service at a certain cost or price.  Rather, it is an arrangement, whereby a group of individuals each pay a fixed amount of money, and then compensation for losses of members of the group are paid out of the total sum.

This chart from a presentation by Islamic finance lecturer R.A. Sarjoon helps distinguish between conventional insurance and takaful in the eyes of Islamic financial experts:

Diagrams of conventional insurance & takaful

The problem with takaful is that it gives the sharia law advocates and advisers yet another opportunity to distort financial markets with awkward, inefficient models that enrich themselves while spreading sharia law concepts deeper into society and farther throughout the world.

Whenever an Islamic financial product is pitched by the men on the business side of Islamic financial firms, they have to go to their sharia advisory boards and ask the members to sign off on the proposals.  When the product is structured on the borderlines of Islamic law, it gives the sharia advisers outsized influence over the final business decision on the structure of the product.  The controversial products probably help deliver more fees to the sharia advisors as well, because their services are called upon more often to bless off on the structure.  The sharia advisers like innovation in financial products because it gives them the opportunity to meet more often to deliberate on the sharia compliance of the proposed products, they can claim more expenses, and it helps justify the payments the sharia advisors receive from the Islamic firms, etc.

Takaful is a potential bonanza for the sharia advisers.  They can offer their services not just to Islamic banks, but to insurance companies as well.

Read more background and news about takaful over at Shariah Finance Watch.

* Dar, Humayon A., and Moghul, Umar F., The Chancellor Guide to the Legal and Shari’a Aspects of Islamic Finance (Great Britain: Harriman House, 2010).


Islamic prof: takaful will lead to zakat bonanza

December 27, 2009

As Shariah Finance Watch has pointed out, Islamic insurance, or takaful, is on the rise, particularly in Iran and South Asia.

But if one Qatari scholar of Islamic law has his way, takaful will multiply in the Persian Gulf states as well.  This recent article from the Gulf Times points out that the number of Islamic insurance companies has increased from one to three in the past ten years, and Dr. al-Qaradaghi would like to see it increase much further.  The growth of Islamic insurance presents its own sharia finance problems, but what caught my eye was the zakat connection of the scholar’s sales pitch:

A leading industry expert has predicted a huge growth potential for Qatar’s Takaful (Islamic insurance) market, estimating its annual growth at 25%.

Dr Ali Mohayeddin al-Qaradaghi, a professor of Islamic jurisprudence at Qatar University, said that the local Islamic insurance market has lots of expansion opportunities since “every policy holders with the conventional insurance firms is willing to turn to the Takaful scheme”…

The scholar also estimated the annual Zakat that should be given by banks and companies listed in region’s stock markets at $100bn, which he said, can tackle the poverty problem in the world if invested in aid programmes.

“Based on a recent study I made, I calculated the value of the Zakat due by companies and banks in Gulf and other Islamic states can make $200bn. If this amount was properly invested through a ten-year plan to eradicate poverty, there would be no more poor people who starved to death around the world,” he added.

All right.  So that’s $200 billion in corporate zakat dollars due out “around the world.”  That sounds nice at first.  Until you listen to Ambassador Holbrooke, the U.S.’s special envoy to Afghanistan and Pakistan, who says that most of the Taliban’s revenue comes from zakat donations from Persian Gulf benefactors.  I feel no excitement about a new zakat tidal wave crashing down on the shores of an increasingly radicalized Islamic world.