Posts Tagged ‘United Arab Emirates’

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One million dirhams in zakat bribes

November 7, 2010

The only time zakat can be given to non-Muslims is for the purposes of paying them to convert to Islam.  Understandably, slick Muslim spokesmen in the West don’t like to advertise that because it highlights the discrimination and bribery inherent in zakat.  But occasionally you find examples such as an item in August from UAE’s The National:

ABU DHABI // One hundred new converts to Islam will each receive an equal share of Dh1 million donated by the Zakat Fund. Zakat, the third pillar of Islam, is a mandatory tax for every Muslim who is financially able to contribute. It is calculated at 2.5 per cent of financial assets, but has different rates for a variety of other sources of wealth, such as livestock and minerals.

New converts are one of eight broad categories defined as deserving recipients of zakat in Islam. “It is our duty as Muslims to encourage and support those who embrace Islam to help show them the right way of life and to encourage them [to] learn more about their religion and how to behave like real Muslims,” said Abdullah al Muhairi, the fund’s secretary general, in a statement yesterday. “Supporting those who have recently converted to Islam strengthens the feeling of brotherhood, justice and equality among Muslims,” he added.

The Zakat Fund was established in 2003 by Sheikh Zayed, the late founder of the UAE. The fund recently set a record target of Dh72million for zakat revenues in the month of Ramadan, after announcing that its revenues in the first half of 2010 had doubled compared to the same period in 2009. The fund maintains that the increase in revenues is a result of greater transparency in the handling of zakat finances.

In its own press release, the Zakat Fund said, “The newly Islam converts are one of eight categories specified by the Holy Quran and the Islamic Shari’ah to deserve being given Zakat money.”

In this manner, the Zakat Fund validates the “eight categories” of zakat recipients.  Some Islamic charities don’t like mentioning the eight categories because we know that the mujahideen count as one of those categories, but the Zakat Fund doesn’t seem concerned by that implication.

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One in three don’t trust Gulf charities

March 17, 2010

It may be for different reasons, but I agree with one-third of Middle Eastern survey respondents who say they don’t trust Islamic charities, don’t know how the money is being spent, and doubt the overall integrity of the process.  From The National on March 13:

Poor exposure and transparency are being blamed for the results of a survey that found a third of respondents do not trust charities in the region.

While some charity officials rejected the findings of the recent YouGov Siraj online survey as invalid, others acknowledged a failure of communication and a strong need for accountability to the public on the part of charities.

In the survey, 35 per cent of respondents indicated that they do not trust local charitable organisations in the Middle East, and 32 per cent said they refused to donate to the charities because they did not have a wide enough reach.

“It may be that those who are not donating could be sceptical about how well their money will be spent or not sure of the process’s integrity,” said Iman Annab, the chief executive of YouGov Siraj.

“The findings indicate that there seems to be a need for greater transparency surrounding the donation process and charitable foundations across the Middle East.”

The survey polled more than 2,600 Middle Eastern residents, more than a quarter of whom were from the UAE. The rest were from Saudi Arabia, Jordan and Egypt.

The Red Crescent Society, which is responsible for regulating all charities in the UAE, dismissed the results.

“We reject completely the findings of this report,” said Abdulrahman al Tenaiji, a spokesman for the Red Crescent in the UAE. “We have credibility, and international organisations like the United Nations recognise the UAE’s contributions.”

However, he acknowledged that the inability of charities to showcase results on the ground contributed to a lack of trust among donors and a perception that philanthropies are not transparent.

Read the rest of the story here.

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UAE touts money laundering “progress”

February 16, 2010

As Deputy Secretary of the U.S. Treasury Department Neal S. Wolin continues his tour and meetings in the United Arab Emirates today, the Central Bank of the UAE is trumpeting an increase of money laundering cases from 1200 in 2008 to 1700 in 2009.

Some people would be embarrassed that money laundering cases have increased, but not Abdulrahim Al Awadi, head of investigations at the UAE Central Bank.  He’s casting it as a healthy sign that UAE banks have increased their compliance with anti-money laundering standards and reporting.  From Emirates Business 24/7:

The UAE detected more than 1,700 suspected cases of money laundering in 2009, The sharp increase in cases against the previous year is due to stricter compliance by banks and other financial institutions, a Central Bank official said yesterday.

The Central Bank said it also received more than 11,800 reports on cash declaration last year as part of its intensified crackdown on illegal money, but denied recent reports that real estate firms were being used as channels for such funds.

The head of the Central Bank’s Anti-Money Laundering and Suspicious Cases Unit (AMLSCU) said the UAE was enforcing one of the strictest legislations in the world to fight money laundering, financing of terrorism and weapons of mass destruction, tax evasion and corruption.

“In 2009, the AMLSCU received 1,729 cases of suspected money laundering compared with 1,170 cases in 2008,” said Abdulrahim Al Awadi, Head of AMLSCU at the Central Bank.

“The reason for this increase is that the UAE economy is growing and the country is becoming more open to other economies and societies. But the more important reason is the intensive training courses we are conducting for bankers and staff at other financial institutions. Banking staff have become more experienced in detecting such cases and are showing stronger co-operation with the authorities and more compliance with existing laws. Another key factor is that we have introduced stiffer laws and new mechanisms to combat money laundering,” he said.

Speaking to reporters at a briefing to announce a regional anti-money laundering meeting in Abu Dhabi next week, Al Awadi said 683 suspected cases in 2009 were referred to the competent authorities for further interrogation, while 169 are now in court. The remaining cases are being investigated by the unit…

Al Awadi also flatly denied claims that UAE real estate markets are rife with laundered cash.  I hope that Deputy Secretary Wolin confronted UAE’s Central Bank governor with these concerns during their meeting yesterday.

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Dubai atop a “toxic tide of illicit cash”

January 29, 2010

Today’s post involves another news story about the connections between crime and terrorism.  However, this article is better than average, because it doesn’t try to equate terrorism with international crime, like the speech analyzed here in yesterday’s post.

Last Sunday’s Guardian printed a follow-up to the story of hawaladar Naresh Jain’s arrest.  I’ve blogged about Jain here earlier, so I’ll cut out the background and go straight to the heart of the Guardian piece, which is how Dubai was the perfect setting for Jain’s and other people’s crimes:

Jain has reportedly admitted to Indian police that he has laundered cash, but denies being involved in the drugs trade.

However, investigators believe that his businesses are based on huge sums of cash originating in Africa and passed on to him by diamond smugglers and drug dealers – and that most of that illicit cash flows into Dubai. But the allegations against him do not make him unique in the emirate. “[Jain’s arrest] was an important incident, but many wanted men reside in Dubai,” says Dr Christopher Davidson, an expert on Gulf economics at the University of ­Durham.

To many, Jain is the latest, perhaps the biggest, example that proves the United Arab Emirates is not so much awash with vast oil wealth but built on a toxic tide of illicit cash: a place where Russian mafia and drug cartels clean their dirty cash and al‑Qaida finances terror atrocities. And at its heart is Dubai, a world financial centre that in the past 15 years has grown exponentially.

As Dubai’s ruling elite pick through the wreckage of its bombed-out economy, which exploded under the weight of $60bn of debt last year, an equally pressing issue threatens to undermine not just Dubai but the UAE as a whole.

Next month, a meeting of the Financial Action Task Force (FATF), the powerful intergovernmental body responsible for combating money laundering and the financing of terrorist networks, will meet in Abu Dhabi. The meeting is expected to establish which countries to put on a high-risk jurisdiction list following a request by G20 finance ministers last year. It is thought likely that the UAE will feature on the list. Such a development would be a serious blow to the money men of Dubai, but would confirm many people’s fears that it remains a port of choice for dirty cash. Read the rest of this entry ?

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Sharia mortgages boost Burj ownership

January 8, 2010

Burj Khalifa (read: Burj Caliph) Tower in Dubai

With fireworks and fanfare, the United Arab Emirates recently opened the tallest building on Earth.  The skyscraper was financed by Emaar Properties, a publicly-traded company, and most of the building space is residential.

The majority of the Burj’s residential units have already been sold.  I was curious, what with Islamic prohibitions on riba and therefore prohibitions on traditional home loans, just how the buyers were financing entry into such an expensive and luxurious development.

Well, in addition to a host of real estate projects throughout the Middle East, Emaar Properties is also the majority shareholder of Amlak Finance, the UAE’s biggest Islamic home finance company.  This excerpt comes from Amlak’s website:

Amlak Finance is the first specialised home finance provider in the UAE and continues to be a leader in the industry by retaining the biggest market share Read the rest of this entry ?

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Full steam ahead: Gulf petrochem loves sukuk

December 15, 2009

Despite its last minute bailout from Abu Dhabi, Dubai’s Islamic bond meltdown should cast the severest possible doubts on the viability of a sharia compliant financial model.  Instead, it’s full steam as Gulf petrochemical businesses turn to Islamic bonds, or sukuk, to finance their long-term capital projects.  This just in from Emirates Business:

The petrochemical industry in the Gulf will need to finance its high-capacity new projects through sukuk as other finance options become increasingly difficult to obtain, finance officials said.

The view comes close on the heels of an announcement of the region’s association of petrochemical producers – Gulf Petrochemicals and Chemicals Association (GPCA) – that the region will expand its petrochemical production capacity by 10 million tonnes the next year. The region’s total petrochemicals production capacity is currently pegged at 63 million tonnes. This will be almost doubled to 115 million tonnes by 2015, according to GPCA.

“Sukuk is the most viable among the financing alternatives for petrochemical projects in the region. That’s because options of long-term credit financing have dried up,” said Khalid Hamad, Executive Director (Banking Supervision) with the Central Bank of Bahrain.

Petrochemical industries – particularly the ones with federal support – in the Gulf have in the past resorted to issuing the Shariah-compliant Islamic bonds to finance costly projects. In 2006, Saudi petrochemical giant Saudi Basic Industries Corporation (Sabic) issued its first sukuk. In 2007, the petrochemicals giant issued another sukuk to finance its $11.60 billion (Dh42.6bn) acquisition of GE’s plastics business. Equate, the Kuwaiti petrochemicals major, was one of the first petrochemical companies in the Gulf to issue a sukuk.

The sukuk market in is currently valued at more than $100bn and it is projected to reach $150bn by 2010. In 2006, 80 sukuk issues raised $18.15bn globally, with a large share of this issuance occurring in the Gulf.

Hamad said he expects quasi-government and private companies in the region to issue Islamic bonds to finance their projects. “As we speak, it’s happening. Private companies are issuing sukuks,” he said.

“Issuing long-term bonds is difficult these days because of a lack of liquidity. Furthermore, banks are reluctant to lend for long term,” he said.

Abdulkarim Mubarak, Chief Financial Officer of Equate, said sukuks need to evolve as a viable financing option. “Most of the sukuks being issued are short-term debts and amount of money raised is not very high. We were one of the first petrochemical companies in the region to issue a sukuk. But then petrochemical companies need to look at other options as well because you cannot raise a very high amount through sukuks in the current scenario,” Mubarak said.

Notice that everything is becoming an excuse for more sukuk.  Tired of irresponsible lending practices?  Try sukuk, its advocates say.  Want to boost your banking sector?  Try sukuk.  Want to expand market share?  Try sukuk.  Trouble with obtaining capital?  Try sukuk.  Burned by sukuk?  Try even more sukuk.

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New gold fund unpopular; coin demand high

November 3, 2009

Dubai fund managers are surprised that Muslims would rather buy gold coins than a gold fund.  I’m not.

DUBAI, Oct 28 (Reuters) – The Gulf region’s first gold exchange traded commodity (ETC), a new investment vehicle launched earlier this year, is seeing only modest growth due to regional unfamiliarity with the product.

Grant Collins, senior managing director of the Dubai Commodity Asset Management, said the security was also hampered by a trend for bullion investment in the Middle East to come from individuals rather than institutions or funds.

Collins told the Reuters Middle East Investment Summit that the group may not have realised just how much people preferred to have the the gold rather than a gold-backed product.

For fun, google “Islamic gold.” You’ll find roaring sales pitches for gold coins that would put G. Gordon Liddy to shame.  Why the push to sell Muslims gold?  Old-fashioned gold-buggery plays its part, but these Islamic legal arguments have played a role:  Read the rest of this entry ?