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Islam Under Scrutiny

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Islamic Finance, Nick Sherry and inconvenient truths

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On 27 May, 2010 the Assistant Treasurer, Senator Nick Sherry, delivered a disturbing speech on the implementation of Islamic Finance in Australia. It was given at the launch of a Malaysian law firm's propaganda statement on the sector and should be of concern to every Australian. Most sadly it is now apparent that the Australian Government is not only wilfully blind to the dangers of Islamic Finance but are actively encouraging Shariah law in Australia.

Below is the relevant extract from the speech (the full speech is on his website):

Unfortunately, since the Government's announcements of our work in this area, and the publication of my Middle East speeches on my Parliamentary website, I have been confronted with a number of emails and letters from unhappy, and I must say misinformed, members of our community putting forward negative views about Islamic finance. These have been small in number but they have come in and they are of concern.

Senator Sherry, it is yourself who is misinformed. You are listening solely to those who stand to profit from Islamic Finance and have chosen to ignore objective arguments and facts. As an elected member of Parliament it is your job to listen to Australian citizens not the commercial interests of foreign banks and law firms.

It cannot happen to Australia???

Perhaps you would like me to be more 'positive' about terrorist funding and the imposition of Shariah law in Australia? We are only small in number now because this is a new and technical field, a point your Islamist mates take advantage of.

So what is your concern? That people have a different view to the Islamists? That your little pet project may not be as good for the country as you would like us to think it is?

Some of the issues of concern include open claims that Islamic finance is used to spread terrorism, that it is a vehicle to promote the world domination of Islam over other faiths, or that it is designed to replace conventional financing.


So we have a challenge in front of us – and that is to continue the community dialogue, to increase awareness of the truth and to highlight the facts.

As your Islamist mates would say "let the taqiyya begin!" Remember Senator Sherry, dialogue is a two way street, are you prepared to listen to us, to become aware of the truth and the facts, none of which have been proven wrong yet.

In April I politely wrote to you (and I am certain you read it and that I am one of the 'unhappy') asking for "30 minutes of your time to confidentially discuss these issues. This 30 minutes may go a long way to settling the fears of many thousands of Australians." You did not respond despite this being clearly in the spirit of courteous and open dialogue. You are not interested in dialogue, you are interested in bulldozing this through without consultationdemocratic processes and an unbiased risk assessment.

I was particularly pleased to read that your comprehensive and balanced booklet dismantles such arguments one by one.

Senator Sherry, please google the word "taqiyya". Please also understand that this law firm has a vested commercial interest in the sector. It is extremely amateur of you to base your opinions on the views of those with such interests.

I think that the view that Islamic finance is "terrorism finance" is particularly egregious.

Terrorist funding through Islamic Finance has been proven in the United States. Please educate yourself on this and the dealings particularly of a Mr. al Qaradawi.

Of course not all profits from Islamic finance go to terrorist funding but it happens. If 1% goes to terrorists then that's enough to be 'unhappy' in my view. Why are you ignoring the fact that terrorism does get funded by Islamic Finance? I urge you to review the website  Shariah Finance Watch.  This is an extremely credible and reliable U.S. based source for analysing Islamic Finance terror funding.

Also from the front page of "The Times" in London on June 3: "Despite their claims to be an entirely peaceful organisation, The Foundation for Human Rights, Freedoms and Humanitarian Relief (IHH) has a history of involvmenet in Islamic extremism around the world and has been linked with an attempted bombing of an American airport." Islamic charities like this one receive "Islamic charity" money all the time.

As Demystifying Islamic Finance points out, Shariah law considers the illegal use of violence as a heinous crime. And of course, Islamic financial institutions — just like conventional financial institutions — are bound by strict laws and regulations, including anti-terrorism and anti-money laundering laws. As I'm sure you are all aware, Australian financial institutions are among the best-regulated in the world, and Islamic financial institutions operating in Australia will be no exception.

Such basic ignorance of Islam is unforgiveable. Violent jihad to spread Islam is not considered 'illegal' under Shariah law. Blowing up Israel would not be considered illegal either. Your naive connection between 'illegal' in a Shariah law sense and 'illegal' in an Australian law sense is embarrassing. And since when did Shariah law have any integrity in Australia?

As for laws and regulations I have already written to you explaining that more will need to be done, particularly in regards to foreign Islamic Banks operating here, where their profits go and the beneficiaries of Islamic charities that receive funds pursuant to Islamic Finance contracts. Are you prepared to a) have ASIO screen the Shariah advisers, and b) insist on Islamic charities and their beneficiaries being named in the finance contracts? This is simple but I'm sure this check on terrorist funding is less important than hurting the feelings of Islamists in your view. Your obligation is to Australian citizens, not to foreign interests.

In addition, I would argue, that those set on financing terrorism are just as likely to use conventional means – indeed any available means – to deliver on their wicked and misguided goals.

Those goals are called Islam. Yes, they use many means but Islamic financing is a convenient one. An Islamist could not take their place on the board of Westpac and say one day "how about we fund Hamas guys with our late payment penalties?". That's a bit harder and your point is disingenuous. Islamic Finance is a means to fund terrorism that works so the Islamists will look to utilise it rather than more risky and difficult means.

It's not even borrowed funds or corporate profits that will finance terrorism either. As noted before Sharia advisers will have pools of late payment fees and other money derived from non-Sharia compliant profit which needs to be cleansed by being given to "Islamic charities". Control of this money is given to the Sharia advisers, many of which have been proven to have terrorist affiliations.

It's also worth noting that the Shariah prohibition of betting or gambling means that Islamic banks can use fewer risk-hedging techniques and instruments than conventional banks. As the world learnt to its cost, the excessive use of risk-hedging instruments led to the growth of "toxic assets" during the global financial crisis.

Islamic hedging instruments are commonplace. This is nonsensical as well, if you have a problem with these products then regulate them better or just don't use them as much. Stating that it is a positive of Islamic Finance to be limited in its ability to deal with risk also makes no sense. You also forgot to mention that asset bubbles and poor lending on the perceived security of 'tangible assets' (that were, in effect, many of the toxic assets) was the sub-prime crisis.

I was also glad to see that your booklet addressed the issue, propagated on some anti-Islamic websites, that Islamic finance is designed to replace the conventional financial system and promote the world domination of Islam over other faiths.
This claim is clearly ridiculous.

Read a history book. Islamic Finance is but one weapon of stealth jihad and the caliphate movement, though a very important one because of the power money wields. As of now it is not intended to replace the current conventional system but it may as part of the Shariah law path, just as democracy may be replaced one day. A long way off but look at the demands of Muslims in various countries depending on Muslim populations, as the population grows the demands get more serious. This is easy to prove.

At the moment though the only person who I think wants to replace the current system right now is yourself based on your adulation for the Shariah!

You see, I do understand it seems ridiculous, the whole "Jews will take over the world" nonsense, "Muslims are just the new Irish Catholics, Greeks, Italians, Vietnamese" hysteria. But do some research and educate yourself and you will learn it is different, it really is different. One day you will realise (hopefully not too late) that Islam is a whole new ball game, and you thought Communism was bad!

As your booklet points out, the tiny minority of Muslim extremists who promote this view are not part of the mainstream and hardly speak for the rest of Muslim society.

Again, your dhimmitude willingness is astonishing. I think you'll find the views of the mainstream complicit at best if you bothered to learn more about Islam. The mainstream does and will fall into line when the intimidation kicks in.

There is no reason why an Islamic financial system cannot co-exist alongside the conventional financial system here in Australia, subject to the same laws and prudential regulation.

This is a prelude to parallel legal systems, blind freddy can see where this is headed. What a disgraceful comment.

Internationally Islamic Finance is pushing for an easing and rethinking of prudential regulations that apply to it based on the usual myth that Islamic Finance has built-in checks and came through the GFC well. Your Government will adopt these in a flash to remain attractive to the Islamic Finance dollar. As for laws, of course they will be subject to the same ones if you keeping changing Australian laws to suit Islamic Finance!

As I have said – this is not about special treatment but about a fair and level playing field that is not prejudiced against the provision of Shariah-compliant products.

The Australian Government has a duty and an obligation to reject and discrimate against Shariah law. It's not about freedom of religion, it's about adapting Australia to another legal system, one that is barbaric, backwards and cruel. Please understand the difference.

In addition, I hope that people who read your booklet will appreciate the shared values which are the foundation of our respective financial systems – and indeed the many shared values of the world's main monotheistic faiths.

Supremacist ideology, intolerance, hatred, cruelty, jihad and terrorism is not a value I share as a Christian.

The Australian Government works to foster competitive and efficient markets that promote consumer wellbeing, a secure financial system and sound corporate practices.

I have explained previously on this website how inefficient and inflexible Islamic Finance products are. ls paying excessively more for your finance and lying about the risk and ethical nature of it promoting wellbeing, security and sound corporate practices?

This work supports a market system based on integrity, transparency and clarity — the same principles which are set out in the Koran and the Sunnah and which form the basis of Islamic finance.

Wow! The Koran and Sunnah promote integrity, transparency and clarity! Where do we start? Well its clear on one thing, plenty of clarity on how to deal with homosexuals, adulterers, 14 year old rape victims, women, infidels and little girls. Transparency and integrity: shall we discuss taqiyya again?

I could go on for hours here Senator Sherry but we all know that this comment is simply shameful, ignorant to the point of stupidity and an insult to the millions of innocent victims of Islamic hate.

Senator Sherry, also recognise that you cannot pick and choose from Shariah law. By supporting any of the Shariah you are expressly providing your support for beheadings of homosexuals, stoning of adulterers and rape victims, amputations for minor offences and the official status of second class citizen and virtual slavery for woman and non-Muslims. Koran 2:85 might be worth reading.

Importantly, the Shariah prohibition against highly speculative activities not only helps to protect the economy against abuses and distortions, but also forges a closer link between financial activity and the real economy. This maximises the efficient allocation of capital and resources, helping to create jobs and boost sustainable growth.

Let me explain again a commodity Murabaha, the preferred structure for general corporate purpose loans. The financier purchases a quantity of metal from a broker costing the amount of the loan, sells it to the borrower for an increased price on deferred repayment terms and the borrower then sells it to another broker at the financier's original purchase price. This all happens instantaneously. The borrower ends up with a loan for utilising as it pleases (and pays the broker's fees) and a random selection of metal goes nowhere in a side arrangement between the brokers. Is this your real economy?

This is not some obscure structure either, more than half of all non-retail Islamic loans are commodity Murabaha for the very reason the borrower can generally do what they please with the money.

Also I'd reckon a pretty big proportion of loans in Australia already go to investing in business and corporate activities or to build things.

Note also that given the inflexible structures used in Islamic Finance, it is highly inefficient, unproductive and slow. Not good. The one glimmer of hope for those against Islamic Finance is that many companies try it, realise it is inefficient, grossly expensive and not worth the effort and don't bother again unless they need 'lender of last resort' funds.

The Australian Government firmly believes that Islamic finance can increase the depth and sophistication of our financial markets.

There's nothing too sophisiticated about 4th century financing techniques (developed mostly by the Christians). But yes it will increase the amount of Middle East money in Australia which ALWAYS comes with strings attached. The problem is, by being indebted to places like Saudi, Australia's sovereignty is eroded. Decisions on immigration, application of Shariah law locally and the building of madrassas need to be taken with sensitivity to the Middle East dollars.

We also recognise that there are almost 400,000 Muslims in Australia who may use Islamic financial services if they are more accessible. Offering retail Islamic finance products may foster social inclusion, enabling Australian Muslims to access products that may be more consistent with their principles and beliefs.

Social inclusion? We are different, we do things differently, we bank differently, we think differently, we are more moral than those who devour interest, we are going to heaven you to hell, we delude ourselves that there is no interest?

As well, this would widen the choice of products for non-Muslims – for example, the increasing number of people in our community interested in socially responsible investments might be a natural fit with some of the fundamental tenets underlying Islamic finance.

What an insult that Islam and Islamic finance is more socially responsible. I would urge all non-Muslims to steer very clear of it. If for no other reason then because Islamic Finance contracts discriminate against non-Muslims. It is against the Shariah to name a charity in the contracts that is not Islamic.

There's really not much left to say. The Australian Government are not the people to write to anymore regarding the implementation of Shariah law in Australia, they are the chief architects and promoters of this insanity.

Senator Sherry, you and the Malaysians have not disproven a single factual argument proposed, you just suggest we're all misinformed, racist, Islamophobic and wrong - the usual rubbish.

Last Updated on Tuesday, 08 June 2010 19:39  

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