In recent months, a growing number of U.S. commercial banks, hedge funds and other financial institutions have begun promoting products described as “Shariah-Compliant.” By so doing, they hope to attract some of the immense petro-wealth now accumulating in the Islamic Middle East. Neither the management nor shareholders of the firms engaged in such Shariah-Compliant Finance (SCF) appear to admit, however, the civil and criminal exposure to which they are exposing themselves – and the serious dangers this practice entails for their country.
The problem lies with “Shariah.” This is the term used by the most powerful – and virulent – Islamic authorities to describe their theo-political-military doctrine. Its stated purpose is to replace sovereign, secular nations like the United States with a transnational Islamic order governed by a ruling authority, the Sunni’s Caliph or his Shiite counterpart, with Shariah as its foundational law or constitution. Under Shariah Law, violent means are ordered if necessary to effect the world’s submission to Islam.
Shariah is what the Taliban brutally practiced in Afghanistan. It is the law of the land in Iran, Sudan and Saudi Arabia – three of the most repressive regimes in the world, all of which have extensive ties to jihadist terrorism. It is characterized by such barbaric practices as beheadings of apostates, subjugation of Jews and Christians, stonings for adulterers, flagellation for women deemed “unchaste,” amputations for petty crimes, female genital mutilation and martyrdom in the service of jihad.
Why on earth would Western bankers want to be promoting practices that comply with, and therefore institutionalize and legitimate, this repugnant and repressive code?
The answer, of course, is that they perceive in SCF a new way to make money. The sub-prime fiasco demonstrates that it is perfectly possible for American financiers to turn a blind eye to practices that are unwise, even reckless and criminal, when there are profits and bonuses to be garnered. Unfortunately, Shariah-Compliant Finance has the potential to create a national sub-prime meltdown on steroids.
The reason? As a legal memorandum prepared for the Center for Security Policy by experienced securities litigator David Yerushalmi () makes clear, Shariah-Compliant Finance entails considerable civil and criminal exposure for firms that engage in it.
Frank Gaffney Jr. is the founder and president of the Center for Security Policy and author of War Footing: 10 Steps America Must Take to Prevail in the War for the Free World .
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