Islamic finance needs to be revitalized, says Safa Al Hashem

Ms. Al-Hashem, said:

"Despite all the skepticism the world had toward the Islamic banking system in the GCC, particularly in Kuwait, not only does the integrity of the system hold, but Islamic finance also remains the most optimal solution to avoiding the repercussions of the Financial Crisis."

This was while talking about the role of Islamic banks in providing initial solutions in view of the current financial crisis.

"However," she added, "although Islamic banks do contain an array of real Islamic Banking products like Tawreeq, Sukuk, Murabaha, Islamic real estate mortgages, they in effect provide the same traditional products of commercial and investment banks with only change of trade name."

Ms Safa said, "We, at Advantage, along with our partners diligently tried to identify the life-span of Islamic banking system, its activities and a number of products. Although the accuracy of the figures announced by these Islamic institutions whether in terms of volume of investment or total investments of Islamic investment institutions have remained unchallenged thus far, we have ascertained that just like the conventional banks the Islamic banks were considerably affected by the crisis."

Al Hashem added, "This is primarily due to the fact that the Islamic banking system is a part of capitalistic system and endeavors to realize profits using Fiqh (Jurisprudence) tricks to reformulate products in an Islamic framework and then sell Islamic products at a higher price as compared to original traditional financial products."

Ms Al Hashem continued, "Our research on Islamic Banking will focus on Islamic financial system, Islamic finance industry and experts who are working in Sharia boards to impart Sharia jurisprudence and unfair bonuses payroll to such committees. With the current financial crisis invading Kuwait and other countries in the world, Islamic banks and its investments instruments will soon be forced to reconsider its financial engineering."

In conclusion Ms Safa said, "Being strategic and administrative consultants who design and implement the concept of corporate governance for our clients, we continue to advocate for the rights of the shareholder during the holding of general assemblies boards of Islamic banks and companies. We are yet to see actual inquiries from shareholders regarding the financial results and losses of companies despite the massive impact of the financial crisis upon such companies. Formal enquiries need to be initiated regarding ambiguous matters like imaginary compensation for lawyers, committees of experts and accountability of the Chairman for false appointments of executives in such companies or banks."