FT publish LCF Shariah banking letter

Date: 26/Apr/2007
Topic: Islam

The implications of Islamic bonds are far-reaching

By Andrea Williams

Sir, We write to express our concern at your report that the government is planning to issue sukuk, or shariah-compliant bonds (“Britain first in west to issue Islamic bonds”, April 23).

The government may be attracted by the prospect of money from Muslim investors, but it seems it has not considered the implications of using bonds that comply with shariah law. Shariah law does not simply prohibit interest and finance speculation, it stipulates that money must not be used for a purpose incompatible with Islam.

This could include any number of areas of the financial market, such as alcohol and cigarettes, clothing, food, media (which produces gossip), and animal welfare (which promotes the welfare of non-halal animals). It would also mean this money could not be used in the furtherance of many individual freedoms, or in the promotion of any idealistic or political worldview other than Islam (including secular democracy).

The government appears to be overlooking the implications of allowing a proportion of UK government finance to be determined by a law not recognised in the UK. It is of particular concern that there has been no parliamentary scrutiny of this issue. For example, if these bonds are introduced, it is not clear who will be the arbiter of any disputes. The bonds are religious agreements, and disputes that arise will often involve a question of interpretation of shariah law.

Is the government prepared to be bound to the decisions of Islamic scholars on the practicalities of these bonds? These are questions that should be answered before shariah law is introduced into UK banking - not after.

Andrea Minichiello Williams,

Lawyers’ Christian Fellowship,

London SE1 8XN

• LCF Shariah Banking Letter

  LCF write to express concern at the report that the government is planning to issue sukuk, or shariah-compliant bonds