From: [email protected]: [email protected];
[email protected]: RE: [INAYAH GROUP-22895] التدقيق الشرعي في
البنوك الإسلاميةDate: Wed, 11 Feb 2015 20:39:08 +0000Assalamu Alaykom Wa
Rahmatu Allah Thank you all for opening this subject again.I want to assure
here that Dr.Abdul-Bary Mesha'al is highly specialized in Islamic Fiance, and
his opinion is very valuable. Although we did not meet in person yet, but we
have been in touch over the phone and through INAYAH Group for a ehile. I am
positive that Dr.Masha'al will be an asset for Muslims in the US in sha Allah,
especially within his field.On the other hand, AMJA does have all the necessary
documents to issue a verdict regarding Lariba and other mortgage companies. We
believe that the legal contract signed mutually between Lariba and its clients
is the most important document to analyze. Muslims in the US are showering us
with contracts and other affiliate paperwork to check and issue a Fatwa
regarding those companies who introduce their products as Sharia compliant
ones. Lariba is one of those companies where people have sent me in particular
its contract. I have a copy of the 2012 version of the contract.We could not
find any hint in Lariba contract showing any Islamic mode of finance in effect,
rather it looks like a very conventional mortgage contract. Thus, AMJA declared
that Lariba contract is a void one, and that it is prohibited for Muslims to
finance with Lariba.For more details, please see below the Lariba-related part
of my PERSONAL research discussed in AMJA recent convention. My research does
NOT reflect AMJA position, rather the declaration we issued recently is the
ONLY official stand of AMJA.Chapter ThreeAmerican Finance House Lariba
Introduction to the Company Lariba is one of the oldest Islamic housing
companies in the US, starting its operations back in 1987. It finances the
purchase of houses and refinances them for those who want to convert from a
conventional mortgage to an Islamic or Riba-free one, as well as financing the
purchase of businesses, cars, furnishings, and medical equipment. Their
website, www.lariba.com, explains how the Lariba mode of finance works and the
different financing services they provide to the community at large. Modes of
Islamic FinanceAccording to the website "Our home financing model is based
on the concept of “Declining Participation in Usufruct” (DPU) (Declining
Musharaka). This is done as the basis for calculating the monthly payment and
marking the value of the property to the market using actual market rental
values of similar properties in the same neighborhood. The uniqueness of the
LARIBA model is that we DO NOT RENT MONEY. Instead, we approach each
transaction as an investment. The market rental value of the property financed
determines attractiveness as an investment. If the house is overpriced, the
model will flag this fact to the homebuyer in order to go back to renegotiate a
lower price or to wait until an existing market “bubble” is burst. It is
important to note that each property like a car, a home, a commercial building
has two rights of ownership. The first is the ownership of title to the
property called “Milkul Raqabah” (the ownership of the neck). The other right
is the right to use the property (Haqul Manfa’aa – the usufruct). For example
one can own a car or a house but he or she can rent out the right to use the
car or the house by leasing it.1. LARIBA conceptually purchases the property
jointly with the client. LARIBA would authorize the client to act as its agent
(wakeel) to select, negotiate the price of, and purchase the Property." The
website then goes into detail, explaining the steps of implementing this model.
Please go towww.lariba.com/home-financing.htm for details.On the Sharia
compliance issue, they state, "Our Home (Auto, Businesses and Trade) Financing
(and Refinancing) Shari’aa Compliant Riba-Free Model is based on the Fatwas
Given By Sheikh Qaradawi…… & His Team of Aalim (Scholars) in 1990 and Justice
Sheikh Taqi Usmani fatwa and methodology."Analyzing the Contract
Theoretically speaking, the Lariba mode of finance is identical to the Guidance
Residential one, which according to them is a Diminishing Musharakah one.
But the main difference is that Lariba's contract, which is the legal document
that governs the relationship between the company and its client, does not
reflect any of the obligations and financial responsibilities of the parties in
the Diminishing Partnership model, while the Guidance contract, as discussed,
does – but then the latter is not Sharia-compliant anyway. The only thing I
could found in the Lariba 85 pages long contract in this regard is "Buyer/s and
AFHL mutually recognize that as a matter of Islamic Jurisprudence, Buyer/s may
not pay numerical interest on a debt. However, Buyer/s additionally acknowledge
and confirm that Buyer/s may repay the Initial Capital advanced by AFHL
(Repayment of Capital or RofC) plus a return on Capital (RonC), plus an amount
needed to pay all property taxes and assessment and to keep the property
insured…..Buyer/s and AFHL have mutually performed such due diligence as each
deemed appropriate to determine a mutually agreeable rental value for the use
and enjoyment that Buyer/s will receive from the property….The interest rate
stated in the Note is an implied interest rate for purposes of conformity with
the laws of California and the United States of America, and is intended to be
deed of Trust/Mortgage interest under the Internal Revenue Code and similar
state tax laws."However, just before this, we find the following: "In the
event of late payment, non-payment or prepayment, the terms and conditions of
the Note and Deed of Trust/Mortgage will govern as fully as though this
Agreement were not present. All terms and conditions of the Note and Deed of
Trust/Mortgage remain fully enforceable according to their terms. This
agreement describes how the parties arrived at the terms of the Note but does
not amend or supersede the Note. Moreover, the parties expressly acknowledge
that in the event of any civil judicial action, suit or proceeding by either
party to enforce or interpret the Financing Documents, the Note and Deed of
Trust/Mortgage shall be construed strictly in accordance with their terms as
ordinarily understood in the civil courts of North Carolina" It is obvious
that the second paragraph negates the first one completely. Furthermore, the
first one-to start with- does not furnish any of the duties and financial
responsibilities of the two contracting parties in this diminishing
partnership. Status of This Contract The agreement of the company and its
client is a Diminishing Musharakah, thus, the content of the contract must
comply with and reflect the guidelines of such an agreement in Sharia.
Because none of the guidelines of Diminishing Musharakah is mentioned in the
contract, it is invalid. It characterizes the relationship between Lariba and
the client as a lender who advances an explicit interest-bearing loan to a
borrower. In fact, in 2005 the AMJA Fatwa Committee issued a Fatwa,
unanimously declaring that the Lariba contract is a void one. In addition to
the writer of this research, this Fatwa was signed by their eminences Dr. Salah
Al-Sawy, Dr. Ahmad Shlaibak, Dr. Waleed Menecy, and Dr. Mwaffak Ghalayeny.
Although Dr. Hatem Al-Haj was not a part of the Fatwa Committee at that time,
he adopted the same conclusion later on, and has a Fatwa on the AMJA website
indicating clearly that the Lariba contract is identical to any other
conventional mortgage contract. I am not aware of any verbal or written Fatwa
by Dr. Waleed Basyouni or Dr. Mohamad Nai'em Sae'y that indicates otherwise.
Suggestions to Make This Contract Sharia-Compliant: All the duties and
financial responsibilities of the two partners in Diminishing Musharakah have
to be reflected and enforced by the contract. The conceptual agreements between
Lariba and their clients do not constitute a binding and enforceable
relationship. Dr.Main Al-QudahAssistant ProfessorAl-Huda University
http://www.AlhudaUniversity.org [email protected] | Twitter
| LinkedIn
Date: Thu, 12 Feb 2015 19:20:20 +0800
Subject: {Kantakji Group}. Add '12930' RAQABA launched its activities in the
U.S with shari'a audit on structures and design of the products in Islamic
financial institutions
From: [email protected]
To: [email protected]
RAQABA launched its activities in the U.S with shari'a audit on structures and
design of the products in Islamic financial institutions
http://raqaba.co.uk/?q=en/node/1414/
Each product in the financial institutions has specific policies and
procedures, and the degree of difficulty to understand these policies and
procedures vary in accordance to basic rules which are:(A) Shari'a rules.(B)
Laws and regulations.(C) The instructions of the central bank and the
supervisory authorities.(D) The related standards, including accounting
standards.(E) Controls elements.The products may resemble sometimes in the name
only, however the structure and design of the product may differ substantially,
for instance, there are many types of the leasing which the Islamic financial
institutions use, one of them is Ijara ended with ownership (ijarah muntahia
bittamleek). It is leasing with promise to ownership leased property to the
lessee at the end of the lease period or during, the ownership can be either by
donation or sale.There are other financing structures of leasing they are
characterized by creativity, it has been mentioned in the Sunnah and enriched
by our scholars, this financing structure has been restructured based on very
famous jurisprudence issue is Sale with the benefit exception (or sell the
asset or neck with benefit exception), it has found a way to apply smoothly and
intelligently in an environment that is facing legal challenges and different
legislative, through one of our clients in the United States (American Finance
House - LARIBA).An understanding of the structure and design of the product
includes understanding its shari'a structure, laws affecting it; related
instructions of the central bank and supervisory authorities, related
accounting standards, and controls elements. All policies and procedures
including contracts which arrange relations between the financing and all
related parties (suppliers, investors .. etc.) are an integral part of the
structure and design of the product. And also the understanding of the
structure and design of the product is half of shari'a audit.One of the shari'a
audit services is to express an independent professional opinion on the
structure and design of the product, this service is new at the level of theory
and practice, Raqaba has provided this service to one of its clients in the
United States (American Finance House - Lariba). This service stands out as a
necessary condition for activation the shari'a audit on the implementation.Dr.
Abdulbari Mashal (Chairman , Raqaba Group) sees that shari'a audit service on
structures and design of the products will impact positively on raising the
quality and efficiency of products and services compliant with shari'a rules.
Also Dr. Mashal added that the shari'a audit is still expanding to accommodate
other services similar to financial audit, and he expect that providing an
independent professional opinion about the internal shari'a control system of
the institution will be required in the professional practice significantly.It
is noteworthy that RAQABA -In a step that reflects the professional status of
the group in the field of shari'a audit and Islamic financial consultation -
has signed an agreement for an independent external shari'a audit with American
Finance House (Lariba) by one of the group companies (Raqaba - US) in the
second half of 2014. The agreement contains provision independent external
shari'a audit services on structures and design of the products, thus enhancing
(Lariba) efforts in its responsibility for the design and implementation of the
contracts and transactions in compliance with shari'a rules.RAQABA (Raqaba -
US) has issued the first shari'a audit report in the United States after a
professional work continued for several months about examination of structures
and procedures for "LARIBA" Home Financing Model "Declining Participation in
the Usufruct (DPU)" (the product) , it will be followed by the issuance of the
shari'a audit report on the implementation of the contracts and transaction for
the year ended 31.12.2015.It is worth mentioning that RAQABA group offers a
wide range of shari'a audit services as well as Islamic financial advisory
services include the following:- External Shari’a Audit,- Internal
Shari’a Audit,- Agreed Upon Procedures (Special Purpose Audit),-
Corporate Governance Audit,- Establishment of and Conversion of Financial
Institutions to Islamic System,- Structuring and Development of Islamic Bonds
(Sukuk) and Other Islamic Financial Products,- Development of Policies and
Procedures of Products and Processes,- Assistance in the Design of and
Implementing Systems That are in Compliance - with the Islamic Laws and
Regulations (Shari’a),- Shari’a Compliant Equities Index,- Foundation and
Management of Shari’a Supervisory Boards (SSBs),- Development of
Policies and Procedures of Internal Shari’a Audit,- Establishment and
Management of the Internal Shari’a Audit Department,- Establishment and
Management of External Shari’a Audit Office,- Developing and Monitoring Shari’a
Quality Systems,- Design of Seminars' Programs and Conferences,- Islamic
Commercial Arbitration,American Finance House (LARIBA) was founded in 1987 in
Pasadena, California in the United States; it was created by a group of
businessmen. The main objective of this company is interest-free financing for
all segments of society, by leasing or participation through specialized
products in home financing, commercial property financing, auto financing, and
equipment financing.Related Links:Establishment of (Raqaba- USA) in the United
Stateshttp://raqaba.co.uk/?q=en/node/1392/
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سياسة النشر في المجموعة:
ترك ما عارض أهل السنة والجماعة... الاكتفاء بأمور ذات علاقة بالاقتصاد الإسلامي
وعلومه ولو بالشيء البسيط، ويستثنى من هذا مايتعلق بالشأن العام على مستوى
الأمة... عدم ذكر ما يتعلق بشخص طبيعي أو اعتباري بعينه باستثناء الأمر العام الذي
يهم عامة المسلمين... تمرير بعض الأشياء الخفيفة المسلية ضمن قواعد الأدب وخاصة
منها التي تأتي من أعضاء لا يشاركون عادة، والقصد من ذلك تشجيعهم على التفاعل
الإيجابي... ترك المديح الشخصي...إن كل المقالات والآراء المنشورة تُعبر عن رأي
أصحابها، ولا تعبّر عن رأي إدارة المجموعة بالضرورة.
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For more options, visit this group at
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سياسة النشر في المجموعة:
ترك ما عارض أهل السنة والجماعة... الاكتفاء بأمور ذات علاقة بالاقتصاد الإسلامي
وعلومه ولو بالشيء البسيط، ويستثنى من هذا مايتعلق بالشأن العام على مستوى
الأمة... عدم ذكر ما يتعلق بشخص طبيعي أو اعتباري بعينه باستثناء الأمر العام الذي
يهم عامة المسلمين... تمرير بعض الأشياء الخفيفة المسلية ضمن قواعد الأدب وخاصة
منها التي تأتي من أعضاء لا يشاركون عادة، والقصد من ذلك تشجيعهم على التفاعل
الإيجابي... ترك المديح الشخصي...إن كل المقالات والآراء المنشورة تُعبر عن رأي
أصحابها، ولا تعبّر عن رأي إدارة المجموعة بالضرورة.
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