Fourth of several parts
Abdulazeem Abozaid
To help solve the Sharia governance deficiencies, the following can be suggested:
Accreditation of members: Sharia boards should have only accredited Sharia scholars so that not any holder of some Sharia or Islamic studies degree can jump in and become a Sharia board member.
As a prerequisite, a Sharia board member should have postgraduate (MA) or doctorate (PhD) in Islamic financial law, in addition to some basic knowledge in banking and finance. He or she must be accredited by an institution, which must be set up for this purpose, through passing some exams and taking some intensive courses if necessary.
Qualifications: The world has many Sharia scholars with no academic degrees in Sharia. We must insist that all Sharia board members have high degree university qualifications. This is imperative to protect this industry from intruders, especially since many Muslims do not realise that a preacher is not necessarily a Sharia scholar, and that Islamic law has different branches the most sophisticated of which is the Islamic law of transactions.
Independence and control: The independence of Sharia boards and all Sharia controllers is vital and indispensable for the integrity and credibility of their work.
A third party such as the Central Bank or an international institution such as the Council for Islamic banking and Financial Institutions must select, appoint and dismiss them to ensure their independence and avoid conflict of interest.
This step is important to ensure the integrity of Sharia boards.
If the Sharia board member finds himself appointed, paid and possibly dismissed by the bank he is giving fatwa to, then his human nature will make him take a lenient approach in fatwas to maintain his position and attract other Islamic banks.
Financial and legal experts: Sharia boards should also include financial and legal experts with no voting right to advise the Sharia scholars and brief them on the financial and the legal concerns as well as the possible implications of any Sharia resolutions.
This step is particularly important when the Sharia board members do not have adequate legal, finance or market experience. They must consult trustworthy and independent experts before they can take a decision.
A wrong fatwa in many cases could be a result of a misrepresentation by the bankers or a misunderstanding by the Sharia board members.
Essential limitations: It is commonly observed that a few Sharia scholars are monopolising Sharia boards. This is primarily because of the proven convenience of their and the fact that newly opened institutions usually ask existing ones to recommend scholars for their Sharia governance boards.
This practice ends up with the same scholars working for a number of institutions.
This phenomenon is far from professional as it carries the seeds of many negative implications on the industry; being some of them the subjection of the whole industry to the views of those limited dominating figures, and the incapability of them to efficiently and fully discharge their responsibilities.
Therefore, the number of boards one person may join must be limited to a reasonable number, also to give chance to other qualified people.
International Board: It is essential to establish an international Sharia Supervisory Board to help solve the problem of conflicts in Islamic products universally.
Its responsibility shall then be to endorse products only, since it would not be feasible to look into the individual transactions of the individual Islamic banks.
Such a Board should have a specific number of the most credible, experienced and qualified Sharia scholars from various jurisdictions and school of thoughts.
These scholars must be fully independent and not sitting on any individual Sharia board.
Such a committee could also be affiliated the Organisation of Islamic Cooperation (OIC).
OIC should meet all the expenses of the International Board.
Its resolution should be binding on the individual Islamic banks, and in case of proven infringement by one of these banks, it should have an authority to declare the Islamic bank as non-operating according to Sharia rules.
Even if this Board does not have the legal force to withdraw the license of the non-compliant bank or cause it to be withdrawn, it will still have a great power over banks and their Sharia boards.
The Board may have its audit arm to go and inspect banks, analyse their products and report infringements if any.
(To be continued)
Abdulazeem Abozaid is Associate Professor of Islamic Finance Programme at Qatar Foundation, Qatar. The above is the fourth of several parts of the Paper that he presented at the 11th Conference of Western Economic Association International hosted by Victoria University and Massey University at Te Papa Museum, Wellington from January 8 to 11, 2015.
Emails: aabozaid@qfis.edu.qa; abozaid.abdulazeem@gmail.com
