DIFC watchdog urges transparency from Islamic scholars

MORE TRANSPARENCY: The CEO of Dubai’s International Financial Centre Authority has called for more transparency from religious scholars. (Getty Images)

The CEO of Dubai’s International Financial Centre Authority has called for more transparency from religious scholars that decide upon the viability of Islamic products.

Speaking at the 2008 Sukuk Summit in London on Thursday, Nasser Al-Shaali called for the sector to create “multi-lateral, internationally accepted” systems to inform investors about financial services’ compatibility with Islamic law.

He said more data should also be made available on the financial performance of sukuk, or sharia-compliant bonds.

“We need to force more transparency. There is a need for information systems to force transparency into the industry, to hold sharia scholars more accountable and to create consistency.”

Providers of sukuk have come under fire from scholars in recent months, with the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) stating earlier this year that as many as 85% of bonds did not conform to Islamic principles.

The industry has also complained about differences in regulatory approaches between national authorities.

Adressing the forum, Al-Shaali pointed to work being done by the Islamic Financial Services Board (IFSB) as being crucial to the development of the sector.

But he said too much focus was being placed on sharia standardisation and not enough on the “actual performance and uptake” of sukuk.

With the industry reported to be planning a certification scheme for Sharia-compliant bonds, he said: “When I buy a bag of potato chips in the States, I buy them for the potato chips, not necessarily for the small kosher symbol that’s on the back. But in case I wanted the comfort that they were kosher, that kosher symbol is there.”

Al-Shaali said services should always remain “true to the tenets of Islam”.

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