Arboon, Ijara and Delorenzo, Fatwa Collector

GROWING INTEREST

When Hedge FundsMeet Islamic Finance

U.S. Firms Hire ScholarsT o Help Design Products;
The 'Rent-a-Sheik' Issue By JOANNA SLATER August 9, 2007; P

HAYMARKET, Va. -- One recent afternoon, New York money manager James Rickards presented Sheik Yusuf Talal DeLorenzo with a dilemma: Could his hedge fund be Islamic-friendly?

Islam prohibits all kinds of speculative behavior that is embedded in Wall Street's DNA.

But Mr. DeLorenzo, a Massachusetts-born convert to Islam, is on a mission to meld centuries-old Islamic law with modern finance in the U.S.Mr. Rickards's fund couldn't bet on currency futures or some of the shares in the Standard & Poor's 500 index, Mr. DeLorenzo said, if he wants observant Muslims to invest.

But some alterations could earn the sheik's approval -- such as holding currencies instead of futures, and buying only S&P 500 companies that aren't debt-heavy or dependent on profit from interest payments. "Music to my ears," Mr. Rickards said. "It sounds like I can still get the effect I'm looking for."

With the Middle Eastern economy booming, partly thanks to soaring oil wealth, the Islamic financial industry has been expanding at a clip of about 15% a year, according to accounting firm KPMG, and is on pace to reach $1 trillion in two years. The money is seeking new outlets and Western financial institutions are seeking new clients -- opening the door for more aggressive methods to reconcile two worlds that don't easily

The issue of what's permissible has opened fault lines within Islamic finance. Malaysian adaptations of Western-style bonds, for instance, have been condemned, then copied, in Muslim countries in the Middle East.

Scholars consulting for Western financial institutions are criticized for bending religious laws to serve financial ends -- the "rent-a-sheik" argument, says one U.S. bank official.

Vendors profit by "capitalizing on people's religious insecurities," says Mahmoud El-Gamal, a professor of economics who holds a chair in Islamic finance at Rice University.

"Don't take my duck, sprinkle holy water on it, and say it's a chicken."Islamic law, or Shariah, stems from the Quran and subsequent interpretations by scholars. In the economic realm, commerce receives divine approval but several verses speak of a prohibition on interest, a practice viewed as exploiting the borrower.

• An association in Bahrain is the informal authority on Shariah compliance for Islamic financial institutions.
• But its standards aren't mandatory and don't govern the offerings of Western firms, which retain their own Shariah boards to advise them and issue their own rulings, or fatwas.
• Top scholars can serve on dozens of boards, earning retainers of up to $20,000 to $40,000 a year per client.
• Scholars who give their seal of approval sometimes receive a percentage of assets invested.

Mr. DeLorenzo says it's rare to get a percentage of assets, but that one time he accepted such compensation.

• Among his other clients is Dow Jones parent company of The Wall Street Journal, which retains him and five other scholars to consult on its indexes of Shariah-compliant companies.
• Mr. DeLorenzo receives an annual retainer of $5,000 plus stipends for attending two to three meetings a year.

Pledging Collateral - Arboon

• Western banks say they make more than cosmetic changes to create shariah-compliant financial products. London-based Barclays Bank PLC, which worked with Mr. DeLorenzo and a firm called Shariah Capital Inc. on a platform for hedge funds to trade without violating Islamic requirements, had to rewrite a 20-odd-page brokerage contract.

The concept of short-selling -- using borrowed shares to bet on a stock's decline -- was replaced with an Islamic down-payment structure known as an arboon.

Any reference to a "guarantee" was replaced, for instance by a pledge of collateral, because Islamic rules require shared risk by all parties.

NEW OPTIONS

• The Issue: Hedge funds and financial-services companies are seeking to create new products that can meet Islamic religious requirements.
• The Incentive: The Middle East's economy is booming, creating demand for new investment options, and Western firms are looking for new clients.
• The Challenge: Firms are adapting offerings to avoid prohibitions such as charging interest, while religious scholars decide how freely they can interpret Islamic law."There were definitely a few firsts," says Kieran McCann, a director in Barclays Capital's prime-brokerage group.

The gap between Wall Street and Islamic financial law can be uncomfortably wide, especially amid lingering distrust on both sides after the 2001 terrorist attacks on the U.S. But the U.S. also is home to several million middle-class Muslims, one of the largest markets in the West.

A 2004 Zogby poll for Georgetown University found a majority have college educations and earn $50,000 or more a year. Some early steps in providing Islamic alternatives have exposed pent-up demand.Vetting ServicesOnce word began to spread that Devon Bank in Chicago was exploring Islamic financial products in 2002, there was an immediate response from the local Muslim community, says bank vice president David Loundy.

"People said, 'Can you do houses, cars, lines of credit, and how about my sister in Connecticut?'" Some customers went as far as calling scholars in Pakistan to vet the acceptability of Devon's services, he said.

One Devon customer, Ahmed Khan, a technology executive at Dutch-based bank ABN Amro Holding NV, says he owned a home in the late 1980s but was "very uncomfortable" paying conventional mortgage interest and went back to renting.

In 2005 he took out a Devon "Shariah-compliant" mortgage using a method called ijara: The bank bought Mr. Khan's condominium and he pays a monthly sum to buy it from the bank over time, plus a lease payment for using the property.

In the first five years his cost of financing is about 7%, he says, and he paid some fees beyond normal closing costs for the specialized legal structure.

Mr. Khan had to fill out a standard mortgage application, but says it's important for U.S. Muslims to accept such compromises to encourage banks' efforts. "If you don't show that demand, there will never be any supply," he says.

The bank also converts the arrangement to a conventional mortgage for its regulators and the Internal Revenue Service, and advises customers to seek tax advice on whether it's deductible.

Mr. Khan takes the deduction.

Cadre of ScholarsMr. DeLorenzo, 58 years old, is at the center of the push to develop Islamic financial products in the U.S. He also serves on boards of Islamic scholars that rule on their acceptability, as do a cadre of less than 20 top scholars globally -- only a couple of them in North America -- who advise banks and financiers.

Mr. DeLorenzo's clients have included Morgan Stanley, Brown Brothers Harriman & Co., Royal Bank of Scotland PLC, and France's Société Générale SA.An Islamic mortgage that Mr. DeLorenzo helped develop here is serving as a blueprint for a venture in Saudi Arabia. He worked with a Lebanese investment bank to structure the first-ever Islamic bond from a U.S. company, issued last year by a small Texas energy firm.

Mr. DeLorenzo acted as "a cultural bridge between us and the rest of the scholars," says Ibrahim Mardam-Bey of Bemo Securitisation, the Lebanese bank. He can read banks' term sheets as well as the Quran, and has another advantage, says Mr. Mardam-Bey:

"Very few of the other scholars care to read their email."Mr. DeLorenzo, named Anthony at birth, is a grandson of Sicilian immigrants whose family was half-Catholic, half-Methodist, and was raised in neither religion, he says.

He uses the Islamic honorific "Sheik" that religious scholars are free to claim for themselves, but favors business suits and has a trimmed white beard. He was interested in finance from the age of 13, when he asked his mother to buy him shares in Studebaker Motor Co., he says.

As a Cornell University student he hopped a trans-Atlantic freighter to study in Spain, but tired of the trip early and got off in Casablanca. There he became fascinated with Arabic and Arab culture and began to read the Quran. He never returned to Cornell, instead studying in Cairo and Karachi.

He changed his name, married a Pakistani woman and in the 1980s became an adviser on education to the Pakistani government.

After attending a conference on Islamic economics held in Pakistan, he began collecting fatwas on Islamic banking issued by religious scholars across the Muslim world.

In 1989, amid escalating violence in Karachi, armed men attempted to shoot their way into the home where Mr. DeLorenzo, his wife and their three children lived. One of the family's servants was shot in the head. The case was never solved, he says.Mr. DeLorenzo quickly moved his family to Virginia, and his interests turned to the challenges faced by observant Muslims living in the U.S. The Islamic financing options here -- small-scale efforts by cooperatives, rather than financial heavyweights -- left him unimpressed.

"They were charging people too much, making them stand in line for six months to a year, demanding down payments of 40% on a house, and didn't have very good Shariah advice, if any."

Banking Fatwas

He began to establish his reputation as an expert in the late 1990s, after publishing a collection of English translations of the Islamic banking fatwas.

In 2000 he began working with what would become Guidance Financial Group, a company founded by Mohamad Hammour, a former economics professor at Columbia University. The goal: to offer U.S. Muslims a competitively priced Islamic mortgage.

It took a year and a half to hammer out a solution that they believed could not only comply with Shariah, but also clear the various home-finance regulations of individual states. It also needed to be eligible for financing by mortgage giant Freddie Mac.

"We had to essentially reinvent the entire mortgage process -- from the day you talk to the consumer, to the day the mortgage gets sold on Wall Street," says Dr. Hammour.Guidance offers a co-ownership agreement known as a musharaka, a slightly different strategy than that of Devon Bank.

The customer and Guidance jointly form a new corporation to own the home. Part of the customer's monthly payment goes toward buying out Guidance's share and part is a "utility fee," which the home buyer pays in exchange for using the asset.

Guidance says it keeps the fees roughly competitive with the market in 30-year mortgage interest rates, though there are added fees connected with the co-ownership venture. By the end of the term, the home buyer has completely bought out Guidance's stake and wholly owns the house.

Guidance reports the transaction to the IRS as a conventional mortgage, like Devon Bank, and says its customers generally take a regular deduction.

Guidance says it reached $1 billion in such financing in June, and is now operating in 21 states and Washington, D.C.

The firm contends the market for Shariah-compliant mortgages in the U.S. could top $10 billion a year.

Selling Point

Another member of Guidance's Shariah board is a former Pakistani judge, Muhammad Taqi Usmani, whose expertise is a major selling point for Guidance customer Ferzana Mir, a doctor from Pakistan who lives in Plano, Texas. (Mr. Usmani also serves on the Dow Jones Shariah board.)

Dr. Mir refuses interest on her U.S. bank accounts, and says some U.S. Muslims she knows are skeptical of a mortgage like hers because they view its substitutions for interest as "just a play on words." She disagrees: "As you delve into the finer points, you understand how this is different," she says.

Mr. DeLorenzo is pushing the envelope with an even more complex product, the Islamic trading system for hedge funds he helped develop with Barclays and Greenwich, Conn.-based Shariah Capital.

In the summer of 2001, Shariah's CEO Eric Meyer was a hedge-fund manager looking for a new venture. He was impressed by Mr. DeLorenzo's writing on Islamic finance. He sought him out and the two men talked for more than five hours about how to create an Islamic hedge fund.

Mr. DeLorenzo had his doubts. Hedge funds' variety of complex investment strategies -- including "short selling" stocks by selling borrowed shares to bet their price will drop -- poses a problem.

In Islamic finance, investors aren't allowed to sell what they don't own because it represents an unacceptable form of speculation.

There are other prohibitions, too. Because of the ban on interest payments, investors must avoid companies like banks that rely on interest for their income.

For the same reason, they are required to steer clear of firms that carry high levels of debt -- defined in different rulings as around one-third of either market capitalization or assets -- and thus pay a significant amount of interest.

Those are obstacles that would stop some experts.

Monzer Kahf, an economist and consultant in Islamic finance who lives near Los Angeles, says he generally supports Islamic finance efforts, but draws the line at trying to make hedge funds Shariah-compliant:

"What are hedge funds other than advanced forms of speculation?"'Excruciating Detail'

Mr. DeLorenzo and other well-known scholars began by breaking down the entire process of the traditional short sale "in excruciating detail," recalls Mr. Meyer. Some of the scholars' questions stumped even seasoned short-selling pros.

• One example: If an investor borrows shares in a company, and that company goes bankrupt, who has voting rights?Questions like that were "just exasperating," Mr. Meyer says. "You're thinking, 'It's bankrupt, what does it matter?'
• But in Islamic finance, you always need to know ownership and control" to make sure the risk is shared among the parties. After months of meetings in London and New York, Mr. DeLorenzo and his fellow scholars adapted the arboon contract -- akin to a down payment that enables the short-seller to take ownership of the share, rather than just borrowing it.
• To address avoiding companies with too much debt or other issues under Islamic law, Shariah Capital developed new screening software. It taps directly into the quarterly reports that companies file electronically to the Securities and Exchange Commission and weeds out businesses that carry high amounts of debt or reap significant income from interest payments.

Mr. DeLorenzo now holds the title of chief Shariah officer for the company, and can tap into the software and monitor what's being traded at any time.

Two U.S. hedge fund firms have signed up to use the trading platform so far, and Mr. Rickards, the New York hedge-fund manager, is considering joining them.Mr. DeLorenzo says he hopes adapting Islam to modern finance could eventually influence other areas of Islamic law.

Shariah has "essentially been in a coma for several centuries," he contends. "It desperately needs reviving." He says he wants to expand his own small group of colleagues, but encounters cultural obstacles.

He recalls a meeting earlier this year in Dubai where a scholar lectured a group of visiting executives from a multinational investment firm about the sinfulness of conventional finance. "It was worse than bad," Mr. DeLorenzo says.

Write to Joanna Slater at joanna.slater@wsj.com (joanna.slater@wsj.com)

The growth of financial industries in the Islamic world is creating demand for investment professionals with an understanding of Islamic law - a demand that won't be satisfied any time soon.

At a recent regional business summit organized by Reuters, participants said Muslim investors are increasingly sophisticated and increasingly inclined to invest their money according to the stricture of Sharia, or Islamic law, say media reports.

For example, Islamic law prohibits paying interest, which makes it difficult to trade bonds or other debt instruments.

In addition, Islamic law bans investment in companies engaged in gambling, pornography or alcohol products.

Hassan Hakimian, The Cass Business School's associate dean for Off-Campus Programs, told BusinessWeek Islamic finance is growing some 15 percent annually and will continue that growth for at least the next ten years.

At the Reuters summit Atif Abdulmalik, chief executive of the private equity group Arcapita, based in Bahrain, said Islamic investing is now "mainstream."

Keba Keinde, CEO of Dubai's Millennium Finance Corp, which will invest $10 billion in energy, media and telecommunications over the next five years, added, "In terms of finding leverage,

Islamic finance has made progress in adding depth." A number of business schools are adding courses on Islamic finance, BusinessWeek says.

London's Cass school is launching an Executive MBA program in Dubai this fall, saying it sees a demand for more MBAs with experience in the area.

Islamic finance is expanding its reach across sectors ranging from global bond issuance to hedge funds - and even retail banks and home buyers in the U.S.

That portends increased job opportunities for individuals able to work with Sharia-compliant finance concepts that bear exotic names such as Sukuk, arboon and ijara.

"With the Middle Eastern economy booming, partly thanks to soaring oil wealth, the Islamic financial industry has been expanding at a clip of about 15% a year, according to accounting firm KPMG, and is on pace to reach $1 trillion in two years.

The money is seeking new outlets and Western financial institutions are seeking new clients - opening the door for more aggressive methods to reconcile two worlds that don't easily mesh," The Wall Street Journal reports. Separately,

Islamic Finance Information Service reported that worldwide issuance of Islamic bonds, known as Sukuk, soared 75 percent in this year's first half, to a record $24.5 billion. Issued primarily by Muslim-based institutions like the government of Malaysia and the Qatar Real Estate Investment Company, the investments allocate risk among parties to comply with the Quran's prohibition on paying or receiving interest. While marketed mainly within Muslim countries, international Sukuk bonds sold to global investors make up a growing share of the total market. Deutsche Bank was the leading underwriter of international Sukuk bonds, with $952 million issued this year. Meanwhile, Islamic finance is making headway in other, less obvious places. Thursday's page-one WSJ story explains how an American-born Islamic finance pioneer is marketing a Sharia-compliant trading system to hedge funds, and has also helped various banks in the U.S. create mortgage alternatives for Muslims buying homes here. Guidance Financial Group says it's provided over $1 billion in Sharia-compliant home financing in the U.S. The five year old Reston, Va.-based company operates in 20 states and Washington, D.C.

I've noticed a new program , which tries to portray itself as an Islamic CFA, it's called the Certified Islamic Finance Professional, or CIFP.

• If I'm not mistaken it was created in Malaysia, which is at the forefront of Islamic finance.
• Another thing i noticed, is that they offer a scholarship program for the CIFP program.
• A link to the details of the program and quick facts...http://www.inceif.org (http://www.inceif.org/)http://www.bnm.gov.my/index.php?

Honesltly, it's the first time I've heard of this, is it just another TLA, or in this case (FLA) Four Letter Acronym? I don't think it's even close to the other designations, but it does fill a niche for those who might be interested.:)

The Rest @ Quantnet

Is al Qaeda trying to Influence US Politicians

“If they were to allow the whole picture to emerge… certain elected officials will stand trial and go to prison.” – Sibel Edmonds By Lynn Grant

08/15/05 "International Post" -- --- CHICAGO, Illinois, Aug 15 (IP) – During the current flurry of September 11th related news, one item has gone largely unnoticed.

Reports of former FBI translator Sibel Edmonds’ allegations concerning improper financial ties between House Speaker Dennis Hastert and Turkish officials and businessman have become a source of discontent for beltway insiders on both sides of the aisle.

However, the recent coverage has not addressed why Sibel Edmonds’ information regarding Speaker Hastert’s dealings with the Turks necessitated an in-depth investigation by the September 11th Commission.

In an August 10, 2005 interview about her reported allegations, Edmonds was asked, “What are you alleging about the Speaker of the House?” Though under a strict gag order, she replied:

“I have been giving all the details to the appropriate channels. And they have been confirmed. And what I have said all along is the fact that as far as the 9/11 is concerned, September 11 is concerned, these departments -- and when I say “these departments,” the Department of Justice, the Department of State, and the Department of Defense -- have intentionally blocked the investigations of real -- the real criminals in this country. …

• Most of al Qaeda’s funding is… through narcotics. And have you heard anything to this date, anything about these issues which we have had information since 1997?
• And as I would again emphasize, we are talking about countries. And they are blocking this information, and also the fact that certain officials in this country are engaged in treason against the United States and its interests and its national security, be it the Department of State or certain elected officials.
• While alluding to treason, Edmonds’ reply indicates that her allegations about Speaker Hastert are linked to al-Qaeda and the September 11th attacks.

To understand this link, it is necessary to examine the substance of Mrs. Edmonds’ allegations, as reported in the recent issue of Vanity Fair:

A large part of her work at the F.B.I. involved listening to the wiretapped conversations of people who were the targets of counter-intelligence investigations.…

Many involved an F.B.I. target at the city’s large Turkish Consulate, as well as members of the American-Turkish Council and the Assembly of Turkish American Associates. Some of the calls reportedly contained what sounded like references to large scale drug shipments and other crimes. …

One name, however, apparently stood out – a man the Turkish callers often referred to by the nickname “Denny boy.” It was the Republican congressman from Illinois and Speaker of the House, Dennis Hastert.

According to some of the wiretaps, the F.B.I.’s targets had arranged for tens of thousands of dollars to be paid to Hastert’s campaign funds in small checks. Under Federal Election Commission rules, donations of less than $200 are not required to be itemized in public filings.

The Vanity Fair article adds:
The targets reportedly discussed giving Hastert tens of thousands of dollars in surreptitious payments in exchange for political favors and information. …

“She told us she’d heard mention of exchanges of information, dead drops—that kind of thing,” a congressional source says. “It was mostly money in exchange for secrets.” …

There was talk, she told investigators, of laundering the profits of large-scale drug deals and of selling classified military technologies to the highest bidder. …

“There was pressure within the bureau for a special prosecutor to be appointed and take the case on, “the [FBI] official says. Instead, his colleagues were told to alter the thrust of their investigation – away from elected politicians and toward appointed officials. “This is the reason why Ashcroft reacted to Sibel in such an extreme fashion [invoking the rarely used State Secrets Privilege],” he says “It was to keep this from coming out.”
Though a Hastert spokesperson has dismissed Edmonds’ allegations and no evidence is presented confirming Hastert received illegal payments, the article reports on another wiretap in which “a senior official at the Turkish Consulate is said to have claimed in one recording that the price for Hastert to withdraw the resolution [recognizing the Turkish slaughter of Armenians in the early 1900s as Genocide] would have been at least $500,000.”
The targets of the wiretaps translated by Edmonds were heavily concentrated near Hastert’s Chicago-area congressional district:
Vanity Fair reveals that the FBI’s investigation centered on Speaker Hastert’s Chicago-area district:
One counter-intelligence official familiar with Edmonds’s case has told Vanity Fair that the F.B.I. opened an investigation into covert activities by Turkish nationals in the late 1990’s. That inquiry found evidence, mainly via wiretaps, of attempts to corrupt senior American politicians in at least two major cities - Washington and Chicago. …

In December 2001, Joel Robertz, an F.B.I. special agent in Chicago, contacted Sibel and asked her to review some wiretaps. Some were several years old, others more recent; all had been generated by a counter-intelligence that had its start in 1997. “It began in D.C.,” says an F.B.I. counter-intelligence official who is familiar with the case file. But “it became apparent that Chicago was actually the center of what was going on.”

These disclosures about Edmonds’ targets help to clarify her past statements to the press.
For example, when asked in a January 2005 interview if she had any information that would tie the targets of her FBI wiretaps to the September 11th attacks or Osama bin Laden’s organization, Edmonds replied, “Through certain activities with money laundering, and narcotics and illegal weapons procurement. Yes.” (audio)

More specifically, Edmonds wrote in a July 2004 article that she has “firsthand knowledge of ongoing intelligence received and processed by the FBI since 1997, which contained specific information implicating certain high level government and elected officials in criminal activities directly and indirectly related to terrorist money laundering, narcotics, and illegal arms sales.”
Yet Edmonds may not be the only well-known FBI Whistleblower with connections to this 9/11-related investigation in Chicago.
Beginning in the mid-1990s, FBI Special Agent Robert Wright was given orders to investigate several Chicago-based businessmen with ties to Turkey – and Osama bin Laden.
Special Agent Wright shared details of his investigation with Brian Ross of ABC’s Primetime Live in 2002:

ROSS: Their story begins in the mid-1990s. With growing terrorism in the Middle East, the two agents were assigned to track a connection to Chicago, a suspected terrorist cell that would later lead them to an Osama Bin Laden connection.

WRIGHT: We had a cell in Chicago, right. And that was, that was the premise of how we got the investigation going.

ROSS: But Wright says he soon discovered that all the FBI Intelligence Division wanted him to do was to follow suspected terrorists around town and file reports, but make no arrests.

WRIGHT: The supervisor who was there from headquarters was right straight across from me and started yelling at me, “You will not open criminal investigations. I forbid any of you. You will not open criminal investigations against any of these intelligence subjects.”

ROSS: You’re on the Terrorism Task Force and you were told you will not open criminal cases?

WRIGHT: Yes.

ROSS: In 1998, Al-Qaeda terrorists bombed two American Embassies in Africa, killing more than 200 people. The agents say some of the money for the attack led back to the people they had been tracking in Chicago, and to a powerful Saudi Arabian businessman, this man, Yassin Kadi, who had extensive business and financial ties in Chicago. Yet, even after the bombings, the agents say headquarters ordered no arrests.

WRIGHT: Two months after the embassies are hit in Africa, they want to shut down the criminal investigation. They wanted to kill it.

ROSS: The move outraged the Federal Prosecutor in Chicago, who says Agents Wright and Vincent were helping him build a strong criminal case against Kadi and others.

MARK FLESSNER, FORMER FEDERAL PROSECUTOR: There were powers bigger than I was in the Justice Department and within the FBI that simply were not going to let it happen. And it didn’t happen.
Wright’s investigation appeared to have had little effect on Chicago businessman Yassin Kadi. The Boston Globe reported in 2002, “Qadi was so well respected that he escorted former president Jimmy Carter around a Saudi women’s college in 2000.”
Though a presidential escort, Kadi’s al-Qaeda ties are so widespread, agents working on his investigation once pondered whether he may have been Osama bin Laden. During a June 2003 conference at the National Press Club, Special Agent Wright declared:
On June 9, 1998… I became the only FBI agent before 9/11 to utilize the civil forfeiture laws of the United States to seize $1.4 million in international terrorism assets from a Middle Eastern terrorist group. The original source of these seized funds was Yassin Kadi, a Saudi businessman. During 1998, an assistant United States attorney and I discussed the possibility that Mr. Kadi might actually be Osama bin Laden, or at least a close associate of bin Laden’s. …

However, my repeated attempts requesting FBI’s international terrorism unit to investigate Kadi’s financing of international terrorism was ignored. …

Four years later, only three weeks after the September 11 attacks, Mr. Kadi was designated by the United States government as the financier of Osama bin Laden.
Kadi, now 48, acted as ‘the financier of Osama bin Laden’ not only in the Chicago-area, but in Turkey as well. Two months after 9/11, The Turkish Daily News published an article detailing Kadi’s investments entitled “Osama bin Laden’s ‘Cashier’ in Turkey”. The Turkish Daily added:
Kadi, who was living in Istanbul, fled from Turkey following the Sept.11 attack. Kadi is a partner in two Turkey-based companies, the Karavan DisTicaret, a foreign trade company, and Ella Film-Produksiyon, a movie company. He once owned a 90 percent stake in Karavan and 30 percent in Ella but more recently these stakes have changed due to capital expansion.
In March 2005, Turkish authorities concluded an investigation into Yassin Kadi’s suspected links with al-Qaeda. The Arab News described the probe’s findings:
Turkey’s chief public prosecutor has formally ruled that there is no evidence whatsoever to suggest that Saudi businessman and philanthropist Yassin Abdullah Al-Qadi has had contact with or has assisted the Al-Qaeda terrorist organization. …

The probe concluded that, far from being a member or supporter of Al-Qaeda, Al-Qadi was above board and his actions were at all times wholly legitimate.
Turkey’s Prime Minister, Recep Tayyip Erdogan, took no issue with his chief prosecutor’s questionable ruling. Though few familiar with Turkish politics would be surprised at Prime Minister Erdogan’s position.
In November of 2001, The Turkish Daily News published an article with the headline ‘Tayyip – bin Laden Relationship’ referring to Prime Minister Recep Tayyip Erdogan. The article provided translation of a Turkish language report one of the country’s largest newspapers which stated, “A Cumhuriyet headline said, referring to Justice and Development Party (AKP) leader Recep Tayyip Erdogan: “… Al Kadi’s business partner Faruk Sarac is a close friend of the Erdogan family.”
Though the Turkish Prime Minister is a close family friend of a business partner of bin Laden’s financier, this may be nothing more than a coincidence.
However, another report seems to cast doubt on the coincidence theory. The Turkish Daily News reported in October 2001:
Hurriyet said: “Cuneyd Zapsu is the partner in Turkey of Saudi businessman Yasin al-Qadi whose assets in the United States have been frozen because he has links with terrorism. Zapsu, one of the founders of the AKP, is Recep Tayyip Erdogan’s closest friend.”
Some Turks consider Zapsu to be their own version of Karl Rove. Earlier this year Prime Minister Erdogan sued a news contributor because of a political cartoon depicting Zapsu perched on Erdogan’s back. And in late 2004 The Economist reported:
Secular Turks… fear that Mr Erdogan might use his muscle to expand the role of religion in public life. The real worry should be that more power could encourage his authoritarian streak. Even today only a handful of his advisers, among them Cuneyd Zapsu, a wealthy businessman, and Omer Celik, his youthful speech-writer, dare to disagree openly with Mr Erdogan.
The terrorist tendencies are not confined solely to Erdogan’s closest friends and advisors. The Prime Minister himself has been involved in extremist behavior.
According to The Turkish Daily News, “A Cumhuriyet headline said, referring to the Istanbul Municipality during Erdogan’s time as mayor, “The headquarters of religious reactionaryism [sic].”
While Mayor of Istanbul in the 1990s, Erdogan was jailed for four months by Turkey’s secular military after reading an Islamic poem containing the phrase, “Mosques are our bayonets, the domes our helmets and the believers our soldiers.”
Erdogan imprisonment began in 1998, after a military coup forced his political party from power. Less than four years later, Erdogan’s party resumed power and the national hero soon became Turkey’s Prime Minister.
The Prime Minister’s life story reads like a movie script: a man of destiny and vision, who can overcome any obstacle his path. Erdogan is surrounded by leaders who have been by his side from early on in his political career, including his Foreign Minister Abdullah Gul and Parliamentary Speaker Bulent Arinc. An April 1998 report in The Turkish Daily News stated:
Cumhuriyet reported that the prison sentence Istanbul Mayor Recep Tayyip Erdogan has been given has come as a relief to the older generation. … Meanwhile, Abdullah Gul and Bulent Arinc are expected to come to the foreground as the younger generation’s potential candidates.
Another 1998 Turkish news article reported:
Commenting on the prison sentence given to Istanbul Mayor Erdogan, Gul said… “This incident will add strength to our cause -- to Erdogan’s own cause and to our party.” …

Arinc said that they had not expected Erdogan to receive a sentence of this kind… “We have joined our fates with our friend, Tayyip Erdogan.”
Erdogan, Gul and Arinc would soon become the three most powerful men in Turkey. Such power combined with the Erdogan administration’s various ties to Osama bin Laden should cause alarm among American officials engaged in the War on Terror.
Yet even post-September 11, 2001, the result has been the opposite. During a 2002 visit with the Prime Minister in Turkey, Dennis Hastert stated:
It was a very good meeting that we had with the new Prime Minister. … We are committed as our country, the United States, to work with Turkey, to carry on. We see Turkey as a very stable country, as a matter of fact the model for stability and moderation and democracy.
Despite the Turkish government’s refusal to grant coalition forces access to key military bases during the 2003 invasion of Iraq, Speaker Hastert never wavered in his support of Turkey. According to Turkish Speaker Arinc, Hastert declared, “We respect your parliament’s decision. Our Congress does the same thing from time to time. It is nothing to be offended by.”
In late 2004 Hastert made another trip to Turkey, as The Washington Post reports:
Folks in Europe are still talking about that splendid, 10-day, pre-Christmas tour of Europe led by House Speaker Dennis Hastert (R-Ill.) to attend the 60th anniversary ceremonies of the Battle of the Bulge. The group stopped to… visit more troops at Incirlik air base in Turkey…

Support personnel... [were] amazed the plane got off the ground in Turkey -- what with all the fine rugs and pashminas -- not to mention some Turkish-made shotguns Hastert and Dingell bought.
With such a display of hospitality, it is not surprising that Speaker Hastert invited his Turkish friends for a visit in May 2005. The Anatolia News Agency reported on the trip:
Turkish Parliament Speaker Bulent Arinc has indicated today that his visit to the US Congress will be the first ever one by a Turkish parliament Speaker…

Arinc will be in Washington DC upon an invitation from US House of Representatives Speaker Dennis Hastert.
A Turkish government website added:
Parliament Speaker Bülent Arınç visited Washington between May 24-27 as the guest of Dennis Hastert, Speaker of the US House of Representatives. Arınç also attended a reception hosted in his honor by Hastert. …

Arınç, who completed his meetings in Washington D.C. arrived in Chicago on May 27. …

Arınç, who got information from Turkish Consul General Naci Koru about the work of the Turkish Consulate General in Chicago on Saturday… met Turkish community in Chicago on May 29.
The previous passage would have seemed relatively innocuous, if not for the recent Vanity Fair article which included passages such as:
“It began in D.C.,” says an F.B.I. counter-intelligence official who is familiar with the case file. But “it became apparent that Chicago was actually the center of what was going on.” …

The FBI’s investigations into a senior official at the Turkish Consulate is said to have claimed in one recording that the price for Hastert to withdraw the resolution would have been at least $500,000. …

In all, says a source who was present, she [Edmonds] managed to listen to more than 40 of the Chicago recordings supplied by Robertz. Many involved an F.B.I. target at the city’s large Turkish Consulate… and the Assembly of Turkish American Associations.
It should come as little surprise that while in the U.S., Arinc visited the ATAA, according to the Anatolia News Agency:
Turkish Parliament Speaker Bulent Arinc, who is currently in the United States upon formal invitation of the U.S. House of Representatives Speaker Dennis Hastert, met representatives of the Jewish community and of the Assembly of the Turkish-American Associations (ATAA) on Wednesday.
Though even without the recent allegations by Sibel Edmonds, the following report from The Turkish Daily News regarding Prime Minister Erdogan’s 2004 trip stateside to meet President Bush may have raised an eyebrow:
Prime Minister Recep Tayyip Erdogan… first arrived at the Peninsula Hotel in Chicago. …

After the concert, Chicago Municipal Mayor Richard M. Daley held a dinner for Erdogan.
Welcome to America.

The Rest @Information Clearinghouse

Dahabshiil - Global Hawala from Somalia

September 4th 2003I

nterview With Abdirashid Duale, CEO of Dahab Shiil Money Transfer CompanyINTERVIEW – September 4, 2003 (IRIN) - Dahab Shiil Group is the largest money transfer company in Somalia, with over 1,000 employees. After 11 September 2001, Somali money transfer companies came under international scrutiny and the biggest company Barakat was shut down after the US government accused it of links with terror groups - a charge vehemently denied by the company. Here Abdirashid M Duale, the CEO of Dahab Shiil, tells IRIN of some of the challenges facing the remittance business and his company in particular.

There have been accusations that Somali remittance companies are not transparent in their operations. How transparent is Dahab Shiil?

The whole process of Dahab Shiil money transfer and remittance is fully transparent. Every transaction is meticulously recorded at the point of collection as well as payment.

• Every sender is given a receipt and every recipient signs a payee-voucher.
• So there is a paper as well as an electronic trail for each transfer.

Our records are open to any concerned authority that wishes to peruse. We not only bear our allegiance to our clients but also obey the laws of the countries that we operate in.

We have clear policies and modes of operation that are free of anomalies.

All transactions go to our head office for checking, processing and authorization.

Dahab Shiil works within its communities, it knows its clients, and its agent knows the sender and the recipient.

How wide is your reach in the Somali regions and in the Diaspora? For example can anyone send money to any place in Somalia, no matter how small?

Dahab Shiil has a large worldwide network. It has a representation of approximately 400 agents and branches in 34 countries around the world. It is represented in practically every country where there is a significant Somali community.

About the amount of money sent, yes, anyone can send whatever amount he or she wishes to any part of the Horn of Africa and also receive it through Dahab Shiil.

How many clients do you serve?

Well, when you speak of a client, the thought may be about the person sending the money. We at Dahab Shiil hold both the sender and the receiver as part of our network of clients. About the number of our clients, well at least every Somali in the Diaspora has engaged our services and the same can be said of the Somalis living in the Horn and East of Africa.

How much money do you handle in an average year and what is the average transfer?

• Over 90 percent of the transactions still consist of small amounts of less than $200 sent mainly from Europe and North America to support dependants or to help relatives and friends out of difficulties.
• These small amounts of transfers sent through us when added together amount to millions of dollars a year.
• However, a significant number of transactions relate to investments, commerce and social development projects initiated in the region of the Horn of Africa.
• For the Somali business sector, Dahab Shiil is their main gateway to the rest of the world.
• Barakaat was known for providing people with small loans to start businesses and served as a place to deposit money safely for a short term.

Do you provide such services?

Dahab Shiil acts as a financial institution for a wide spectrum of the Somali society, whether individuals, enterprises or international organisations and provides a range of services to its clients, including small loans.

It also facilitates international payments for imports. As people trust Dahab Shiil with their money, it serves as a conduit for investment funds, and hence plays a major role in the development of the country.

Dahab Shiil works with United Nations agencies as well as other international organisations in the region, facilitating their development and humanitarian projects.

Given the fact that money transfer companies, likes yours, are under great deal of pressure since September 11, do you have any plans to set up a bank in the future?

We are already existing as a bank in Southern Somalia where we are offering all the services of an ordinary bank and we are currently negotiating with the authorities in Somaliland towards achieving the same. Our vision is to become the first fully-fledged Somali Commercial Bank that works in partnership with foreign banks.

Dahab Shiil recently acquired a licensed foreign exchange in Dubai and Djibouti, which will make it possible for Dahab Shiil to access international banking services including the use of the standard swift code.

What has been your greatest challenge since September 11?

The events of September 11 have had an enormous impact on the financial services sector. These difficulties are not unique to Somali remittance companies but have affected all money transfer businesses throughout the world. Before this date there was little regulation governing remittance, and neither law enforcement agents nor legislators paid much attention to it.

After September 11, it suddenly caught international attention and became the focus of the media and governments.

• Rules and regulations were rushed through houses of parliament and government departments.
• In a very short time we found ourselves faced with a host of guidelines and laws to follow and comply with.
• In response we embarked on a campaign to apply for and register our operations with concerned authorities in all the countries where we are represented.
• Secondly, we trained staff on rules and procedures
• Thirdly we published guidelines for our agents on how to detect suspicious transactions and report them.
• In addition, Dahab Shiil will soon introduce propriety software that will make it possible for all its agents to provide near real time transfers of funds and make reporting requirements mandatory.
• The new software program will incorporate a "lookout list" published by international authorities.
• Some of the challenges we face can only be addressed either by a recognised Somali authority or international agencies concerned about the welfare of the Somali people.

The European Union and United Nations Development Programme have made great efforts in the last two years to study and understand the issues facing Somali remittances. But the sector has still some way to go to fully realise its potential, and needs technical and political support from the international community.

How does Somali society benefit from your operation?

The Somali money transfer sector has expanded and has come a long way in a relatively short time. It enabled the Somali community to survive on its own and today it is a lifeline service on which the livelihood of millions of Somalis depends. The importance of this service cannot be over-estimated. Remittances from the Diaspora save lives daily. One can say without much argument, that without remittances coming from abroad many people would not have survived the prevailing poverty conditions and the huge unemployment.

Without it the figures for asylum seekers migrating to Europe and North America would have steeply risen as the poverty-stricken community, with no meaningful sources of livelihood, migrated for "better lives" abroad.

Investment and reconstruction would have been much more difficult. Remittances also play an instrumental role in the peace-building that has taken place in many Somali communities and the international community would have been asked to provide much more financial assistance than it currently provides.

The Rest @ Somaliland Times