Understanding Islamic Finance - Doha Academy of Tertiary Studies

64 Understanding Islamic Financeundertaking any liability or doing work for it, at the cost of other bondholders. Therefore,conventional prize-carrying schemes are repugnant to the tenets of the Sharī´ah due to theinvolvement of both Riba and Maisir.Banks running such schemes normally do not give any return to the participants of thescheme. Some others give a very meagre return to general participants of the scheme andgive the difference between the meagre rate given to the majority of the participants andhuge prizes to a few out of hundreds of thousands of participants. This causes loss to themajority to give undue advantage to some of the participants of the schemes. Moreover, theattraction in these schemes is to avail oneself of a chance at a prize and become a millionaireovernight. It is not only un-Islamic but also against the common norms of morality andsound economic principles. Such schemes divert the flow of scarce resources from realsector economic activities to games of chance and speculation.3.3 BUSINESS ETHICS AND NORMSIn addition to the major prohibitions, including Riba, Gharar and gambling, the IslamicSharī´ah has enunciated a set of principles that provide a basic framework for the conductof economic activities in general, and financial and commercial transactions in particular.The Holy Qur’ān and the Sunnah refer to a number of norms and principles which governthe rights and obligations of parties to the contracts. Principles enunciating justice, mutualhelp, free consent and honesty on the part of the parties to a contract, avoiding fraud,misrepresentation and misstatement of facts and negation of injustice or exploitation providegrounds for valid contracts. 42These norms are related to the accountability of human beings before Allah (SWT) andtherefore have different implications from those of the norms of mainstream business ethics.Islam teaches belief in the Hereafter, which requires that man should not usurp anyone’srights. It is a principle of Sharī´ah that while Allah (SWT) may pardon the faults committedagainst His rights (neglect of worship, for example), he does not pardon the harm done bya man to fellow beings or even to other creatures. So, giving people their due right is thecardinal principle of the Islamic system of ethics. Some encouragements like benevolence,purification of income, proper transparency and disclosures, documentation of transactionsleading to precision about the rights and liabilities of the parties and comprehensive ethicsrequiring care for others are also part of the Islamic framework of business norms. Below,we briefly give some important norms.3.3.1 Justice and Fair DealingThe foremost principle governing all economic activities is justice, which means fair dealingwith all and keeping a balance. Justice keeps the sky and the earth in their right placesand is the cementing force between various segments in a society. The Holy Qur’ān says:“And let not the enmity and hatred of others make you avoid justice. Be just; that isnearest to piety ” (5: 8). Stressing this point, the Qur’ān further says: “You who believestand steadfast before Allah as witness for (truth and) fair play” (4: 135). This makes thepoint clear that whoever believes in God has to be just with everyone – even with enemies.42 For details, see Hasanuz Zaman, 2003.