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and he heard me deliver a Friday sermon (jum’aa khutbah) at the masjid.
We became close friends, and I shared with him my dream of starting Is-
lamic banking services for the community in America. He was another gift
from God, because he encouraged me to proceed. He was also instrumental
in introducing me to his contacts: significant lawyers, bankers, and religious
scholars who specialized in the field of Islamic finance. He also wanted to
start a stock portfolio under my management. He further asked our team to
develop parameters that would qualify a company stock on world stock
markets to meet Islamic finance investment criteria. In cooperation with a
few dedicated and highly qualified Islamic bankers and scholars, we devel-
oped these parameters, started the portfolio, and diversified it among differ-
ent portfolio managers around the world. We reviewed the different screens
used to identify Shari’aa-compliant stocks and the performance of this $250
million portfolio on a quarterly basis. To my knowledge, that was the first
time in history an Islamic stock portfolio was developed and brought to life.
It would be years before the Dow Jones Islamic Index was developed, made
public, and marketed throughout the world.
We started American Finance House LARIBA in 1987. In the beginning
we were not sure if our efforts would be accepted or if they would be mis-
understood. We used the name American Finance House:Americanto ac-
knowledge that our company is American, andFinance Houseto imply its
nature as an Islamic treasury; in the early history of Islam, the Treasury was
called the House of Assets (Bayt ul Maal). We also added the word LARIBA.
In the beginning, we explained to those who did not know about riba-free
financing that LARIBA stood for Los Angeles Reliable Investment Bankers
Associates. Those who knew about riba-free Islamic financing also under-
stood that in the language of the Qur’aan (Arabic),lameansnoandriba
means the act of renting money at a price called interest rate (the Old Testa-
ment uses the sister wordribitfor the same concept). We made it very clear
that we were not out to change, dismantle, or demolish the conventional
banking and finance system in the United States. We simply offered a hum-
ble alternative that would serve those ‘‘puritan’’ Muslim Americans who
wanted to live according to their religious beliefs while obeying the laws of
the United States. We articulated this at the outset when we made it clear
that changing U.S. laws was not one of our objectives.
As we developed LARIBA, we wanted to make sure that it would be a
grassroots organization for our community. That meant that we should rely
on our own resources, not go hat-in-hand soliciting capital from the oil-rich
communities in the Gulf. We believed that if we were really serious, we
could entice many of our community members, starting with each one of us
putting our own money where our mouths were. We also wanted to train
members from our community on Islamic banking and finance. We madexx PREFACE