3.It is peculiar to note the posture of most of the Shari’aa finance
scholars, who ignore what is believed to be the basic revolutionary
aspect of the RF finance system: thecommodity indexation rule,
which neutralizes the effects offiatmoney fluctuations, and the
mark-to-market rule, by which each of the items to be financed is
marked (compared) to the market to identify any market bubbles
and help investors make prudent investment decisions. We believe
in prudently evaluating the potential investment in terms ofreturn
on capitalinvested, by pricing, for example, cars, homes, or equip-
ment based on the actual lease rate they would command in the
open market system. It is believed that these rules are the most im-
portant, and add fundamental unique aspects to the RF financing
approach. There is no mention, for example, of paper (fiat) money
and how it may lead to unfair and deceptive aspects of a transaction.In conclusion, it is believed that in a fair and viable RF banking regime,
all the banking regulations that were discussed in Chapter 7 should in fact
be part of Shari’aa requirements. It is the real intent, and not merely the
words in a convoluted contract, that in fact makes the RF banking and fi-
nance system unique and beneficial. Many of the Shari’aa-compliant con-
tracts are in fact designed by force-fitting the conventional riba-based
contract into language that ‘‘complies’’ with Shari’aa in form, but that in
most cases does not satisfy the realspirit and substance of why Shari’aa
prohibited riba.
We want to share with the reader a personal experience that we hope
will shed more light on the unfortunate practice of some of the ‘‘scholars’’
who have in fact risen to positions of fame despite very little being known
about their education, training, research, scholastics, and/or any proven
track record of documented, debated, and critically reviewed research.^15
At LARIBA, we once decided to engage a well-educated economist who
had completed a Ph.D. in economics in the United States, had authored a
number of books on ‘‘Islamic’’ economics, presented himself as a scholar in
Shari’aa, and acted as an advisor to some of the most prominent law firms
active in ‘‘Islamic’’ finance legal services. We wanted this economist to eval-
uate the LARIBA Shari’aa-based RF model as a foundation and develop a
set of documents that he would feel satisfied what he believed to be the Law
(Shari’aa), in his opinion. We gave him the fruits of our 27 years of research,
supported with references and research papers to read. He came back with a
big smile on his face, saying, and I quote, ‘‘This is really unique and is differ-
ent. I think you have something that will be very useful.’’ We gave him our
instructions, which consisted of making sure that the research we docu-
mented was included and articulated in his efforts and ensuring that we had
252 THE ART OF ISLAMIC BANKING AND FINANCE