AIG, Sharia and Uncle Sam

A federal judge in Michigan has declined to dismiss an ex-Marine’s lawsuit that insurance giant AIG is using tax dollars … Continued

A federal judge in Michigan has declined to dismiss an ex-Marine’s lawsuit that insurance giant AIG is using tax dollars to promote Islamic Sharia law and charities that may be funneling money to terrorist organizations.

Just when you thought the government’s massive bailout of AIG couldn’t get more complicated or controversial.

The facts of the case “raise a question of whether the government’s involvement with AIG has created the effect of promoting religion and sufficiently raise Plaintiff’s claim beyond the speculative level,” U.S. Dist. Judge Lawrence P. Zatkoff ruled.

The judge’s ruling, a surprise to many legal scholars who think the suit will never go to trial, adds a troubling religious dimension to an already troubling economic crisis. It also shines a spotlight on Sharia-compliant financing, a growing part of the $1 trillion Islamic banking industry.

Sharia, or Islamic law, encourages trade and investment, but bans interest and prohibits investments in certain areas such as gambling, alcohol, pornography, abortion, human cloning, conventional banks or insurers, and most forms of entertainment. Under Sharia, making money from money, such as charging interest, is usury and therefore not permitted. Western banks and investment companies have established Sharia-compliant accounts overseen by imams and Islamic scholars.

According to the lawsuit, filed by the conservative Christian Thomas More Law Center, at least a portion of AIG’s $40 billion federal bailout has been used to support Sharia-compliant financial products. The suit claims that violates the First Amendment’s establishment clause. “It is outrageous that AIG has been using taxpayer money to promote Islam and Shariah law, which potentially provides support for terrorist activities aimed at killing Americans,” Richard Thompson, President and Chief Counsel of the Thomas More Law Center, said in a statement.

The federal judge hasn’t ruled on the merits of the case, but he did acknowledge that “at least two of AIG’s subsidiary companies practice Sharia-compliant financing, one of which was unveiled after the influx of government cash.” He also noted “That after the government acquired a majority interest in AIG and contributed substantial funds to AIG for operational purposes, the government co-sponsored a forum entitled “Islamic Finance 101.”

Many legal experts doubt that such actions constitute a violation of church (or mosque) and state.

“The government no more cares about advancing Sharia through the AIG bailout than my local Ralphs supermarket cares about advancing kosher laws by selling products that are certified kosher,” UCLA law professor Eugene Volokh, who expects the case to be thrown out, wrote in his Volokh Conspiracy blog.

Robert Tuttle, constitutional law professor at George Washington University, told Fox News that he doubts the case will go to trial: “The question is whether the government has funded religion, not whether the religion is good or bad that the government has funded. Then the next question is whether the government is responsible for what AIG has done. I can’t imagine any court saying, under existing law, that the government will be responsible for what AIG does.”

Anti-Islam conspiracy theorists will have a field day with this one, regardless of what happens to the lawsuit. But the case does raise some interesting questions about the application of Sharia law in western democracies and economies.

Are companies that pursue religious clients endorsing that religion? Can and should every faith group have its own financial products? Can democracy accommodate any aspect of Sharia? Could capitalism survive without interest?

For now, I’ll go with On Faith panelist and Interfaith Alliance chief Welton Gaddy‘s bottom line on Sharia in the West: “If a conflict arises between American law and religious laws, the Constitution prevails.”

Written by

  • CCNL

    Is not the “mark-up” on a product a form of interest? And said “mark-ups” are returned to investors as dividends. So Islamics do not accept dividends??

  • walter-in-fallschurch

    “But the case does raise some interesting questions about the application of Sharia law in western democracies and economies.”huh? interesting? there is no way western democracies should even give sharia a second thought. those ancient religious rules have no place in secular western societies.

  • walter-in-fallschurch

    i LOVE how new posts appear at the bottom of this page. wish they were all that way.

  • blakegoud

    The idea that providing alternatives to financial products that involve religiously-created screens leads to a lawsuit about the separation of church and state strikes me as silly. Providing Shari’ah-compliant alternatives to products like insurance is not promoting a particular religion; it is simply reconstructing products in a way that attracts customers based on their ethical beliefs. The product at issue that AIG launched is takaful, Islamic insurance. In most ways it is identical to mutual insurance. Conventional insurance entails paying premiums to an insurance company with the contract specifying payment terms should a given event occur. For many Muslims, this is not halal (permissible) because it creates contractual uncertainty because it is conditioned upon an uncertain event. The alternative, takaful, merely modifies the structure so that the premiums are collected together into a pool invested according to a set of ethical guidelines by the takaful provider with the pool remaining owned by the participants. In case a specified event occurs,particpants are paid out of the common pool. The takaful provider retains the same role of setting premiums so that the expected payouts are covered by premiums and earns fees from managing the common pool. Nothing in how any Islamic finance product, takaful or other, works implies promotion of religion. The resistance against Islamic finance means that financial services are not fully being used by a group of Americans because of their ethical, faith-based beliefs. My blog is

  • halozcel1

    Many many times I wrote and I am writing once more.When the world was flat,when the Law(Jewish Religion)originated beliefs/cults founded by Son of Jewish Woman and Camel Driver,when the Pagans believed in 10000 years old Mother Goddess Cult,money was Golden and Silver CoinsPresent day,World is round(worse,it is revolving) and money is *Piece of Paper*,not Golden coin.Therefore,nobody can compare Piece of Paper with Golden Coin Mentality.Bank interest can not correlate with Sharia(Desert Rules).There was no Bank in the middle of desert in 7th century.

  • Garak

    Are American companies to shoot themselves in the foot by foregoing a very lucrative business just because the private contracts involved rest on Islamic law? Look at who’s behind the lawsuit–the same people who wanted to impose Catholic law on Terri Schiavo and the rest of America. People are free to choose any set of laws they wish to govern private contracts. AIG was free to join in this. Now that the gov’t owns AIG, it also owns these private contracts. Those who are running AIG have to know the business. Thus, Islamic Finance 101. Are the taxpayers to take a loss just to satisfy Islamophobes who seek to advance a far-right religious fanatic agenda? Not this one.Were the US banks that structured loans with Communist countries to comply with Marxist-Leninist law thus guilty of engaging in communism? Of course not.If we want to forbid banks from supporting terrorism, we’d ban them from doing business with Israel.

  • Farnaz1Mansouri1

    Hello Hallocel1, Magnificent Rostam,One day, maybe, people will believe you when you say the world isn’t flat. Anything is possible. :)Farnaz

  • asizk

    :”using tax dollars to promote Islamic Sharia law and charities that may be funneling money to terrorist organizations.”This is a most ignorant statement any one can say:Shariah is the anti-thesis of terrorism and violance. If Shariah is implemented anywhere,peace and proesperty will prevail.

  • Impeachbush99

    Woa!!! AIG is filled with more scumbags and more scummy than we even imagined! Our Government pouring Billions into a company sponsering terrorism, sounds familiar, right??? How can we keep fighting the “enemy” when we have to finance them…not uncommon AT ALL in American History….

  • samiles96

    I seriously doubt that this conservative Christian organization would be raising a finger in this situation: The government bails out an airline and they serve kosher meals. You would never hear this organization raising issues about that. It’s all about Islamaphobia. By raising the “possibility” (but not proof) of links to terrorism, this organization can get attention from the general public. Disgraceful.

  • spidermean2

    Thomas More is patron saint of lawyers in the ROMAN CATHOLIC CHURCH.This is NOT a conservative Christian law center but a conservative CATHOLIC one.CATHOLICISM IS NOT CHRISTIANITY.WHEN WILL DAVID WATERS UNDERSTAND THAT?DAvid, you are promoting stupidity and it’s a shame that you even call yourself a Christian.If Islamic Finance prohibits investments in certain areas such as gambling, alcohol, pornography, abortion, human cloning, and most forms of entertainment, evangelical Christianity is NOT opposed to that. Muslims who read this article should understand that David Waters DOES NOT represent the TRUE CHRISTIAN VOICE. He is a fake just like Satanism is all about. Satanism is fake godliness. And the Vatican is the Seat of Satan.

  • mightysparrow

    Blakegoud wrote: “…Providing Shari’ah-compliant alternatives to products like insurance is not promoting a particular religion….”

  • CCNL

    Paganplace,We appreciate your comments about Muslims and dividends but said comments would have more credence if you had an advanced degree in economics/business.

  • walkerbert

    Coffee can savings and loan, man. A .50 notepad, and a lock box will do wonders for your ‘portfolio’. Wasn’t 9/11 about the stock market, as much as it was anything else? What really goes on? Do we really want to know? Sounds like some sort of faith-based organized crime, to me.

  • coloradodog

    Hurray for Calsailor!A private chat room for CCNL and Canyon Shearer (oops – Spidermean)

  • acpress

    There is no consensus on the limits of usury and interest in shariah and there is no current system of arriving at shariah. Old shariah is required to be made current by governments legislative proces which has not happened much. Few Muslim countries ( Pakistan ) have the legislative process in place but have not used it to make the shariah. It is a misunderstanding even among Muslims, thanks to the unholy priests, that the 7th century shariah in all aspects is valid now. Usury is regulated by many non-Muslim governments including the US. We just placed restrictions on credit card interest. Dividends are permitted as an investment return. The idea is to avoid abuse and gambling. Quran does not use the word interest but the equal of usury as being prohibited. Americans having recently suffered from the financial collapse through abuses of the like of Madoffs do not have the credentials to reject alternative investment doctrines. How this alternate investment strategy became a tool of the terrorists is our stretch of imagination.

  • coloradodog

    “Christians:” poking at Muslims.”Christians:” poking at gays.”Christians:” poking at Pro-Choice”Christians:” poking little boys”Christians:” brandishing sharp sticks (or hard ones), as if this was the example Jesus taught them, crying when people poke back.

  • CCNL

    On the other hand, the basics of Christian morality have made the world a better place to live. It is very disturbing and very sad that some “Christians”, other religious and atheists fail at the basics of acceptable human conduct to include protecting life in all its stages. e.g. Thou shalt Not Commit Adultery and Thou Shall Not Covet Thy Neighbors Wife/Husband/Partner with the corollary of Thou Shalt Not Fornicate pertain not only to heterosexual couples but also homosexual couples. This probably is no concern to non-Christians or non-Jews but it should be a major concern to those religious types that believe in the teachings of the OT, NT, the Commandments and all of its corollaries. So we have a Christian God (if it exists) who supposedly created all of us to include homosexuals. Said God is therefore responsible for the defective gene/mind-set that causes homosexuality? One might conclude from this that the Christian God would therefore approve same-sex marriages since that is the only sin-free state where any type of couple-sex can be performed.

  • coloradodog

    Does anyone else find irony in AIPAC Jews at AIG “using tax dollars to promote Islamic Sharia law and charities that may be funneling money to terrorist organizations.”I guess money trumps religion every time.

  • coloradodog

    “If a conflict arises between American law and religious laws, the Constitution prevails.”(uh, er, unless or course the religious law is that of Sarah Palin evangelicals, O’Reilly Catholics or gay-hating Mormons)

  • CalSailor

    Spidey:The author of this article is NOT from the St. Thomas More group filing the lawsuit. If you have a (reasonable) argument against the legal group…go yell at them.To everyone:Why in the world SHOULDN’T AIG create Sharia compliant law to assist customers who need specific practices (for WHATEVER reason) in order to become customers. It is called MARKETING!!!!If AIG (even after its bailout, a private company) wants to market VA homeloans, they have to comply with VA Regs, and they discriminate…one has to be a Veteran or able to use the Vet’s entitlement in order to buy. Why shouldn’t they find a way to meet a growing potential customer base?If marketing is illegal if it involves Muslims, then it must be illegal when it means Passover and Easter displays in every store in the country. Christmas cards (no matter if they have Santa or the Nativity on them…they are still called “Christmas cards” except by a few.)would also be illegal. Let’s just call them “Holiday cards”. Thanks, but I’d rather call them Christmas cards…even if the individual chooses for whatever reason to buy one with a doggie in a red and white hat on the front.This is a huge mountain out of not very much. We’ve managed to accomodate all sorts of people, including all sorts of religious people (Jews, Christians “blue laws”, including Amish, etc., etc.) Accomodating Muslims and others for whom Western ways are different is going to be the way we accomodate the already existing, and positive diversity in our country.But the “oh horrors…it’s coming…it’s coming…the end of the world!!!!” people are going to find some way of panicing. For most US citizens in the US, we have more to worry about from the Patriot Act than that AIG is going to help Muslims buy houses via sharia complaint lending practices. My neighbor’s house is vacant. I’d be happy to have it sold under sharia compliant financing to a Muslim family that will become part of the fabric of my neighborhood, and give my kids more practice in understanding the Golden Rule. Or should the neighbors be able to veto their loan? How about my VA loan? Or my other neighbor’s Fannie Mae/Freddie Mac loans…’cause just maybe it’s a “subprime loan”…horror of horrors. To anyone who lives in my neighborhood…just keep the lawn mowed and don’t blast the stereo at 2 am and I’m happy.Pr chris

  • CalSailor

    I’m so glad Spidermean is the “true” pope…after all, the biggest claim of the papacy that drives most people crazy is the idea of infallibility. And Spidey has just done so on the issue of determining the religious fate of a billion or so Catholic Christians. Tell me, when did these messages first start arriving?Why don’t you save your venom for something real? If YOU don’t want to be a Catholic…that’s YOUR choice. It is not YOUR choice to determine a billion people are lying (cause they all think they are Christians). Learning to distinguish what’s in their realm of authority and what is not is part of growing up on the part of teens. Maybe you never learned it. You’re not going to convince anyone with your rants. You and CCNL ought to have a private dialogue. You two can keep each other going for several years, I’d think.Pr Chris

  • RubeFoster

    This article misses the constitutional point entirely. Which is astonishing because the point is simple: (i) under the First Amendment, the Government cannot promote religion, economically or otherwise; (ii) the Government controls AIG; and (iii) AIG promotes Islam via its shariah division which pays for the services of Muslim religious leaders.The Government’s intention – if government can be said to have a single intention – is entirely beside the point. Hence, Eugene Volkh’s comment that “The government no more cares about advancing Sharia through the AIG bailout than my local Ralphs supermarket cares about advancing kosher laws by selling products that are certified kosher” is irrelevant. Ralph’s supermarket is not owned by the government, and selling kosher products entails nothing more than selling products with a specific label desired by a certain consumer group, Orthodox Jews.In contrast, the government owns AIG, and shariah-compliant finance involves payments to imams and ayatollahs, religious leaders, not simply selling insurance products with a halal label.If the government owned a majority stake in Ralph’s supermarkets, and Ralph’s supermarkets paid rabbis to inspect its kitchens and certify its products as kosher, that would violate the First Amendment’s entanglement clause, too.

  • elfraed

    To avoid even the appearance of wrongdoing, AIG could divest itself of those accounts.