By Sadia Karim.
The world is full of chaos. We are struggling hard to make sense of it all. We are struggling to find hope in a world full of constant events that push us far from it. ‘We’ here is ‘humanity’ or the ‘human race’.
Economists are struggling with their questions to make sense of the situation world economies are in and searching to find a way out.
Employees in financial institutions, who have reached deep into their souls, are torn between ethics and financial security.
Islamic Financial institutions are proudly announcing their presence to solve part of the problems. Muslims are in doubt and criticizing the way they operate.
Indeed these are generalizations of scenarios and don’t represent all of humanity, all of economists, all of employees, or all of Muslims. But, all of the above do exist.
The question is, how do these solve any problem at all? What are we doing to bring solutions to the table?
Criticism is easy. Trying to understand things with clarity followed by solving a problem is not.
Isn’t the later a dignified way to address issues around us to make tomorrow better than today?
2014 is over, almost. A new year dawns upon us. What will it be like? What are our resolutions?
What will be our approach in regards to Islamic Finance?
Will we keep criticizing without exhorting efforts to understand where the root problems lie?
Will we keep living in denial and stop ‘thinking’ with the illusion that somehow that may solve the problems?
Will we dream about jobs and look at goals but in a way that may be far from reality?
Or shall we stop for a moment, reflect, and take a new direction to understand, diagnose, and find solutions for ourselves and to the world?
We have choices. A good number of those. Our destiny is shaped by which ones we make.
The primary purpose of this blog is to share latest information, opinions, exchange knowledge and expertise on the field of Islamic Finance from different perspectives. The secondary purpose is to share opinions and key development of Islamic Banking and Islamic insurance in Tanzania.
Wednesday, December 31, 2014
Saturday, December 13, 2014
SCANDALS OF VATICAN BANK AND MKOMBOZI COMMERCIAL BANK: COMMONALITY OR COINCIDENCE?
INTRODUCTION.
Recent ESCROW Scandal report by the PAC accused two banks i.e. Mkombozi Commercial Bank partly owned by the Catholic Church and Stanbic Bank for money laundering and facilitating fraud which lead to the disappearance of TZS 306 Billion. The report surprised and left many wondering whether the government will take decisive measures as suggested by the final PAC recommendations to the government to declare the two bank 'institution of money laundering concern.'
Those familiar with Mkombozi Commercial bank (MCB)accuse the only catholic church bank in Tanzania of two things; first,
facilitating 'filthy business enterprise' of Mr. James Rugemalira, one of the accused culprit of 'stolen' funds from the TEGETA ESCROW account maintained at the Bank of Tanzania. Second; facilitating the hand out of funds from the TEGETA ESCROW account to a number of people including Bishop Methodius Kilaini, who was given TZS 80 million for unknown reasons,later to be claimed that was a donation to the Church from James Rugemalira.
Notwithstanding, Financial Times Magazine concluded it is 11 months investigation which revealed the mismanagement of the Vatican Bank, owned by Catholic church in the Vatican City which has an asset size of Euro 5 billion. The FT magazine reported that in June 2013 the police arrested silver haired priest Monsignor Nunzio Scarano in Rome. FT Magazine reports "The cleric, nicknamed Monsignor Cinquecento after the €500 bills he habitually carried around with him, was charged with fraud and corruption, together with a former secret service agent and a financial broker. All three were suspected of attempting to smuggle €20m by private plane across the border from Switzerland.
Prosecutors alleged that the priest, a former banker, was using the Institute for Religious Works – the formal name for the Vatican’s bank – to move money for businessmen based in the Naples region, widely regarded in Italy as a haven of organized crime. Worse still, Scarano (who, together with the other men, has denied any wrongdoing) had until only a month earlier been head of the accounting department at the Administration of the Patrimony of the Apostolic See, the treasury of the Vatican."
What has faced the two bank owned by Catholic Church? Is MCB alleged involvement a repetition of what happened within Vatican Bank? Is there commonality or coincidence in regards to revealed course of events?
VATICAN BANK SCANDAL.
Much has been written and said in regards to the scandal faced by Vatican Bank. FT magazine published a long article named "The scandal at the Vatican bank" by Rachel Sanderson, where a number of observations pointed out that the bank "plagued for years by several scandals that include charges of corruption, money laundering and mismanagement." Others referred it as 'a heaven for
money launderer and tax dodgers'
According to Mr. David Willey in his article published by BBC under the title 'The Vatican Bank is rocked by scandal again' in June 2013, Vatican bank has been accused of money laundering and lack of due diligence in allowing non-religious, and even crony, businessmen to hold accounts in what amounts to an international offshore tax haven. The author reports that 'During the 1980s, the archbishop (Paul Marcinkus,a giant of priest)got involved in some shady dealings, first with a Mafia-linked Sicilian banker called Michele Sindona, and then with an Italian financier called Roberto Calvi, president of the Banco Ambrosiano, which eventually collapsed with huge debts involving losses of at least $250m (£165m) to the IOR, one of the Banco's shareholders.'
Rachel Sanderson states that 'There were surprisingly few checks and balances on cash flow – and far less documentation than expected. The staff was small – 112 people, largely Italian until this year, with cardinals acting as supervisors. Many of the staff seemed unversed in customer due diligence, according to some. “They would not answer basic [Know Your Client] requests,” a senior manager at an international bank says."
These scandals led major reforms of the bank leadership to be undertaken by new Pope. This year,Pope Francis, announced the appointment of anew head for the bank, French financier Jean-Baptiste de Franssu to undertake two year programme 'to cede the bank’s asset-management business to a newly formed Vatican department, leaving the institution handling only payment services for priests and religious organizations.''How far the Vatican reforms go depends on the man at the top. Named after a saint who was plain-spoken and happy with simple pursuits, Pope Francis’s approach so far has inspired the bank investigators to work some long and late hours. For them, his early reflections on what banking should be – in this bejeweled city of saints and sinners, or anywhere in the world – is worthy of some meditation."
Source: various articles on the internet.
Recent ESCROW Scandal report by the PAC accused two banks i.e. Mkombozi Commercial Bank partly owned by the Catholic Church and Stanbic Bank for money laundering and facilitating fraud which lead to the disappearance of TZS 306 Billion. The report surprised and left many wondering whether the government will take decisive measures as suggested by the final PAC recommendations to the government to declare the two bank 'institution of money laundering concern.'
Those familiar with Mkombozi Commercial bank (MCB)accuse the only catholic church bank in Tanzania of two things; first,
facilitating 'filthy business enterprise' of Mr. James Rugemalira, one of the accused culprit of 'stolen' funds from the TEGETA ESCROW account maintained at the Bank of Tanzania. Second; facilitating the hand out of funds from the TEGETA ESCROW account to a number of people including Bishop Methodius Kilaini, who was given TZS 80 million for unknown reasons,later to be claimed that was a donation to the Church from James Rugemalira.
Notwithstanding, Financial Times Magazine concluded it is 11 months investigation which revealed the mismanagement of the Vatican Bank, owned by Catholic church in the Vatican City which has an asset size of Euro 5 billion. The FT magazine reported that in June 2013 the police arrested silver haired priest Monsignor Nunzio Scarano in Rome. FT Magazine reports "The cleric, nicknamed Monsignor Cinquecento after the €500 bills he habitually carried around with him, was charged with fraud and corruption, together with a former secret service agent and a financial broker. All three were suspected of attempting to smuggle €20m by private plane across the border from Switzerland.
Prosecutors alleged that the priest, a former banker, was using the Institute for Religious Works – the formal name for the Vatican’s bank – to move money for businessmen based in the Naples region, widely regarded in Italy as a haven of organized crime. Worse still, Scarano (who, together with the other men, has denied any wrongdoing) had until only a month earlier been head of the accounting department at the Administration of the Patrimony of the Apostolic See, the treasury of the Vatican."
What has faced the two bank owned by Catholic Church? Is MCB alleged involvement a repetition of what happened within Vatican Bank? Is there commonality or coincidence in regards to revealed course of events?
VATICAN BANK SCANDAL.
Much has been written and said in regards to the scandal faced by Vatican Bank. FT magazine published a long article named "The scandal at the Vatican bank" by Rachel Sanderson, where a number of observations pointed out that the bank "plagued for years by several scandals that include charges of corruption, money laundering and mismanagement." Others referred it as 'a heaven for
money launderer and tax dodgers'
According to Mr. David Willey in his article published by BBC under the title 'The Vatican Bank is rocked by scandal again' in June 2013, Vatican bank has been accused of money laundering and lack of due diligence in allowing non-religious, and even crony, businessmen to hold accounts in what amounts to an international offshore tax haven. The author reports that 'During the 1980s, the archbishop (Paul Marcinkus,a giant of priest)got involved in some shady dealings, first with a Mafia-linked Sicilian banker called Michele Sindona, and then with an Italian financier called Roberto Calvi, president of the Banco Ambrosiano, which eventually collapsed with huge debts involving losses of at least $250m (£165m) to the IOR, one of the Banco's shareholders.'
Rachel Sanderson states that 'There were surprisingly few checks and balances on cash flow – and far less documentation than expected. The staff was small – 112 people, largely Italian until this year, with cardinals acting as supervisors. Many of the staff seemed unversed in customer due diligence, according to some. “They would not answer basic [Know Your Client] requests,” a senior manager at an international bank says."
These scandals led major reforms of the bank leadership to be undertaken by new Pope. This year,Pope Francis, announced the appointment of anew head for the bank, French financier Jean-Baptiste de Franssu to undertake two year programme 'to cede the bank’s asset-management business to a newly formed Vatican department, leaving the institution handling only payment services for priests and religious organizations.''How far the Vatican reforms go depends on the man at the top. Named after a saint who was plain-spoken and happy with simple pursuits, Pope Francis’s approach so far has inspired the bank investigators to work some long and late hours. For them, his early reflections on what banking should be – in this bejeweled city of saints and sinners, or anywhere in the world – is worthy of some meditation."
Source: various articles on the internet.
Tuesday, December 9, 2014
CAPITAL MARKET AUTHORITY OF KENYA STRATEGIZE ON ISLAMIC CAPITAL MARKET PRODUCTS.
Kenya ambitions to be East Africa's Islamic Finance hub has sparked various subsectors in the Kenyan financial markets to develop their respective initiatives to achieve that goal. One such subsector is Capital Market Authority (CAM), which come out today in the workshop organized by CAM in partnership with IRTI and Awal consulting at Tribe Hotel in Nairobi highlighting a priority objective of the Authority as " to accelerate the building of critical mass for development of a significant Islamic Capital Markets industry by broadening the range of available Shariah compliant products and services that in the medium term qualify Kenya for inclusion in the Islamic Finance Country Index as outlined in the Capital Markets Master Plan."
OBJECTIVES OF THE WORKSHOP.
The workshop aims to explore current institutional, policy and legal impediments to development of the subsector and practical recommendations for implementation. Few significant objectives of the strategic roundtable workshop are:
1. To provide a platform for sharing valuable experience, guidance and recommendation from developed market from international and local experts in setting the Islamic financial regulatory framework in the current Kenya's financial service industry.
2. To set strategic approaches, initiatives and plan to be taken by regulators and industry players in implementing such framework.
3. To identify development priorities in addressing market constraint faced by Kenya's Islamic financial service industry.
4. To suggest practical solutions to solve issues and constraints faced by the industry.
5. To identify key support areas needed by the industry in order to ensure sustainable growth of the industry.
KEY CAPITAL MARKET AUTHORITY INITIATIVES.
Kenya has been analyzing challenges facing Islamic Finance industry for some times. Key among the challenges are, lack of legal and regulatory framework, limited technical human capacity to serve the industry and Shariah authority. To ensure the country meets its strategic goal in regards to Islamic Finance, Mr. Joseph Mwenda mentions four strategic initiatives to be taken by CMA starting from 2015, these are:
1. Formulation of guidelines to facilitate issuance of Sukuk (Islamic Bonds) as well as Islamic collective investment schemes, put in place internal policies and manual to guide CMA in its activities in relation to Islamic Finance.
2. Undertake capacity building by training CMA officials as well as the other professionals important to enable the proper functioning of Islamic capital market products.
3. Formulate Shariah governance framework which shall lead to the establishment of national Shariah supervisory board as well as aligning the CMA players with with AAOIFI and IFSB standards.
4. Provide public education and awareness in order to remove misconceptions, foster understanding and sustain Islamic finance industry.
Above mentioned bold initiatives comes into light though Kenya has a Muslim population at only about 15 percent of 40 million. Despite of that, Kenya has great potential to remain the main market mover of Islamic financial market for East Africa region as it currently host two Islamic banks and more about eight Islamic banking windows. It is also a home of one full fledged Takaful and Re-takaful institution. With these market players on the stage, it is important to move with speed to develop Islamic capita market products to support the existing institutions but also provide Kenya with cash it needs for its development.
Further reading visit:
http://www.cma.or.ke/index.php?option=com_content&view=article&id=509:cma-hosts-islamic-finance-roundtable-2&catid=13:news-and-events&Itemid=230
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