More commentary on TID's wakala

The Investment Dar's defense in a lawsuit filed by Blom Bank over a wakala agreement is receiving significant attention throughout the industry. The contract, in which TID acted as the investment agent for Blom Bank and was responsible for returning principal plus an agreed profit margin if the investments were profitable, was signed off by its Shari'ah board three years ago. In court case, TID argued that the contract was not Shari'ah-compliant and therefore is void. The court sided with TID and ordered that TID repay only the principal. This has attracted attention to the impact the ruling could have on Islamic finance as a whole by increasing Shari'ah risk. One unnamed lawwyer suggested that TID "is clearly in financial difficulties and clutching at straws to get out of paying but [this] may cause concern for conventional institutions considering entering into a sharia transaction."

Other News

• Reuters sums up a recent Islamic finance conference in Jordan.
  
• Belgium is marketing itself to Brunei (in addition to countries in the GCC) as a destination for Islamic venture capital funds.
  
• A Malaysian company Binariang GSM has partially redeemed $1.1 billion of its senior sukuk.
  
• The recent debt exchange by Gulf Finance House led Standard & Poor's to raise the rating from selective default to CCC- with outlook negative.
  
• Bullion Management Group, a Canadian company offering two bullion funds, received Shari'ah approval from the Islamic Finance Advisory Board.
  
• France is still expected to make changes to its legal and regulatory framework to accommodate Islamic finance.
  
• The establishment of an Islamic finance company in Kerala, India is still uncertain because of the involvement of the government and the limits of government involvement with a religiously-based financial institution. It may be changed to be an 'interest-free', rather than Islamic institution.
  
• New tax changes that would implement a goods and services tax in Malaysia will be done so that it has an equal impact on conventional and Islamic financial services.
  
• Business Week provides a list of the upcoming sukuk issues.