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Tags: shariah | finance | aig

Lawsuit: U.S. Controls Unconstitutional AIG 'Islamic Finance' Unit

By    |   Monday, 23 March 2009 07:35 PM EDT

A former U.S. Marine who fought in Afghanistan and Iraq charges that insurance giant AIG — already under fire for $165 million in bonus payments — is using his tax dollars to promote Islamic Shariah law and charities that may be funneling money to terrorist organizations like Hamas and Hezbollah, sources tell Newsmax.

The Michigan-based Thomas More Law Center has filed a lawsuit alleging that a Bahrain-based AIG subsidiary, AIG Takaful - Enaya, is promoting Islam at the expense of Christians and Jews.

Because the federal government owns about 80 percent of AIG, the center says Secretary Timothy Geithner and the Treasury Department are violating First Amendment protections against establishment of religion.

Some observers say the new controversy could make the bonus flap pale by comparison in significance.

“The bonuses just happen to be the outrage du jour,” trial counsel Robert J. Muise of the law center tells Newsmax. “But I know the more people are learning about this Shariah-compliant finance component, I think the outrage is steadily increasing in that area as well.”

Frank Gaffney, president of the Center for Security Policy, tells Newsmax: “Both of them involve activities that the American people are, or would be, horrified by, were they to discover a business that they own is engaged in.”

The Thomas More Law Center filed the lawsuit on behalf of Kevin J. Murray, a former U.S. Marine who, as a devout Catholic, objects to his tax dollars' going to promote fundamentalist Islamic laws. The lawsuit charges that AIG’s Shariah-compliant unit “engages in Shariah-based Islamic religious activities that are anti-Christian, anti-Jewish, and anti-American.”

Treasury Department attorneys have filed a motion asking the federal district court to dismiss the lawsuit on the grounds that the federal government does not control — and therefore is not responsible for — AIG operations.

That may prove a difficult argument to sustain, however. When the U.S. government paid more than $40 billion in November to save AIG, it took ownership of about 80 percent of the company. Public ownership of AIG was been cited by members of Congress to justify last week's bid for confiscatory taxation of $165 million in AIG bonuses.

The nonprofit legal center’s response to the motion says the government’s claim “cannot withstand even a modest inspection.”

Richard Thompson, president and chief counsel of the Thomas More Law Center, stated in a news release, “Although widespread public anger has rightfully focused on bonuses AIG paid to top executives using taxpayers’ money, that anger would be at an even higher pitch if the public knew that our tax dollars were being used by AIG to promote Islam and Shariah law, which provides support for terrorist activities aimed at killing Americans and destroying America.”

Shariah finance has been described as an alternative to capitalism, one based on the Koran rather than on civil government or common law. At times, Shariah law has been associated with draconian measures of justice carried out by tribal leaders in the Middle East.

One of AIG’s many subsidiaries, AIG Takaful - Enaya markets “Shariah-compliant” insurance policies and investments. The company offers many lines of insurance. For example, its Web site states it insures energy-related projects for up to $150 million, construction projects up to $75 million, financial risk up to $35 million, property up to $100 million, and insurance against acts of terrorism for up to $50 million.

As those numbers suggest, the potential for Shariah-compliant policies is huge, and growing. The market is expected to reach about $10 billion by 2010. AIG is one of several major companies delving into policies specifically designed to be compliant with Islamic law.

AIG certifies its Takaful policies comply with Shariah law. “Takaful” is an Islamic version of insurance coverage based on Islamic precepts. AIG is able to certify its products comply due to several factors:

Shariah Certification

AIG Takaful’s policies are reviewed and approved by a Shariah board of three Islamic experts.

The AIG Takaful Web site includes their endorsement: “We, the Supervisory Shariah Board of AIG Takaful Enaya confirm that we have perused and studied the insurance products, policies, and contracts of the above aforementioned company, and we hereby certify that all . . . are fully Shariah compliant and in line with Islamic … rulings of Takaful insurance.”

That endorsement is signed by the three scholars, one of whom is Dr. Muhammad Imran Usmani. Usmani’s presence on the board has been criticized because his father, retired scholar Muhammad Taqi Usmani, advocated that Muslims should wage violent jihad to establish the global supremacy of Islam.


The AIG unit avoids prohibited activities. Islam refers to prohibited behaviors as “haram.” AIG says it does not “invest in anything that is haram,” and does not “borrow, lend or enter into any financial transaction that is unIslamic.”

The Thomas More lawsuit says this language indicates “the Takaful insurance business of AIG is pervasively sectarian.”

Shunning Certain Industries

The lawsuit says compliance with Shariah prohibits investments in industries involved in alcoholic beverages, gambling, pornography, interest-based financing — or that support the United States military.

Charitable Donations

Shariah certification requires certain profits to be “purified.” This is accomplished by donating a percentage, often 2 percent but sometimes more, to an approved Islamic charity.

“What you essentially have,” Muise says, “is a federal government funding an operation it owns that is in the business of promoting a religious tax, that goes to fund interests that are contrary to Christians, contrary to Jews, and really contrary to the United States, in terms of those charitable organizations that funnel money off to terrorists.”

Although it is unknown which Islamic charities have received AIG-related donations, one charity on the approved list, according to the Thomas More lawsuit, is the Holy Land Foundation. Last year, a jury convicted leaders of the Foundation for conspiring to support terrorism, and with laundering money for a terrorist organization. The lawsuit says no Christian or Jewish charities are on the list as approved.

Muise blames lack of awareness for the public’s fixation on AIG’s $165 million in bonuses, compared to the nascent, multi-billion dollar Shariah-compliant financing industry.

“If Americans understood what their tax dollars are supporting,” Muise says, “I would suspect that a large number of federal taxpayers would be outraged by that. I don’t think that’s the bill of goods they’ve been sold in terms of what that money would be doing.”

Muise wants the district court judge to order the Treasury Department to cease practices related to AIG that violate the First Amendment. One possible solution would be an order for AIG to divest itself of any business unit that engages in Shariah-compliant finance.

Gaffney calls the Treasury Department’s involvement with AIG’s Takaful company “patently unconstitutional,” because it favors one religion. Moreover, he says Sharia “has as its explicit purpose the overthrow of all secular governments, including ours, in favor of a global theocracy.”

Gaffney says the Obama administration should be held accountable.

“Some of this was put in train obviously before they came to office,” Gaffney says. “But having said that, they own it now. And as we’ve seen in this Kabuki theater that they’ve been engaged in over the bonuses, they’ve got responsibility. And they’re making decisions every day that bear on all of this. So I think holding them accountable at this point is not only necessary, but appropriate.”

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A former U.S. Marine who fought in Afghanistan and Iraq charges that insurance giant AIG — already under fire for $165 million in bonus payments — is using his tax dollars to promote Islamic Shariah law and charities that may be funneling money to terrorist organizations...
Monday, 23 March 2009 07:35 PM
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