Shari`ah Supervision of Islamic Mutual Funds

Yusuf Talal DeLorenzo

Islamic mutual funds presently represent one of the fastest growing sectors within the Islamic financial industry. As Shari`ah supervision is an integral part of the industry, its place in relation to Islamic mutual funds is certainly no less important. My intention in this paper is to discuss in a general way the variety of functions performed by Shari`ah supervision and their importance. In doing so, I will make observations about the industry and suggestions for a better future.

It is a matter of concern that a significant number of managed Islamic equity funds function without Shari`ah supervision of any sort. In fact, according to the data available on the ninety or so Islamic mutual funds, less than one half actually retain their own Shariah supervisory boards.1 This is an alarming circumstance which, for the reasons that will be discussed in this paper, needs to be remedied. Ideally, if management is slow to address the issue, then the remedy will come from the investors themselves. In fact, as Muslim investors grow in numbers and sophistication, they expect more from the professionals who manage their money. Then, in terms of performance, always the bottom line, and in terms of customer service, and in terms of Shari`ah compliance, Muslims have already begun to expect more and more from their funds. In terms of Shari`ah supervision, a great deal can be expected.

Particularly now, with the opening of the retail markets to middle class Muslim investors, Islamic mutual funds find themselves if not in direct competition, then at least subject to direct comparison, with the host of conventional mutual funds available to consumers. Today, funds offer all manner of services to investors, from virtual office space on their websites, to real time performance updates, to regular reports, to the ability to customize a portfolio by using a pin number and selecting new fund options online or over an automated phone systerm! In short, the mutual fund industry has progressed from its beginnings as almost a closed sort of country club operation that catered to a financial elite, to its present service-oriented state that is driven by competition. Our new generation of Islamic equity funds is a part of this market, and certainly subject to many of the trends that move it. It is for this reason that, by way of example, the Azzad / Dow Jones Islamic Index Fund offers its investors a host of online facilities, in addition to regular reports by management, independent auditors, and a Shari`ah Supervisory Board. Then, with standards of service, accountability and transparency rising to keep pace with the market, and with sophistication and expectations on the rise among Islamic investors, Islamic funds which fail to upgrade will certainly be bested by funds that succeed in doing so. Moreover, when retail Islamic funds begin to offer so much to their clients, investors in the other Islamic funds, institutions and high net worth individuals will not fail to take notice and, ultimately, either move their assets or insist that management take measures to give them more value for their money.

There are, however, instances of Islamic funds that have found other ways to see to the Shari`ah supervision of their businesses. For example, some funds have retained the services of a single Shari`ah supervisor. I find nothing wrong with such an arrangement, especially if the fund is set up to track an Islamic index like one of indexes from the Dow Jones Islamic Market Indexes family. Obviously, such an index fund will require less Shari`ah supervision for its portfolio than an actively managed portfolio because its investable universe will already have been screened by the Shari`ah Board of the index provider. Then, with the active support and cooperation of management, a single Shari`ah supervisor should suffice to ensure Shari`ah compliance and assume responsibility for the other aspects of Shari`ah supervision. Even so, the presence of a full board would undoubtedly be more assuring to investors, and quite possibly more effective as well.2

Another way that an Islamic fund may ensure Shari`ah supervision without retaining the services of a Shari`ah Supervisory Board is for it to appoint a Shari`ah scholar to the fund's Board of Trustees. Then the scholar may either chair a subcommittee or work alone to supervise the fund for Shari`ah compliance and oversee the other Shari`ahrelated matters. Thus, while the ideal situation will always be for a fund to retain the services of a full Shari`ah Supervisory Board, with three or more members, there are other ways of accomplishing the requisite Shari`ah supervision.

In this context, however, I would like to point out a serious misunderstanding that appears to have been repeated by a number of different Islamic mutual funds; though very likely with the best of intentions. This misunderstanding is based on the assumption that a fund licensed by an index provider with a Shari`ah Supervisory Board of its own will not require Shari`ah supervision of any sort; not in the form of a board, and not in the form of a single supervisor. Writing in a recent issue of New Horizon, a Muslim financial professional observed, The arrival of the Dow Jones Islamic Market Index is seen as a cure all for banking houses who wish to broaden their success in placing equity funds with wealthy Muslims. The requirement, however, that they must still contract a Shari`ah Board of their own to supervise their own behavior does not appear to be widely understood.

Obviously, an Islamic mutual fund will become a licensee to an index provider with its own Shari`ah Supervisory Board for the reason that the fund wants assurance for its investors that its choice of stocks will be Shari`ah compliant. However, there is a great deal more to Shari`ah supervision than the review of stock choices from a Shari`ah perspective. Then, even if the fund is licensed to an index like the Dow Jones Islamic Market Index, it will still require Shari`ah supervision and advice. In this paper, I shall attempt to explain why this is so by examining a number of different areas in which the participation of a Shari`ah scholar is essential.4 I will also speak of the need for the proactive involvement in fund affairs by its Shariah supervisor(s). Finally, I will make some recommendations on the future of Shari`ah supervision that I believe will add value to every Islamic mutual fund.

Consumer Advocacy
It is of primary importance to understand Shari`ah supervision as consumer advocacy. By taking every possible step to ensure that an Islamic mutual fund represents a halal investment for Muslims, the services performed by Shari`ah supervisors are directed toward the investor. Undoubtedly, as a result of these efforts, the fund and its management will also benefit. But the primary beneficiary is the Muslim investor who can rest assured that his/her money is being put to use in ways that accord with the teachings of Islam and its message for all of humankind. So, while the functions of a Shari`ah supervisor may be compared to those of an independent financial auditor, in the sense that regulatory compliance is ensured, there is a further and far more vital aspect to the role of a Shari`ah supervisor. By assuming responsibility for the Shari`ah compliance of a fund, including its components and its management, the Shari`ah supervisor places himself in a position of directly representing the religious interests of the investor. In discussing the different aspects of Shari`ah supervision, it will become clear that a Shari`ah supervisor functions in many different ways as a consumer advocate with both religious and fiduciary responsibilities. By performing these functions the Shari`ah Supervisor adds significant value to the fund(s) with which he works.

It has already been stated that there is far more to the Shari'ah supervision of an Islamic mutual fund than the screening and selection of equities. Let us now examine some of the different Shari`ah supervisory functions that are inseparable from the success of an Islamic mutual fund. One of the most important of these functions has to do with purification which, as I have carefully explained in my internet-based (at dju.com) course on the Principles of Islamic Investing, actually takes place at two different levels: at a fiscal level and at a moral level.

Portfolio Purification: Fiscal and Moral
It should not be necessary to explain that Zakah and purification are two entirely different, though not unrelated, matters. After all, the literal meaning of Zakah, which will be discussed later in this paper, is purification. But the purification intended for discussion here is the cleansing of an investment portfolio of impure elements.

Many Muslims are familiar with the practice of "purifying" their checking accounts, for example, by simply donating the amounts listed as "interest earned" to charity. Thus, our concern from a Shari`ah perspective is with amounts of money earned by the corporations in which our Islamic mutual fund has invested; money earned by means deemed unacceptable by Shari`ah principles and teachings. Such "impure" earnings must be quantified and then purified.

Of course, the assumption here is that these are stocks that have cleared the various screens for Shari`ah compliance. Thus, the sources of such income might include non-operating income from interest-bearing investments, or earnings from prohibited business activities that are beyond the scope of a company's primary business. Oftentimes, such earnings will result from corporate diversification and new acquisitions. Whatever their source, the fact remains that even Shari`ah-compliant equities will often yield small percentages of income that is considered impure by Shari`ah standards, and which must then be purified.

The responsibility of the Shari`ah supervisor in this regard is to ensure that all such income is calculated by the fund, and that a corresponding percentage is deducted from the earnings, passed on to investors through the dividends, thereby ensuring that these are free of impurities and completely halal.5 The methodologies for calculation may differ from fund to fund, or from one Shari`ah Supervisory Board to another, where scholars, for whatever reasons, have preferences in the matter. This, however, is of secondary importance. Of primary importance is that the fund is actually commited to, and regularly engaged in, such purification. On behalf of the investor, then, it is the Shari`ah supervisor who will ensure that purification takes place, and that it takes place in a manner that accords with Islamic law.

The tangible results of such fiscal purification are that amounts of money begin to pile up. Generally speaking, it is recommended that funds sweep these amounts into separate accounts. With the advice and counsel of the fund's Sharia`ah Supervisory Board, these amounts may be distributed among suitable charities, or a charitable fund may be established for the purpose; again, under the supervision of the Shari`ah scholars.

Of course, it is certainly possible that the matter of purification be left entirely to the individual investor. Nonetheless, when we are speaking of adding value to a fund, it is clear that the fund's performance of this function will relieve the investor of the responsibility, and the considerable time and effort required to perform it. In fact, it is clear that this is a service that is much more effectively performed by the fund itself, particularly when the calculation process, including the collection of relevant data, is not a simple matter for those not equipped to undertake it.

The second half of the purification equation is what I term moral purification, and I consider it no less important than the fiscal purification of earnings. When speaking of fiscal purification, the thing that comes immediately to mind is that we are dealing with an amount of money that has been earned by means we find unacceptable, and is therefore in need of purification. So, in our haste to put aside the offending percentage, we often overlook our moral and religious responsibility in the matter. This responsibility is perhaps best understood in the context of the Qur'anic concept of "enjoining the right and prohibiting what is wrong."

Now the ways to discharge this particular responsibility are varied. But modern corporate democracy has provided Muslim investors with every opportunity to share with management our views and sentiments with regard to corporate practice and policy. By law, in fact, publicly owned corporations are required to hold annual meetings for their shareholders, and these provide opportunities for Muslim investors, or for the Shari`ah supervisors who look after their interests, to voice their concerns to management as vocally and as directly as they feel necessary. Of course, it is impractical to suppose that Shariah supervisors will attend every annual meeting of every holding in the fund's portfolio. But it is still possible to participate in the process of corporate governance by means of proxies and absentee ballots. It is likewise possible, at any time, for shareholders to raise issues with management, and to initiate positive change, by means of corporate shareholder resolutions. When a fund with substantial holdings brings up an issue, management will surely listen.

In an Islamic fund's strategy of proactive engagement with companies, the participation of Shari`ah scholars is essential. It is essential, in the first place, to ensure that the fund is concerned with moral purification on behalf of its investors. And it is essential, thereafter, to ensure that issues of importance to Muslims, from an Islamic perspective, are represented accurately and effectively to the management of major corporations. As Islamic mutual funds grow larger, and begin to hold larger and larger blocks of shares, the attention we receive from corporations will grow proportionately. It is of all the more importance, then, that we represent our way of life in the best and most effective manner possible.

Portfolio Selection: Screening Stocks
Undoubtedly, one of the most important functions of a Shariah Supervisory Board is its scrutiny of equities for compliance with established, Shari`ah-based criteria. Much has been written on this subject in recent years, and much more remains to be written.7 For the purposes of this paper, however, suffice it to say that if an Islamic fund is not licensed to an Islamic index with a full Shari`ah Supervisory Board, then it will undoubtedly require the services of a Shari`ah Supervisory Board to oversee its choice of investments. Such choices cannot be made on the basis of software, or by simply applying the published criteria of another fund, or index. So, when an Islamic equity fund is licensed to such an index, it may at least rest assured that the stocks it invests in will accord with the guidelines for prudent Islamic investing. Even so, and I continue to explain why, it will still require Shari`ah supervision.

While I will not repeat here what has now become common knowledge in regard to the Shari`ah screening of equities, I will take this opportunity to say that beyond the quantitative screening of securities is the highly subjective matter of ethics, and what is socially responsible. Again, from the perspective of enjoining the good and prohibiting what is wrong, I believe that it is the responsibility of Shari`ah Supervisory Boards to work on these issues, even after a fund has licensed to an investable universe through an index. Muslim investors, with our spiritual, cultural, and family ties to what is politely termed the third world, are more intimately concerned with, and sensitive to, the practices and policies of multinationals.

A company's ethics, unlike its primary business and capital structure, are highly subjective and not easily quantified. In considering issues of this nature, it is important that the fund's Shari`ah Supervisory Board works closely with management on policies and guidelines that will adequately cover these issues. Islamic investing has much in common with the modern forms of investing known as ethical investing, socially responsible investing, faith investing, and green investing. Each of these investment sectors, or subsectors, has much of value to contribute; and each has something in common with the teachings of Islam. It is therefore important for Shari`ah Supervisory Boards to keep abreast of what is happening in these areas. The internet is an excellent tool for the purpose of research into these forms of investing, the organizations that support and implement their principles, and the issues that concern them. Perhaps the most encouraging thing for Muslim investors to note about the funds that have grown up around these concepts is that they have been very successful, and that they are the fastest growing sector on the market.8 Given the affinities shared by these groups and Muslim investors, it is important that Islamic funds begin to build bridges. In this effort, the participation of Shari`ah Supervisory Boards will be all important.

Portfolio Monitoring

Beyond selecting stocks is the equally important task of monitoring stocks. In the business world, there is very little that remains the same. A company with non-operating interest income at less than five percent for the present quarter, may show earnings in excess of fifteen percent for the next. Obviously, vigilance is required in these matters to ensure that all of the fund's holdings remain within the limits of the prescribed Shari`ah filters. Again, when a fund is licensed to an index, information of this nature will be passed on by the index provider as a matter of course. In such cases, the responsibility of the Shari`ah supervisor will be to verify the removal of the security from the fund's portfolio. In the case, however, that the fund is not licensed or otherwise positioned to receive such information, even more vigilance is required.

Fund management will generally assign this responsibility to their portfolio managers or research analysts. My own experience to date with portfolio managers is that they are very diligent about these matters. Even so, it is the responsibility of Shari`ah supervisors to ensure that this sort of vigilance is maintained. Very recently, specialized software has been developed that allows management, and Shariah supervisors, to track portfolios with ease. Such software, when connected to the internet, will also provide real time access to portfolios, as well as a host of third party information. To my knowledge, very few Islamic funds have actually provided their Shari`ah Supervisory Boards with this sort of access. Here again, though, the funds that do so will have a competitive edge.9 In the future, Allah willing, every Islamic fund will have this facility. In fact, work is underway on even more sophisticated software. By the time this paper is actually delivered at the 4th Annual Forum, I expect that the beta versions will be up and running. In the final analysis, however, no matter how powerful the search engine or how seamless the links in the software, the expertise of Shari`ah supervisors will be required to make the final call. The software will identify the problem, the Shari`ah Supervisory Board will solve it.

Monitoring Management

The Shari`ah supervisory function includes vigilance in relation to the management of the Islamic equity fund as well. One of the most important issues in this regard is the fund's cash-to-assets ratio. Fund or portfolio managers may keep a large cash portion on hand if, for example, they are bearish on the market, or if they are unable to find attractive securities to buy, or, in the case of an index fund, if they are temporarily unable to purchase the stocks needed to match the index. Of course, the reason for the concern of the Shari`ah Supervisory Board under these circumstances is the possibility that idle cash will lead to interest.

Likewise, Shari`ah Supervisory Boards must be especially vigilant when, owing to adverse market conditions, management decides to assume temporary defensive positions. These may occur as the result of political, economic, or a host of other reasons. The important thing, however, is that the Board ensure that the strategy does not include recourse to the conventional, knee jerk strategies of moving into high quality, short term securities and money market instruments, or commercial or agency paper, or T-bills, or CDs. At such times, it will be best for management to convene a meeting of the Shari`ah Supervisory Board, or at least to confer with the members either individually or by whatever other means, for the purpose of discussing to what lengths the fund may go. Obviously, when such situations occur, it is the expertise of the portfolio managers and analysts that will determine the defensive strategy. It is the Shari`ah Supervisory Board, however, that will determine whether or not that strategy is a lawful one from a Shari`ah perspective.

Another thing that Shari`ah supervision will watch for is the purchase of equities on margin. While managers are aware that such purchases are not permitted, oftentimes their brokers are not. It is for this reason that Shari`ah supervisors must be on guard for these sorts of seemingly innocent mistakes.

In monitoring management, as in monitoring the portfolio, the use of software is particularly helpful. Obviously, this is the trend of the future. In mentioning this, I direct my remarks to both the management of Islamic equity funds and to the members of the various Shari`ah Supervisory Boards. In the future, I expect that a further qualification for Shari`ah Supervisory Board members will be computer literacy.

As a sort of a footnote to this section, I might mention another matter I believe to be of consequence. Everyone recognizes the need for a working relationship between the members of the Shari`ah Supervisory Board and the management of the fund. What people often fail to realize, however, is that relationships between the Board and the portfolio managers, the brokers, the accountants, and the auditors are equally important. When the fund management is openly Muslim, and makes its preferences and practices known to those with whom they work (portfolio managers, brokers, analysts, etc.), there is clearly less likelihood on the part of those colleagues of lapses leading to non-compliance with Shari`ah precepts. Even so, the possibility remains. And when fund management is non-Muslim, the likelihood is greater. Thus, in both cases, it is important to establish relationships between these business associates and the Shari`ah Supervisory Board. Perhaps the best way to accomplish this is to simply introduce the members of the Shari`ah Supervisory Board to the business colleagues of the fund. A short face to face meeting for the purpose of getting acquainted is all that is required. Thereafter, if any issues arise, these may be discussed in a manner befitting professionals who have actually made each other's acquaintance and share a genuine interest in the success of the fund. Such face to face meetings can easily be scheduled around an annual meeting of the Shari`ah Supervisory Board, for example, and may even take place at a lunch or a dinner.

In this regard, I might share an example from my own experience. When our Shari`ah Supervisory Board decided that a certain fund needed to liquidate its position in a certain stock, the decision was passed by management to its broker and the stocks were sold. Moreover, the accountants were instructed to sweep the profits from dividends and capital gains into the fund's charitable account. In a matter of days, the fund's auditors contacted management to question the liquidation of such a lucrative equity, and the justification for separating its earnings. At the request of management, I spoke on the phone with the auditor and we agreed that I should subsequently inform his firm in writing of the action we had requested, and the reasons for it. Thus, a potentially confusing and time-consuming situation was taken care of in a simple and straightforward manner. And the reason that it went as smoothly as it did is that a relationship of collegiality had been established, so that there was nothing awkward or hesitant about the exchanges which took place between us. Similar relationships have led to my receiving tips from portfolio managers concerning the peripheral involvement in prohibited business on the part of certain firms whose stock was held by funds that I supervise.

Monitoring Fees
Certainly, from the perspective of the individual investor, one of the most important of all the different functions performed by a Shari`ah Supervisory Board is its ensuring that the consumer is made aware of the fund's fees and how these are structured. Here again, the Shari`ah Supervisory Board finds itself in the role of consumer advocate. While there is generally no formal channel for communication (other than quarterly or annual reports) between the Board and those who invest in the Islamic fund, the responsibility in this regard is not so much consumer education as it is a matter of the Board's satisfying itself of two essential matters. Firstly, that the fee structure is a reasonable one and, secondly, that the fees are clearly stated in the fund's literature and otherwise communicated without ambiguity to investors.

As the market for Islamic mutual funds grows, investment professionals (and even conventional brokers) will become familiar with the various offerings, and will explain all of the nuances and differences between them to their clients. At the present time, however, most Muslim investors approach Islamic funds directly, and purely on the basis of their understanding that the product offered is halal and will yield halal results only. Under such circumstances, it is very important that Islamic funds clearly state their fees,11 especially when the middle class Muslim investor may be less inclined to be meticulous on the matter. Then, while I am confident that there is no real danger of unscrupulous practices on the part of funds, my real concern is that investors fully understand what sorts of fees they are expected to pay. For example, even here in the US, where the regulatory atmosphere is so strict, the annual expense ratio, or annual fee does not appear on the client statements of most conventional funds. As a result most consumers are not even aware of it. So, if someone invests in a no-load fund, and then sees no mention of fees on their client statements, they might very well suppose that they are paying nothing to their funds.

Even aside from the annual fees and the different sorts of loads, funds will generally charge fees for a number of other services. For example, investors who move money between funds in the same family of funds (from a growth to an income fund, for example) may generally do so without any additional load. There may, however, be a fee for doing so, as well as a tax liability. It should be the responsibility of the Islamic fund to provide investors with a clear picture of their responsibilities in these instances. Such a schedule of fees, if you will, should also include information on breakpoints or volume discounts, on the investors' rights of accumulation, on surrender fees (contingent deferred sales charges), on the facilities accorded by the fund for letters of intent (including the terms of retroactive collection in the event that the LOI is not fulfilled), and on special items like performance incentives and thresholds. The concern of the Shari`ah Supervisory Board in these matters is simply that the investor be apprised of factors that may be of significance to him/her when investing Islamically. By looking out for the interests of the consumer in this manner, the Shari`ah Supervisory Board is actually adding value to the fund. This is because when all the fees are carefully spelled out for investors, there is far less chance of unpleasant surprises and the resulting ill will that might be generated by even the simplest of misunderstandings. In today's service-oriented markets, this should be more than obvious.

Monitoring Fund Documentation

Perhaps more than monitoring, this function of a Shari`ah Supervisory Board is actually one of assisting management in the preparation of filings for regulatory agencies like the Securities and Exchange Commission, subscription agreements, private placement memorandums, fund prospectuses, and the like. Obviously, in the preparation of such documentation references will have to be made to the Shari`ah and its interpretations. For this reason, it is essential that the expertise of Shari`ah scholars be accomodated. It is clearly of inestimable importance that the documents which define the Islamic mutual fund and the ways it works be in complete consonance with Shari`ah precepts. The only way to ensure this is to have the Shari`ah Supervisory Board involved in the drafting and review of all pertinent legal and business documentation.

In fact, I will go one step further and suggest that Shari`ah supervision is extended to include marketing materials, like brochures, advertisements, websites, and even multimedia presentations. In all of these, reference of one sort or another is sure to be made to the Shari`ah and the Islamic nature of the fund. In order to ensure that all such references are made correctly, especially in view of the fact that these will be made public, the involvement of the Shari`ah Supervisory Board is essential.

Monitoring the Industry

As academics, the members of Shari`ah Supervisory Boards will naturally keep abreast of scholarship in their respective fields and specializations. As professionals, it is equally essential that we remain informed of developments in the industry we supervise. In order to comprehend the issues fully, the sorts of issues that require the attention of the Shari`ah Supervisory Boards, it is important to understand them in the broader context of the marketplace in general. From this perspective, the attention brought to bear on the issues by the Board will certainly be more pertinent; with the result that the Board's decisions will be more informed and ultimately of more value to the investor. This is not to say that Shari`ah Supervisory Boards should tell management how to run their business. Rather, what I mean to say is that a Board that is sensitive to the business environment is an effective Board.

In order to maintain this edge, Shari`ah Supervisory Board members need to understand the stock market and its various indicators. They also need to be able to use the tools that will allow them to follow the stock market and the factors that influence it. Thus, at the level of fund and sector performance, the Dow Jones Islamic Market Indexes and the Financial Times\TII Indices are indispensable tools. Specialized websites like Failaka.com, IslamiQ.com, and Muslim-investor.com are important sources of information about the Islamic investing sector, as are a handful of specialized publications like New Horizon, The Islamic Banker, and others. Finally, at the level of the mutual fund industry in general, the sources of information are seemingly limitless, whether in print, online, or over the airwaves. Finally, academic and professional forums, such as this one, may have much to contribute to this important aspect of Shari`ah Supervision.

Product Development

While the issue of product development is more commonly associated with Islamic banks, there is nonetheless a certain amount of scope for it in Islamic mutual funds as well. With the goal of mitigating risk through portfolio diversification, an Islamic fund might consider turning to markets other than the stock market, or to target other asset classes, like REITs. Or the fund may want to do something different as a part of a defensive strategy for a bearish market, or as a way to manage short term liquidity. Whatever the case, there will be a clear need for the expert advice and assistance of the Shari`ah Supervisory Board.

Zakah

The assumption might easily be made that if Islamic mutual funds are active in purification, then they should surely be doing something about Zakah. This, however, is not the case. The matter of Zakah is complicated by any number of factors that lie outside the control of Islamic funds (and, for that matter, Islamic banks and other financial institutions as well). Since these factors are particular to the circumstances of each investor, the matter of Zakah is best left to the investors themselves. In this regard, I will simply refer to the fatwa of the Islamic Bank of Jordan, which effectively explains the reasons why the matter of Zakah should be left to the individual Muslim investor or depositor.

Even when the matter is left to the individual, the fund may consider requesting its Shari`ah Supervisory Board to prepare guidelines for the calculation of Zakah on profits earned through investments in funds. These guidelines might then be published in brochure form and mailed to investors, or posted on the fund's web page as an extra service to its investors. As there is still a considerable amount of debate on the details of Zakah to be paid on such investments, the attention to the matter on the part of Shari`ah Supervisory Boards may indeed help in bringing about a needed consensus on several outstanding issues.

Regular Reports
Finally, one of the most important functions of a Shari`ah Supervisory Board is to prepare reports on the status of the fund it supervises. Such reports are best issued quarterly and should address issues of Shari`ah-compliance in the portfolio, and on the part of management. Likewise, the reports should keep investors informed of the purification process and the charitable ways in which purification money has been put to use by the fund. Other issues of relevance to the supervision of the fund might also be mentioned in the reports, like the new software that enables the Board to easily monitor the fund's portfolios, or to screen stocks for Shari`ah-compliance, and so on. In addition, the Board may use the reports to communicate the ways in which it is addressing issues related to socially responsible investing and the business ethics and practices of corporations. Finally, as the goal of these reports is to promote transparency and full disclosure, they should always be prepared in a straightforward manner. If shortcomings have occurred, these must be mentioned; and the steps taken to remedy the situation as well.

Conclusion
Throughout this paper, I have alluded to what the future might bring. All such references, I believe, have been made with with a degree of optimism. No one doubts that there is a sizeable, and as yet untapped, market for Islamic financial products and services, especially in the United States and Europe, and in Muslim majority countries with prosperous middle classes. When I consider this market, I see a religious community that is in many ways just as comfortable, and at ease, with the modern world as it is with its own Islamic heritage. The politics of the modern world have provided haven, and its economics have provided comfort. At the same time, Muslims are inextricably tied to Islam. My concern, as an advocate for this community, is that we receive the value that we deserve. Not only that we get what we pay for. But that the tenets of our religion are respected; not only in the sense of compliance, but in the sense of honor and esteem as well.

It will not be out of place, in our discussion of the future of Shari`ah Supervisory Boards, to mention here the need for impartiality and independence. In the same way that independent auditors are brought in to review the finances of a business, Shari`ah Supervisory Boards review compliance to Shari`ah precepts. Independent audits are understood as ways to gain and maintain the trust of investors and consumers. Independent Shari`ah supervision is the best way to gain and maintain the trust of Muslim investors and consumers.

The call goes out, from time to time, for the establishment of a central, or a unified Shari`ah Supervisory Board that could look after the interests of every Islamic bank or financial institution. Just as often the call is ignored. (Though, admittedly, an attempt was made in the eighties to establish such a central board, but for Islamic banks only.) My thinking on the subject, and I hope that this is clear from the contents of this paper, is that it is simply impossible for a centralized board to effectively perform all of the tasks required for the Shari`ah supervision of each and every Islamic financial institution. In the early 1980s, when there was only a handful of such institutions, such a notion may have seemed reasonable. But today, when Islamic mutual funds alone number nearly one hundred, the notion is highly impractical.

Not only that, but as the Islamic financial sector looks at ways to provide Shari`ahcompliant financial services to retail consumers, there is an increasing need for specialization among Shari`ah supervisory professionals. Takaful operations, for example, while based on many of the same principles, are nonetheless quite different from banking operations. The operations of commercial banks differ considerably from those of thrifts and investment banks. I expect that in the future we will come to see more specialized Shari`ah supervision, or supervision geared toward specific sectors within the Islamic finance industry as it grows in size and sophistication. Under these circumstances there is no practical future for a single, central Shari`ah Supervisory Board.

To ensure that Shari`ah Supervisory Boards remain current, however, it may be preferable to have a professional organization, an industry association if you will, that sets standards for everything of importance to Islamic mutual funds. Such an association might therefore be inclusive of standards and practices for Shari`ah Boards, Islamic funds, and fund management as well. Such an industry association might also look after the interests of membership, and promote understanding and exchange through publications and regular forums. It could also establish relationships with relevant academic, commerical, and professional bodies The industry appears to have matured to the point where such an association would be of great value to everyone involved in Islamic funds. From the perspective of a consumer advocate, I will strongly recommend the timely establishment of such an industry association.

Any source

PILOT / P-QUEUE / DTC LAUNCH

Last night's Triple Launch Extravaganza announcing the latest numbers of Pilot, P-Queue and Damn the Caesars was a delightful success. Held at the Adam Mickiewicz Library on Buffalo's East Side, the event brought in an impressive gathering of approximately seventy-five people. More pub and performance space than library, the site of the event featured a dimly lit bar with a wide selection of Polish beers and vodkas, an air hockey table, contemporary Polka, and a large hanger-like theater space where the voices of even the softest speaking poets projected outward to the farthest members of the audience.

It was an honor to begin the event with readings by Steve McCaffery and Karen Mac Cormack, both of whom have work appearing in this latest volume of Damn the Caesars. Publicly acknowledging the recent passing of Bill Griffiths, McCaffery started by reading the first part of an untitled Griffiths poem also included in DTC: "WE move forth// silent (step) separate// atta slow pace over sward/ descending/ from this mausoleum". He then read, at a moderately quick pace, from the longer poem Gobi Vedda. Mac Cormack read the shorter poem "Green Logistics" and "ITS...", a prose poem constructed of dislocated phrases culled exclusively from Monty Python's Flying Circus.

Contributors to the most recent number of Matt Chambers' Pilot magazine, the following block of readers included Sean Bonney, Frances Kruk, Sophie Robinson, and Kai Fierle-Hedrick. Assistant editor of How2, Fierle-Hedrick recently returned to the US after eight years in London and was fortunately in the area and available to read. Bonney, Kruk, and Robinson, on the other hand, were able to make the launch through arrangements made by Kevin Thurston and a generous grant from the Mildred Lockwood Lacey Foundation for Poetry. Co-editors of the Yt Communications imprint, Bonney and Kruk traveled from Hackney while Sophie Robinson, now finishing an MA in Poetic Practice at Royal Holloway, traveled from London.

The evening was closed out with readings by Jose Alvergue, Ben Bedard, Jon Cotner, and Siobhan Scarry—all of whom are contributors to the fourth volume of P-Queue magazine founded by Sarah Campbell and now under the editorship of Andrew Rippeon. Alvergue, who received his MFA from the School of Critical Studies at the California Institute of the Arts, read both work which appears in P-Queue and parts of a newer project. Ben Bedard read from Implicit Lyrics, a series of prose poems, a few of which have recently been translated into Spanish. Jon Cotner read from the first part of his book-length collaboration with Andy Fitch, Conversations Over Stolen Food. The part of Fitch in this first conversation was performed by Zach Finch. Siobhan Scarry ended the evening by reading from a series of occasional poems written earlier that day, including variations on two Shakespeare sonnets and poems generated through cell phone discussions. Guaranteeing their occasional quality and foreclosing on the possibility of further iteration, Scarry set the poems aflame after reading the last and these burning poems marked, in a particularly dramatic way, the end of the event.
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N.B.—ON THE MAGS

Edited by Andrew Rippeon, volume four of P-Queue includes new writing by Michael Robbins, Philip Metres, Siobhan Scarry, Allison Carter, Susanne Hall, Laura Jaramillo, Michelle and Richard Taransky, Harold Abramowitz, Crane Giamo, David Driscoll, Meg Barboza, Jose Felipe Alvergue, Elizabeth Cross, Mathew Timmons, Ben Bedard, Anthony Hawley, Jon Cotner and Andy Fitch, and Jordan Stempleman. Two-color letterpress covers and a numbered two-color letterpress card of poem #6 from Susanne Hall's Loteria, part of which appears in the volume. For further information, write: P-Queue c/0 Andrew Rippeon, 306 Clemens Hall, English Department, SUNY Buffalo, Buffalo, NY 14260. Or visit the P-Queue blog: http://www.fergco.co/

Issue two of Pilot, edited by Matt Chambers, is a boxed set of 17 chapbooks featuring new writing by a wide range of younger British poets, including Sean Bonney, Emily Critchley, matt ffytche, Kai Fierle-Hedrick, Giles Goodland, Jeff Hilson, Piers Hugill, Frances Kruk, Marianne Morris, Neil Pattison, Reitha Pattison, Simon Perril, Sophie Robinson, Natalie Scargill, Harriet Tarlo, and Scott Thurston. Covers designed by Chris Fritton. For further information, write: Pilot c/o Matt Chambers, 306 Clemens Hall, English Department, SUNY Buffalo, Buffalo, NY 14260. Email: mjc6@buffalo.edu

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Governor David Pearey Appointed the BVI First Full-Time Magistrate

The Governor Mr. David Pearey has appointed the BVI first full-time Magistrate with effect from September 1, 2007. The person chosen to this post was Mrs. Charmaine Rosan-Bunbury who worked in the Attorney General Chambers as Crown Counsel from 2001 until this appointment.

Mrs. Rosan-Bunbury is a BVIslander, holding a legal certificate from the University of Northumbria, Newcastle United Kingdom, a Bachelors of Law with Honours from the University of Wolverhampton, UK, and a Bachelors degree in Business Administration from the University of the Virgin Islands.

The new Magistrate will deputise for the Senior Magistrate and preside over civil proceedings; she will also preside over sittings of night court, serve as Coroner and conduct inquests into unnatural deaths within the Territory of the British Virgin Islands.

Senior Magistrate Mrs. Valerie Stephens has said that she is pleased to work with Mrs. Rosan-Bunbury, and is glad that being the first full time local Magistrate Mrs. Bunbury would provide balance in court proceedings.

Brian Obvi,
Offshore Analyst

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London Presentation Organized by the BVI International Finance Centre in October

The BVI International Finance Centre will send the delegation to London in October. It's task will be to undertake a series of presentations informing executives involved in the trusts and corporate business sector on the development of BVI trusts and corporate business industries, their regulatory environment and current offshore finance trends and opportunities. Members of the delegation will be Christopher McKenzie (Walkers BVI), Kenneth Morgan (Rawlinson & Hunter, BVI), Peter Larder (AMS Group), and Helene Lewis (Simonette Lewis).

On October 2, evening presentation will be hosted for London-based executives in the trusts; on October 3, there will be presentation for corporate business industries. Speakers from both Public and Private sectors will provide information on the growth of the BVI trusts and corporate business industries, their regulatory environment and current trends and opportunities in offshore finance. BVI IFC will also arrange a series of meetings with London's leading private banks and corporate law firms.

Established in 2002 as a result of the Government's commitment to support the financial services industry, the BVI IFC has played an exceptionally important role in the promotion and marketing of the BVI as a leading financial centre. The main task of the IFC is to make sure that the BVI retains the balance in having a sound regulatory framework, an entrepreneurial business community and BVI government. IFC is not involved in financial regulation, which is the sole responsibility of the BVI Financial Services Commission, also established in 2002.

In June 2007, the BVI IFC revealed new records that showed that in 2006 65,284 Business Companies were registered in BVI, - a 12% increase as compared with 2005, and a new record for annual BVI company registrations set by the offshore centre. In total, at December 31, 2006 there were nearly 775,000 of both types of BVI companies – International Business Companies and BVI Business Companies.

Also, in 2006 the BVI became the 3rd largest offshore centre for captive insurance business, with 57 new captive insurers registered, and total amount of captives being over 400. There were more than 282 new investment businesses in 2006, and the total amount for that sector was about 2,600 active mutual and hedge funds in the beginning of 2007. This year, further growth is expected.

Brian Obvi,
Offshore Analyst

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EU fails to respond to booming global dairy market

The EU has largely failed to respond to a booming global dairy market. Milk deliveries actually fell by 1.5 per cent in 2006 despite an increase in quotas. All sorts of explanations are being trotted out such as the threat of high super-levy penalties and even the expiry of the transitional period in the A10 countries (this allowed for domestic marketing not to comply fully with EU criteria).

An alternative explanation is that the quota regime has ossified the structure of the dairy industry in the EU, holding back the more efficient and protecting more marginal farmers (which indeed is one of its intentions). Quota can be transferred in some countries (the rules differ), but despite the existence of an internal market, it cannot be transferred across national borders. The consequence is that the EU's dairy processing industry has been handicapped in responding to new opportunities on the world market.

What is driving these opportunities? The key factor is increased demand from the emerging economies. As people become more affluent, they consume more products that make use of milk. The increased demand for milk powders, for so long the sump of the industry, illustrates the fact that the major force underlying the price boom is increased demand for processed food ingredients.

Moreover, as demand expanded particularly in fast-growing Asian economies, exportable supplies were limited by drought in Australia and strong domestic consumption in the US and EU. The EU market is likely to be dominated by the expanding demand for cheese. Projections by the European Commission suggest that EU-27 cheese production is likely to increase by a total of 10 per cent during the 2005-13 period and will be likely to use nearly 85 per cent of the additional increase in milk expected to be delivered ober this period.

Can the price boom last? The OECD is relatively optimistic. Even though current exceptionally high prices are unlikely to be sustained, it is confident in its 2007 Agricultural Markets Report that milk powder and dairy product prices are likely to stay at relatively high levels at least until the middle of the next decade. Over the 2007-16 period it expects prices to remain at about US $50 to $100 per 100 kg (milk equivalent) higher as compared with the previous decade.

Compared to the level of average prices in nominal terms over the period 2001-5, world butter prices are preducted to increase the most, rising by 42 per cent. It wasn't so long ago that 'ageing' butter was being sold off from EU intervention stores to grateful Soviet consumers, a trade that made the intermediaries a lot of money. Skimmed milk powder prices are expected to rise by 33 per cent.

Much of the new output needed to meet demand will not come from the OECD area where production is expected to remain relatively stable, with the main production gains coming in Oceania and the United States. The OECD expects India, China and Pakistan to account for more than 50 per cent of the likely global milk production gains.

The one caveat is the quetion of economic growth. If economic growth continues at the rate predicted by the OECD, an average of 4 per cent for Asia, South America and Africa, then increased consumption and high prices will persist. Any faltering in growth would leave large quantities of milk from developing country producers looking for a market which would have a big knock on effect on the EU.

Why are British dairy farmers still in trouble? For historical reasons relating to imports from the British Commonwealth, the UK market is still dependent to a larger extent than elsewhere on the liquid market. This is still very price sensitive in the sense that supermarkets in practice treat milk as a 'loss leader' (whatever they might say to the contrary). However, they have been increasing prices to farmers recently, although input costs have also been going up.

Quotas are to be phased out, not before time, as they made it difficult for new entrants, despite special schemes in a number of countries. The UK in particular had insufficient quota to meet all its potential production needs. A freer market should benefit both producers and consumers.Any source

Fischer Boel seduced by food security rhetoric

Experts on agricultural policy are often asked why the 'farm lobby' has been so successful although, of course, at EU level its influence has declined over time. In part this has been because it has been losing the debate and has often shown insufficient flexibility in responding to new framings of issues.

Nevertheless, one should never understimate the ability of producer interests to use new concerns to their advantage. In the past, for example, British farmers used concerns about the balance of payments to justify the subsidies they received. Food security concerns were significant during the formation of the CAP with recent experiences of food shortages in the minds of decision-makers. These concerns were reinforced by arguments about what might happen if the Cold War got a bit hotter.

With world supply and demand being tighter than it has been for some time, farming journalists and others have been trying to propel food security back on to the EU policy agenda. They appear to have scored at least a partial hit with farm commissioner Mariann Fischer Boel.

She said that Europe was producing enough to meet its own needs but had to keep one eye on growing demand around the world and discuss the question of 'food security'. 'It is obvious that the whole discussion on energy security started when suddenly the Russians cut off the pipelines. And it is obvious that we would want to think about food security. We can discuss buffer stocks just as you have for oil today.' EU rules require countries to keep three months' supply of oil in storage.

The analogy with energy security is an imperfect one as there is no one country with a pipeline of food on which Europe depends that it can turn off to great effect (although the moratorium on exports being operated by Russia and the Ukraine has had an impact on world prices).

Let's hope that just when we thought that intervention buying was fading away, it won't be rejuvenated as 'buffer stocks'. One of the greatest weaknesses of the CAP was always the creation of a risk free market through the purchase of surpluses by government agencies.Any source

National motto – Fairness with Freedom

Prime Minister Gordon Brown has suggested the UK needs a motto. What better than the sub-title of the book The Free Lunch: ‘Fairness with Freedom’?

The two ideals summarize the aims of all democracies. The last century or so has seen swings from the left and right of the political arena as each has taken its turn to guide policy. The left emphasizes fairness, but the attempts at state socialism evident in failed communist states show that fairness of itself is insufficient. Freedom is also an essential human need, but it too is not enough on its own, as the rich and powerful cannot be allowed to have free rein irrespective of others.

The book The Free Lunch suggests that mature democracies need to move to a more citizen-focused policy. The book works out how this might be done, beginning with a basic citizen’s income for everyone. Many groups world wide are seriously encouraging these ideas which are quite practical economically. Fairness and Freedom is an ancient tradition. Read the book to find out more: www.the-free-lunch.com

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1st House of Assembly inaugural sitting held in BVI

September 14, 2007 can be considered to be the beginning of a new era in BVI politics as the 1st sitting of the new House of Assembly convened in Road Town.

The 3-hour session attended by Gov. David Pearey, public servants, family members, students, party supporters and visitors hosted the 13 representatives elected during the August 20 General Elections. Also, a delegation from the U.S. Virgin Islands attended the ceremony.

David Edgecombe represented Gov. John deJongh Jr., Simon Caines represented Lt. Gov. Gregory Francis and Stephen Frett represented Senate President Usie Richards. Sen. Carmen Wesselhoft of St. John also attended.

The main three tasks of the day were selecting a speaker, who does not belong to the ranks of elected House members, electing a deputy speaker and administrating the oath of allegiance to the new members.

The speaker was elected unanimously. It was former teacher and government Personnel Department employee Roy Harrigan of Virgin Gorda. Former speaker and businessman Keith Flax was elected the new deputy speaker.

The government side of the House are the following persons:

• District 1 Rep. Andrew Fahie, Minister of Education and Culture;
• District 2 Rep. Alvin Christopher;
• District 3 Rep. Julian Fraser, Minister of Communications and Works;
• District 4 Rep. Vincent Scatliffe; District 5 Rep. Elvis Harrigan;
• District 6 Rep. Omar Hodge, Minister of Natural Resources and Labor;
• District 8 Rep. Dancia Penn, Deputy Premier and Minister of Health and Social Development;
• District 9 Rep. and Premier Ralph O'Neal, Minister of Finance;
• Territorial At Large representative Keith Flax;
• Territorial At Large Vernon Malone;
• Territorial At Large representative Irene Penn-O'Neal.

The opposition side are:

• District 7 Rep. Kedrick Pickering;
• Former Chief Minister Orlando Smith.

House Speaker Harrigan accepted the position with humility and took the responsibility. He gave each member 5 minutes to speak.

Premier O'Neal noted that there were only 2 seats on the opposition, however, he mentioned that he would not tolerate them being bypassed.

Opposition Leader Smith stated that it was a great honor for his National Democratic Party government to have served the British Virgin Islands for the last 4 years. He also noted that despite the fact that the opposition is small in number, it will have a voice.

When congratulating the new government, he reminded the new constitution that elected representatives have greater responsibilities, especially as regards external affairs and police and crime.

Brian Obvi,
Offshore Analyst

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Giant energy plants to transform UK countryside

The British countryside will be transformed through the planting of tall energy crops, the BA Festival of Science in York heard yesterday. Fields planted with miscanthus (or elephant) grass, 3-4 metres high, will look like Caribbean sugar-cane plantations.

The Rural and Economy Land Use programme (RELU) estimates that 15-20 per cent of Britain's agricultural land may have to be devoted to growing biofuels to meet international obligations to reduce carbon emissions and improve energy security. [The writer is a grant holder in the RELU programme].

The two main candidate crops are willow coppice, harvested every three years, and miscanthus, a fast-growing Asian grass harvested annually in late winter or spring. Farmers would grow those on poor quality arable land, said Anglea Karp of Rothamsted Research, RELU energy crops coordinator. 'The impact on agricultural land and food production is a big concern,' she said. 'Because the energy crops recycle their own nutrients and do not need fertilisers, they will not need to be planted on the best agricultural land.'

RELU has attempted to assess the public acceptability of a landscape dominated by giant energy crops. They conducted a survey using photographs of existing miscanthus and willow plantations. Surprisingly, two-thirds said they would not mind the triffids growing within sight of their home, although this figure fell when participants were told that more local power stations would be needed to produce energy from their crops.

Environmental surveys are particularly suspect because people feel a need to give the 'correct' green answer. When it comes to behaviour, NIMBY attitudes come to the surface.

Nevertheless, RELU supremo Philip Lowe seized the occasion to urge the government to 'take a more strategic approach to land use in rural areas.' The well connected Newcastle University professor said the government needed a strategic vision for balancing the growing pressures on home-grown food supplies with the need to grow energy crops.

The good professor turned words into action when he bought bananas as a healthy energy boost for the participants waiting for my panel at York.Any source

Sarko changes French stance on CAP

Observers like Jack Thurston have picked up signs of a change in the French stance on the CAP for some time. But now President Nicholas Sarkozy has promised to initiate a fundamental debate about its purpose next year when France takes over the EU's rotating presidency. Using words never used by a French president before to a farming audience, he told farmers at a cattle fair near Rennes that they had to learn to make a living from market prices rather than subsidies.

It's a change from the days when Jacques Chirac was de facto farm minister, but before we get too excited a reading of his speech suggests that he envisages the continuation of subsidies by other but more legitimate and acceptable means.

He framed a partly free market message with a demand for more EU wide protection for a sector he described as 'an essential pillar' of the French economy. The EU should set a goal of 'stabilising markets' in agricultural goods, one that, of course, it has had since the Treaty of Rome. It would do this by re-establishing the principle of 'community preference', although he did not spell out what this would mean in practice.

He said that a reformed CAP would need to meet four objectives: ensure food security for Europe (groan); contribute to a growing global demand for food; preserve rural economies and landscapes; and help combat climate change.Any source

OECD blasts biofuel subsidies

Governments need to scrap subsidies for biofuels as the current rush to support alternative energy sources will lead to surging food prices and the potential destruction of natural habitats, argues the OECD in a report leaked this week. The OECD argues that politicians are rigging the market in favour of an untried technology that will have only limited impact on climate change. [The writer is a member of the BBSRC Biofuels Panel but the views expressed here are entirely his own].

The survey says that biofuel would cut energy-related emissions by 3 per cent at most. The study estimates the US alone spends $7bn a year helping make ethanol, with each tonne of carbon dioxide avoided costing more than $500. In the EU it can be almost ten times as much.

There could also be negative environmental externalities. The report states, 'As long as environmental values are not adeuately priced in the market, there will be powerful incentives to replace natural eco-systems such as forests, wetlands and pasture with dedicated bio-energy crops.'

The survey puts a question mark over the EU's plan to derive 10 per cent of transport fuel from plants by 2020. It says money saved from subsidies phasing out should fund research into so-called second generation fuels, which are being developed to use waste products.

Not surprisingly, the NFU has sought to play down the impact on food prices. Their energy and climate change adviser Jonathan Scarlock said, 'The current high prices of commodities are more down to harvest problems in key exporting countries rather than the relatively small proportion going into biofuel production.' While the price of cereals may have doubled this year, the impact on the retail price of food is likely to be about 5 per cent. However, bread prices in the UK have already gone up more than that.

There is a certain amount of triumphalism among farmers' spokespersons at the moment about the fact that the era of cheap food is over. They point out that the proportion of income spent on food in advanced countries has fallen dramatically.

That's so, but many families with young children are on very tight budgets and with fuel prices going up and nursery fees high have little room to absorb food price increases. They may trade down in product quality. Also, supermarkets operating in a competitive environment will try to hold back prices.Any source

BILL GRIFFITHS (1948-2007)

Matt Chambers called from Buffalo this morning to let me know Bill Griffiths passed away today. According to a message sent out by Tom Raworth, Griffiths was checked into a hospital last week and then released. Today he was found in his County Durham home with the television, radio and a computer on.

Endearingly grizzled with tattooed knuckles, Griffiths worked with Bob Cobbing through the Writer's Forum. His first poems appeared in Poetry Review in the mid-1970s, the journal then under the editorship of Eric Mottram — another figure important to Griffiths and whose archive he would later catalog at King's College, London.

In 1987 Griffiths earned his PhD in Old English and Anglo-Saxon Studies from King's College. Aside from his own poetic production through the 1970s and 80s, Griffiths translated from the Anglo-Saxon, translations which include The Battle of Maldon and Guthlac B. Through Anglo-Saxon Books in Norfolk he published Alfred's Metres of Boethius and Aspects of Anglo-Saxon Magic in the late 1990s. Other critical and scholarly works include North East Dialect: Survey and Word List (Centre for Northern Studies, newcastle) and Dictionary of North East Dialect (Northumbria University Press).

Among his dozens of poetry collections (and this is to mention nothing of the perhaps hundreds of ephemeral publications he brought out) are: Tract Against Giants: Selected Poems (Coach House Press), Future Exiles: 3 London Poets (with Allen Fisher and Brian Catling), and, most recently, Mudfort (Salt 2003). He was also, with Tom Raworth and Tom Leonard, included in Etruscan Reader 5.

Earlier this year the Salt Companion to Bill Griffiths, edited by William Rowe, was published. In addition to various interviews with Griffiths, the book contains both casual and critical discussion of Griffiths' work by Eric Mottram, Jeff Nuttall, Alan Halsey, Iain Sinclair, John Seed, Tony Baker and a number of others.

Unfortunately I am in Santa Fe and not Buffalo, away from the handful of Griffiths titles I have — so I cannot access them and think through the work as I consider his passing. Further, it's only six months now since I first started corresponding with Griffiths. In response to a very brief letter soliciting work for a forthcoming volume of Damn the Caesars, he not only sent several wonderful poems and a sizable number of Amri and Pirate Press books but, on hearing about my interest in David Jones, he sent an essay he'd written on Jones' inscriptions and letter design. These poems and the essay were due to appear in the next volume of DTC, now at the print shop. That he has passed before I could get copies of the new volume to him is especially painful. I very badly wanted him to see how much his work was appreciated by younger poets and scholars this side of the pond. Aside from Steve McCaffery, Charles Bernstein, Peter Quartermain, Keith Tuma and a handful of others, Griffiths work didn't enjoy the readership in North America it otherwise deserved.

Discussing Griffiths' poetry In his introduction to the Salt Companion Jeff Nuttall writes:

Bill Griffiths’ poems are dazzling. More than any work in English since Gertrude Stein they insist on being recognised as surfaces and structures. Statements are made. Stories are told. Places and people are described. A bitter anarchism is expressed, also Nietzschean yearning towards energy and joy. Yet statement, narration, description and expression are kept in check so that the poem is seen as itself, a poem, an artefact, an edifice with an importance over and above its subject matter. It is not the light and the landscape, the sense of motion of limbs or machine, the anger and the disappointments, the passions and hungers, which are magnificent. It is the poem itself which, in Griffiths’ work, perpetually dazzles and astonishes in exactly the way the great stained-glass windows of European cathedrals dazzle and astonish before the eye has recognised whatever image is depicted.

It is hard not to agree with Nuttall's assessment of the work. The poetry does dazzle like the stained-glass windows of European cathedrals. But there are no such cathedrals in Santa Fe. Up the street from the Hotel St Francis where I'm writing now is the Loretto Chapel. And a few blocks from that the San Miguel Mission, the oldest church in the United States. Built by Tlaxcalan Indians under the direction of Franciscan Padres in 1610, the church was eventually destroyed by fire and then restored in the late seventeenth century. While on the phone, Matt had a drink to Bill -- a shot of Glenn Fiddich. Having no liquor in the hotel room, I wandered up to the mission and lit a candle.
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ADDENDUM: Matt Chambers just sent the following photograph of Bill with Geraldine Monk. It seems to offer us a window into the community of poets he worked with and worked to galvanize — and I can't thank Matt enough for sending it.

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New Figures for Chinese FDI: BVI Ranks Second with US$9.91 billion

The new statistics on foreign investments in Chinese economy during the first eight months of 2007 shows following figures: value of investments rose 12.79% from a year earlier to US$41.95 billion; 24,848 enterprises were set up in China by overseas investors, that is down 5.26% compared to the previous year.

The released information confirms the position of the British Virgin Islands among regions and countries that lead by the amount of foreign investments. As in the report published by the Ministry of Commerce of China in the mid of June, BVI remains in the second place after Hong Kong.

The amount of foreign investments for eight months of 2007 made US$14.1 billion from Hong Kong, US$9.91 billion from the British Virgin Islands, and much less – US$2.46 billion – from the third investor, the Republic of Korea. Other regions and countries being part of the top ten investors are Japan, Singapore, the United States, the Cayman Islands, the Samoan Islands, Taiwan Province, and Mauritius.

During the first eight months of 2007, investment value of the above-named top 10 countries made 86.55% of the total nationwide. The number of new US-invested enterprises was down 15.12%,while investment value increased by 0.77%, compared to the same period of 2006.

Brian Obvi,
Offshore Analyst

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The international dimension of Islamic finance

Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 2007 INCEIF Global Forum "Leadership in Global Finance – The Emerging Islamic Horizon", Kuala Lumpur, 30 August 2007.

It is my honour and great pleasure to be here to speak at this first INCEIF Global Forum,which has drawn together a distinguished gathering of scholars, researchers and practitioners from the financial services industry. Let me focus on the international dimension of Islamic finance which has continued to gain significance. Islamic finance now extends beyond the traditional predominantly Muslim economies to become an increasingly important part of the international financial system. Total assets of the Islamic financial system are estimated to exceed one trillion US dollars. It is among the fastest growing financial segments in the international financial system with an estimated annual growth of 15 to 20 percent. There is now a growing demand for Islamic financial products in the global market, far exceeding the supply of financial products and services that is being offered by the Islamic financial institutions.

As we advance forward, the international environment in which we are operating is also rapidly evolving to become more complex, competitive and challenging. In the current environment it has become more volatile and uncertain. The challenge for Islamic finance is to evolve strategies that will ensure its competitiveness, dynamism and sustainability. An aspect in the contemporary global Islamic finance that is fundamental is the “principled centred” nature of Leadership in Islam, that involves "trust" (amanah), and with that comes "responsibility" (taklif) and "accountability" (mas'-u-li-yah ). My remarks today will discuss the positive elements that Islamic finance brings to the global financial system, its prospects for enhancing international integration and the potential to strengthen the socio economic aspects of Islamic finance.

Optimizing benefits of Islamic finance

In evolving the international dimension of Islamic finance an important aspect is the optimization of the oasis of benefits and opportunities Islamic finance has the potential to provide. Islamic finance implicitly embraces strong core values and universally beneficial characters. The fundamental requirement of Islamic finance is that it is confines its activities to that which is supported by an underlying economic transaction thereby avoiding emphasis on speculative purposes. The Islamic principles require that the financial transaction be accompanied by genuine trade and business related transactions. This provides for a high level of disclosure and transparency. This thus prohibits the commoditisation of risks, which effectively leads to its proliferation through multiple layers of leveraging and disproportionate distribution. It reduces the potential for information gaps and for mispricing of risks and thus avoids the elements that could contribute to uncertainty and disruptive market conditions.

The Islamic financial system derives its strength and stability from its faculty to uphold Shariah principles. The Islamic financial system thus has an in-built dimension that promotes financial soundness and stability, as it resides within a financial trajectory underpinned by the forces of Shariah injunctions. These Shariah injunctions interweave Islamic financial transactions with genuine productive activities and prohibit involvement in illegal and unethical activities. This intrinsic principle of governance contributes towards insulating the Islamic financial system from the potential risks of financial stress triggered by excessive leverage and speculative financial activities.

Equally important is that the key components of the Islamic financial system, comprising the financial institutions, the markets and the financial infrastructure, has demonstrated its viability and robustness as a form of financial intermediation, with a mutually reinforcing role in enhancing the overall stability of the financial system. Its growing role in mobilising and channeling the funds to productive investment activities across borders brings significant benefits to the global economy. Firstly, it has the potential to contribute global growth and contributing towards some rebalancing of the global growth given that it brings about a more inclusive financial integration. Secondly, the strengthened international financial linkages allows for the potential for greater diversification of risks. The increase in the Islamic financial products, the growing number of assets classes being offered, the increased cross ownership of assets have all expanded the possibilities for greater diversification of risks and the potential for return.

The intrinsic nature of Islamic finance encourages risk management and provides confidence through explicit disclosure and transparency of the roles and responsibilities defined in the contract. The transparent nature of the Islamic financial contracts and the need for underlying economic transaction reinforces the stability of the Islamic financial system.

A vital challenge going forward is however to build a stronger, competitive and dynamic Islamic financial system that better reflects the internalization of Shariah principles in financial transactions, in its form, spirit and substance. This epitomizes the objectives of the Shariah in promoting economic and social justice. While developing Islamic financial system with products and services mirroring the conventional counterpart is acceptable as a pragmatic approach, it needs to develop further on its own paths and merits so as to maximize the potential benefits of Islamic financial system. Key to this is having an appropriate pricing benchmark to be an indicator for Islamic securities to be efficiently priced and credible.

In addition, the role of Shariah scholars who have the full understanding of the mechanics of Islamic financial products and services, are key to ensuring its continued development. At the same time, Shariah decisions, when made, needs to be disclosed. This will allow others to appreciate the juristic reasoning, which in turn would lead to a wider acceptance of Shariah decisions, particularly if they have implications on cross-border transactions.

As the Islamic financial system becomes increasingly more internationally-integrated, it is important to recognize the different regional and institutional strengths and complementarities and the need to maximize synergies. Collaboration among regional centres and key players in Islamic finance will be an important part of the process that will contribute towards greater international financial integration. Constructive engagement in the form of strategic partnerships and collaboration, as well as in market access needs to be enhanced. Allowing greater market access among players in Islamic financial centres can be a catalyst for enhanced integration and innovative elements in the Islamic financial industry.

Malaysia's experience in strengthening the international dimension of the Islamic financial system has shown positive results. This has commenced in 2002 with the inaugural issuance of a global Sukuk to the liberalizing to allow for greater market access in Islamic banking and takaful initiatives by permitting entry of foreign players.

The third area of international integration is the liberalization of our financial markets to allow for greater foreign participation. In particular, in the sukuk market, foreign corporations, multinationals and multilateral agencies may raise ringgit and foreign currency denominated instruments in our market. Our private debt securities market is the largest in South East Asia. Malaysia also has highly liberalized exchange administration system that allows for the free inflow and outflow of funds. There is also no restriction on the utilization of the funds raised in our market. The funds may be utilized for investments outside the country.

Finally, our own financial institutions have ventured beyond our domestic borders. These cumulative developments have strengthened our linkages with other Islamic financial centres.

Another area important for Islamic finance is the investment in research and development (R&D). The promotion of international strategic alliances through smart partnerships can create greater synergy that will bring about new approaches, new technologies and new areas of specialization. Such collaborative efforts amongst Islamic financial institutions would strengthen the ability to leverage on the industry's expertise. The introduction of innovative Islamic financial products in a specific jurisdictions can be expanded to other jurisdictions, which in turn, will contribute to broaden and deepen Islamic financial markets and thus strengthen the overall development of the Islamic financial industry. In addition, collaboration between academic researchers and the practitioners will enable the practical application of such research findings.

In the area of education and training in Islamic finance, there is now a critical shortage of talent in the Islamic financial industry. Collaboration between training institutions is vital to developing the pool of expertise in Islamic finance that subscribes to common standards. Establishing a network of mutual co-operation and collaboration would strengthen the efforts among the institutions of higher learning across regions in the areas of curriculum development, research, training, exchange of ideas and information, and resources in Islamic finance. Such partnerships in connecting the knowledge communities between regions would facilitate this process.

In the area of Shariah, the progressive convergence of Shariah views and rulings, the mutual recognition of financial standards and products across jurisdictions would be major driver towards greater international financial integration. Such a convergence and harmonisation can only happen with greater engagement among the regulators, practitioners and scholars in Islamic finance in the international community.

Finally this integration process also requires greater cooperation among the regulators to ensure that the Islamic financial system is not subject to vulnerabilities and abuses and thus ensuring its soundness and stability. In this respect, the sharing of information among the regulators including across borders is important especially in a more globalised and liberalised environment where financial transactions and activities have become more complex and globalised. In this regard, there is a greater need for regulators to be continuously connected to share information on key issues and developments faced in their own financial jurisdictions. In this respect, the Islamic Financial Services Board has an important role to facilitate this process.

Closer financial linkages among Islamic financial institutions from different jurisdictions is essential to contribute towards accelerating the process and towards serving as a bridge to strengthen the relationship of the international Islamic financial markets as well as the investment and trade ties between regions. Such linkages within the industry could also lead to new product offerings and to co-arranging financing. There could also be mutual development of IT systems and other technologies including other research and development endeavours.

Finally, let me touch on the development of the socio-economic aspects of Islamic finance. While "profit motivated" Islamic financial institutions will continue to evolve and gain greater significance, this trend also needs to be complemented with similar evolution in the socio economic aspects of Islamic finance such as waqf and zakat. A stronger zakat and waqf system would not only complete the equation for a comprehensive Islamic financial system that supports a more equitable distribution of wealth to ensure fairness and equity, it will also become the user of the Islamic financial services particularly in the management and investment of the zakat and waqf funds. In addition, access to Islamic financial services to micro enterprises would bring such activities into the economic mainstream and improve their level of performance.

Conclusion

As Islamic finance advances forward to become an integral component of the international financial system, continuous efforts are needed to further develop the domestic financial system to meet the changing requirements of a highly dynamic and rapidly evolving environment. In our quest to build a viable and sustainable Islamic financial system, the aim is to contribute to the channeling of capital flows to productive investments, create wealth and promote economic activities, that conforms to the principles and values of Shariah. With this, the Islamic financial system will ultimately bring benefit not just among Muslims but with the rest of humanity, Insyaallah. Thank you.

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UN COUP DE LA DIALECTIQUE

My wife is in the bedroom wiping dust off the face of a stuffed Teletubbie—the one with the Lacanian center protruding from the top of its head. My brother with his construction-working gorilla sausage fingers wrapped round my narrow neck tells me water seeks its own level. In other words, we are poets because we’re lazy. I tell him all poets are indeed lazy and want nothing more than to project this laziness onto the world—that is, they map their desire onto the world around them by means of critiquing it. They inject this desire into the consciousness of others in much the same way a radiologist injects barium-meal into the rectum of a patient—uncertain where the cancer resides but having a hunch it's there, the art of resisting Wal-Mart lies in the search for this cancer. As auroras expose the landscape, the process of the poem exposes whatever cancer may or may not reside in the patient. It draws the cancer out. It is a critique of cancer. It makes of the cancer a beautiful thing at precisely the moment it identifies and condemns this cancer. Experts are uncertain whether barium itself, which allows us to view this cancer, is itself cancer causing. This is the poem. This is itself a material manifestation of desire. Like a muddy puddle, the economic ground we throw this desire against reflects the image of our desire back at us, but also transforms and distorts this desire, which is always already distorted, which is busted up before it comes back to us like a boomerang in the form of a fucked up, static image. This is desire.

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