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Depositors question role of Muslim clerics

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A politician  and some Islamic clerics are being accused of having an indirect hand in the mismanagement of a deposit taking financial institution based on Shariah Law where depositors with investments over Rs. 800 million are now being given the cold shoulder by their religious leaders.

Some members of the All Ceylon Jamiath ul Ulama (ACJU), the governing body of Islam in Sri Lanka, are being accused of obtaining loans from Ceylinco Profit Sharing Investment Corporation Ltd, now facing a liquidity crisis, and not paying them back while serving in the company’s Shariah Board.

These members are also accused of approving loans to companies and individuals upon the request of a Muslim Politician in the East without collateral or security.

Depositors accused these members of the ACJU of promoting the Islamic Financial concept in other financial institutions while ignoring the plight faced by depositors of Ceylinco Profit Sharing.

Ceylinco Profit Sharing was incorporated in 1982 and is a part of troubled conglomerate Ceylinco Consolidated. Its core business of accepting deposits and granting loans was governed under the concepts of Islamic Shariah Law.

The ACJU had nominated some of its members to the Shariah Board of Ceylinco Profit Sharing.

Depositors of Ceylinco Profit Sharing said they have not received their profit shares nor have they been able to withdraw their deposits since February of this year.

“Currently there are over 11,000 depositors with investments amounting to over Rs. 800 million,” an action committee of depositors of Ceylinco Profit Sharing said.

These depositors alleged that despite frequent assurances from the management nothing has happened to date.

Depositors have written to the ACJU requesting them to actively participate in finding a solution to the liquidity crisis faced by Ceylinco Profit Sharing but with no response.

“Unfortunately, the ACJU and their members are shying away from depositors and are now busy in promoting the Islamic Financial concept in other institutions,” Mumtaz M. Rahman, President of the depositors’ committee said.

Depositors also alleged that some members of the ACJU in the Shariah Board had obtained loans from Ceylinco Profit Sharing while serving on the board.

“This has led depositors to wonder as to how they could carry out their duties with dignity and independence. It has been revealed that some of the ACJU members had never repaid their loans and that one of them is a well known Moulavi (cleric) often seen and heard in the electronic media,” Rahman said in a letter to the press.

Depositors also said that loans had been channelled through the Shariah Board of Ceylinco Profit Sharing and given to companies and individuals without any collateral or security upon the personal request of a Muslim Politician from the Eastern Province.

“Depositors are of the opinion that apart from mismanagement that may have taken place in the company, the ACJU is also to be blamed and should take responsibility for the present crisis as they openly promoted the company,” Rahman said.

The depositors’ committee pointed out that many of the deposits had been used to invest in other companies of the Ceylinco group.

Audits have also not been done, depositors allege, with the last available audit report of the financial year 2003/04 issued in June of this year! it said.

Depositors said the company does not have money for its day-to-day expenses.

The Island

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Written by lankamuslim.com

August 28, 2009 at 6:16 am

Posted in Articles, Muslim news

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