• Corrupt set-up: Observing Islamic practices in such a set-up :
We come from a country which has been suffering from the ill-effects of un-Islamic, corrupt rule for quite a long time. Bribery, forgery, false records of account, levies imposed by tax men which go straight into their own pockets, high unemployment, poor wages in relation to living expenses are the order of the day. Middle-class businessmen find themselves facing a tough choice of either taking part in such practices or be condemned to failure of business. The majority of them have tried to carry out some sort of compromise. They offer their prayers, fast in Ramadhan, and pay zakah and attend regularly to their worship, while at the same time they cheat the government in taxes, pay bribes to government officers, try to sell their products by making false claims, take loans on interest, etc. They argue that they are sure of being forgiven by Allah who knows their intentions and their situation. If they were to present correct records, pay government taxes and follow the letter of the law, they will be left with very little of their profit and they cannot make ends meet. They would remain poor and the rich would soon crush them. They further claim that they only take loans on interest in the starting period of their business. When they have reached a reasonable measure of prosperity, they would stop that. I should be grateful for your comments.
It is very easy either to condemn this situation and the practices of businessmen in your country or try to find justification for it. But it is wrong to do either. The situation which you have described at length is not unique to your own country. It is applicable to many countries in the Third world, many of which are Muslim countries.
The state of affairs normally comes in the wake of a set-up where the government’s need to establish its authority leads to commit certain excesses and replaces government officials with their own men who are chosen on the basis of loyalty rather than competence. These also commit excesses of their own and that leads their subordinates to also commit further excesses. On the other hand, mismanagement of the economy leads to inflation and rising prices. Corrupt officials want to have more money and follow path of self-glorification. In order to win favor with these people, or at least to guard themselves against their unjust practices, people try to appease them with bribes. Further bribes are also paid to their superiors and evil spreads until it is so common in society that it is practiced openly.
In such a situation, there will always be much injustice as well as suffering by people who are not in a position to either receive or pay bribes. Unemployment will rise and so will the cost of living. A substantial section of society will not be able to make ends meet. Hence the question whether it is permissible for a person in a dire need to resort to such practices which will help him earn a living for himself and his family.
This is not an easy question at all. However, many scholars have pronounced judgment which tells everyone that a wrong situation like this does not permit people to indulge in sinful practices. The Prophet, peace be upon him, says that Allah curses both the one who accepts a bribe and the one who pays it. A scholar will always abide by this Hadith and give judgment on bribery in accordance with it. But then it is easy to say that all bribery is forbidden, while the situation itself is very difficult. Not all bribes given in a corrupt society are presented in order to win an undeserved favor. It is very often the case in many societies that people have to pay bribes in order to get what is rightfully and legally theirs. Sometimes, a totally innocuous case such as division of inheritance among the heirs of a deceased person will remain on the desk of a government official for many months because he refuses to deal with it unless he is paid something to give it the official seal, which he is in the first place employed to do. This is certainly a bribe but it is paid only to overcome an unfair attitude by a government official who is negligent of his duties. On the other hand, tax inspectors may go to a businessman, expecting that he will present them with false accounts and that he will be paying them something in order that they pass his accounts as correct. If the businessman is a good believer who fears Allah and presents correct accounts, he will be held in suspicion by the inspectors. When they realize that no bribe is offered to them, they try to create problems for him and accuse him of falsifying his records. They may be very nasty and they may try to land him into trouble. Should he or should he not pay them something to let them accept his correct accounts? The normal answer given by a scholar to this question is that one should try every possible means not to digress from Islamic teachings. Some people may retort that this is easier said than done. It may be so, but no scholar will tell you that indulging in any practice which is clearly forbidden in Islam can be condoned under any circumstances. This is due to the fact that the authority to forbid something belongs to Allah. No one will pronounce lawful something that Allah has judged to be unlawful.
Moreover, when we allow ourselves to indulge in forbidden practices, we get used to them. We, in fact, help establish their roots more firmly in society. It is certainly wrong to try to justify one's action by the argument that everybody does the same. In certain systems, embezzlement of funds or cutting a slice of the government income to oneself is practiced by the majority of officials in high positions. Employees in more junior positions may emulate their seniors and justify their own action by saying that the top employees are doing the same. That is no argument to justify any unlawful earnings. Two wrongs cannot make right. The crime of a superior employee does not justify that of a junior one. What is needed is a firm stand against all corruption. Only if we demonstrate our resolve to lead an honest, straightforward life will the corrupt have second thoughts about their corruption. Moreover, that firm stand must be motivated by a general resolve to go back to Islamic life. Only through such a return can the eradication of corruption be assured.
Scholars are simply maintaining a consistent stand when they give such answers. It is certainly true that corruption cannot be beaten by acquiescing in even a small part of it. Stamping out corruption needs a firm, unhesitating stand against it which combats all its aspects.
Having said that, I should perhaps add that Allah does not deal in the same way with someone who gives a bribe in order to gain something which is unlawful to him and another who pays a government official some money in order to ensure that he gets his right, especially when he is desperate for it. The two are not the same. In the first case, the aim is to get something to which one is not entitled, and for which one employs unlawful means. In the second case, one is paying in order to overcome injustice and to secure one's right.
Similarly, there is a world of difference between a businessman who presents false accounts and bribes government officials so that they sign them as correct and one who presents correct accounts and finds himself forced to pay the same government officials to accept them. The first one will gain something unlawful, while the other is fighting injustice. While this argument is logical it cannot be used in order to justify all practices you have mentioned.
As for obtaining loans on interest, that is something that no scholar will condone. Islam cannot be applied piecemeal. It must be taken in its totality. No businessman can argue that he will accept or pay interest only in the first few years of his business, until he has established himself. The fact is that when he resorts to such loans and pays such interest, and he finds that it enables him to achieve profits more easily, he will try to find fresh justification for every loan he obtains. The proper Islamic method is to refrain from this practice right from the beginning. When one refrains from an unlawful practice only because it is forbidden, Allah will bless his work and give him prosperity
Some companies and business people charge a higher price for goods that are sold by installments or when the payment is delayed. Is it permissible.
If you go to a shop to buy some expensive item and the shopkeeper offers you different methods of payment with an increase in the price of each, then that is acceptable. Let us say that he would sell you the item you desire for, say, SR. 5,000 if you pay immediately. If you choose to pay after six months, then he tells you the price of the same item is SR. 5,500. He may go even higher if you want to pay the amount by installments over a period of one year. Whichever method you agree with him is acceptable. People often equate such arrangements with interest charged on bank loans. The two are different. In term and installment purchase, the buyer asks for the price of an article, making it clear that the price is paid over a particular time or over a certain period. He is quoted a price for that article. He is not lent the money to buy the article and charge interest on this loan. He is simply buying a particular item at a fixed price which is certainly higher than would be the case if he made cash payment. But all this is an arrangement of buying and selling which is perfectly legitimate.
The case would be different if you agree to a price and then go to a bank or finance company to borrow that price and are charged interest on that loan. In this case, you are doing two separate transactions: The first is the purchase of that article at a particular price, and the second is a loan you are arranging with a bank. The first transaction is legitimate while the second is forbidden.
It may be suggested that when a company sells an article on hire purchase, it can only do so because it has some arrangements with a bank or a finance company. That arrangement may be, in fact, no more than the arrangement of a loan from the bank on behalf of the customer. That may be so, but the customer is not involved in this action. Therefore, he cannot be blamed for it. We can look into this arrangement when we know its details. But for the buyer, the arrangement of payment by installments or at a fixed future time in return for a higher price, is permissible.
May I ask you about a transaction I do when I go home. I buy gold or jewelry here to sell back home for cash or by installments. A friend of mine says that selling gold on credit or by installments is forbidden, as it is similar to usury. Please comment.
We have to differentiate here between selling gold as bullion, or as a currency, which used to be the case in many countries, and selling gold jewelry. When we talk about jewelry, there is an added element to the gold which is the manufacture. No jeweler anywhere in the world would sell manufactured jewelry at the same price as its weight in gold. So we have to treat jewelry as an ordinary commodity, but remembering its nature as well.
When we speak of gold as a currency, or as a precious metal, then when we sell it, the price has to be something other than gold. So we may sell it for cash, or silver, or any other commodity. We may agree on a price for immediate exchange. But if we are exchanging gold for gold, the weight of the quantities exchanged must be the same, and the exchange must be effected on the spot. No credit may be given, and no price increase may be agreed for delayed payment, because that would be giving more value in return for time allowed.
Jewelry has two elements which affect its price: weight and manufacture. Therefore, it is an ordinary commodity which may be sold on credit or by installments. Its price, however, must not be determined in gold in order to steer away from any suspicion of usury. It has always to be understood that the article exchanged is not mere gold. In other words, when you buy or sell an article of jewelry, you do not talk about it as merely a quantity of gold weighing so much, but a piece of jewelry which has the added value of fine manufacture.
• Currency dealers and a deal in currency :
What is the Islamic view on dealing in currency? If one buys a particular currency at one time and sells it later at a higher rate, is this permissible? Is it akin to usury?
No, there is no similarity between usury and dealing in currency as practiced by currency dealers and financial institutions. What is forbidden is to buy the same currency at different rates. If we buy gold for gold or silver for silver or Riyals for Riyals or dollars for dollars, then the two quantities in each transaction must be of the same weight or the same count. If we are exchanging one currency for another, then the two amounts are decided by rates of exchange. What is important, however, is to complete each transaction on the spot. In other words, if I want to buy dollars and offer Riyals, the amount of Riyals I pay for the amount of dollars I am buying is decided by the rate of exchange on the day. I must pay the Riyals and receive the dollars straight away, or "hand to hand," to use the literal translation of the Prophet's own expression. The idea behind this is to dispel any suggestion of making unjustified profit which leads to suspicion of usury.
If one wants to make profit by buying a certain currency at one time and selling it at another, hoping for the rate of exchange to improve in his favor, he is perfectly entitled to do so. Money in this respect is a commercial commodity which may be bought and sold for profit. He must remember, however, that buying the new currency and selling it constitute two separate transactions. When he buys, he has to pay the price on the spot. When he sells, he must receive the price also on the spot. If this is duly observed, then there is nothing wrong with such a transaction.