Islamic Perspective

Islamic Perspective on:-

1. Trust

The problem that can be found in Madoff’s case is it involve in trust of the investors who gave their money as they put their trust that Madoff Investment Securities to invest their money to gain profit. In Islam, this concept is called Amanah. Allah had mentioned in many verses in al-Quran about amanah such as in Surah An-Nisa, Allah had commanded “God command you to render back your trust to those whom they are due”

Furthermore, Prophet Muhammad pbuh also ask us to fulfill the amanah even if the other party is not trustworthy. “Discharge the settlement to those entrusted you, and do not betray the one who betray his promise”. This clearly shows that Islam take serious on fulfilling others trust whether or not the person who entrusted us is good or bad person.

In Madoff cases, he clearly betray the trust that had been given by the investors who put their money in the hedge fund. Hence, it is unethical in Islam to break promises and betray someone’s trust.

1. Theft

Theft generally means the taking of property belonging to another secretly and with fraudulent intention of arrogating it. The Madoff’s hedge fund involving in stealing employee benefit plan. In Islam, stealing is considered as a big issue as it against the Maqasid Shariah that is to protect private and public properties against theft, destruction or unauthorized interference. There are some hadith and verses from al-Quran that warn the believers not to steal others properties as mentioned in al-Quran Allah stated “O you who believe! Eat not up your property among yourselves unjustly except it is a trade among you, by mutual consent …” (4:29). During the Hajj al-wida’ (farewell pilgrimage) Prophet Muhammad also notified the believers “your lives and properties are forbidden to one another till you meet your Lord on the day of resurrection”.

From this verses and hadith, it clearly shows that Islam give a great emphasize on steal others properties. Hence, Madoff hedge fund is not only unethical but also against the Islamic law.

1. Money laundering

The Madoff’s hedge fund also involve in money laundering which is can cause harm to the society as a whole. Money laundering is a process during which the illegal proceeds of criminal origin of the money is shown to be legitimate In other words, money laundering is a process during which the main sources of illegal money and revenues to be hidden (Asaadi, 2007).

Money laundering is considered as a organize crime as it can only be done by systematic method. There are many negative effect such as economic, social and political problems. Islam take this activities as serious crime since it is involving with eating the wrong property. In Surah An-Nisa’ Allah mentioned to the believers “Do not eat each other's property in a wrong way” (4:29). From this verse it can be concluded that eating the wrong property is prohibited and punishable. Moreover, getting someone’s property in a way like robbery and usurpation, or not by these ways, but because it has come by nonreligious way like gambling and usury is forbidden.