I have a Hajj savings account at Al Baraka Bank.

Answer

According to the 'Terms & Conditions of The Al Baraka Investment Account', the 'Haj Account' is supposed to be a Mudhaarabah investment. While this is the claim made by the Bank, in reality it is an ordinary savings account on which interest is paid.

A Mudhaarabah deal in terms of the Shariah is not fettered and encumbered with the many terms and conditions stated in the contract of Al Baraka Bank. Furthermore, the Bank claims to be the 'mudharib' (the labourer/manager) to whom the capital investment is entrusted. The Mudhaarib has no right to levy any kind of fee/ charge on the owner of the money (i.e. Rabbul Maal).

The so-called Hajj account operates just as any fixed deposit account in any kaafir conventional riba/capitalist bank.

Condition No.3 of the Terms speaks of a first deduction from the profit by the Bank. After the first deduction, the remainder of the alleged 'profit' will be shared between the Bank and the investor/depositor. The first deduction made by the Bank is Haraam. The Bank is not permitted to deduct any amount from the net profit for itself.

The claim that the account is a Mudhaarabah contract is a myth. It is a conventional interest-bearing savings account, hence haraam.

If you wish, you may forward a copy of our letter to the Bank. If the Bank claims that our summing up of its 'Hajj/Mudhaarah Account is incorrect, they should explain in detail just where we have erred. They should explain in simple layman's terms, without the jargon of the riba capitalists, how we have erred in our conclusion. For example, they should not pull a smokescreen over the eyes of depositors with the drivel of a 'points system'. A Mudhaarabah is an unambiguous Shar'i system in which the profit-sharing ration is pre-arranged. In the case of the Bank's 'investment account', it is 40% for the Bank and 60% for the investor.

For validity of the Mudhaarabah contract, it is vital that the Bank honestly shares real profit, not interest camouflaged as 'profit', in accordance with the agreed percentage sharing (40-60). The ordinary investors don't understand head or tail of the capitalist nonsensical 'technical' terms with which depositors are bamboozled. They simply accept that whatever gain they obtain from the bank is 'profit'. Beyond this vagueness, they know absolutely nil.

The Bank which claims to be an Islamic Bank, is under Shar'i incumbency to present to each investor/depositor a simple one-page annual or periodic account detailing in simple terms, and shorn of capitalist drivel, the following aspects:

Gross Profit, Trade expenses and Net Profit. If the net profit is R100, the Bank's share will be R40, not a cent more. The deductable trade expenses may NOT include any administration fees or any kind of charges whatsoever for itself for handling and investing the funds. The Bank's reward for being the 'mudhaarib' is 40% of the net profits, hence it is haraam for it to levy charges and fees. If the funds are invested in a business, i.e. in another company, the whole of the profit which the Bank acquires from that company will be the subject for the pro rata sharing between the Bank and the investors/ depositors.

The Bank may not enter into a separate deal with the company in which it invests the funds of the depositors to earn firstly a separate profit share for itself. For example, the Bank utilizing the funds of the depositors invests in Company XYZ. All the profit acquired from XYZ belongs to the Mudhaarabah Partnership. No percentage of the profit may be deducted by the Bank for itself.

The capitalist jargon with which the contract is painted provides a screen to conceal the true state of the Bank's dealings from its investors. The ordinary and average person understands sweet nothing of the manner of the operation of the account. The terms and conditions in the contract are in fact hieroglyphics to investors. As long as there is no clarity and transparency on the

precise terms and nature of the contract, it will not be a valid Mudhaarabah deal in the Shariah. Our advice is that you close your Haj Account, and invest in gold coins. People who had bought kruger-rands two years ago, have made almost 80% profit due to the rise in the price of the coins. Krugerrands can also be readily sold, and converted into cash. In fact, gold coins are better than cash.