Unlawful earnings: In the past

Q652 :A trading company which obtained interest based banking facilities for conducting its business made a good profit which was paid to the shareholders. The general manager, who at the same time was a major partner, bought some land and real estate with what he had received from the company. His investment has multiplied over the years to about six times its original value. However, when he realized that Islam forbids interest, he resigned and left his job. What worries him now is what to do with the assets and real estate he possesses, as they were acquired out of the income of interest-based trade operations.


A652 : This is a tricky question, because I take it that it is pretty impossible for the man concerned to know how much of his original earnings came from the facilities the company received from the bank and what percentage of that profit was the result of the direct investment of his money and how much of it was due to his own efforts. You may have a situation where a company could hope to make a net profit of, say, 20,000 riyals a year if its trading is confined to the money the partners have paid in as capital. However, with banking facilities, the company may make a much greater profit, which is not proportionate to the actual interest it pays or receives. Moreover, the company in such conditions does not receive interest, but pays it in return for the facilities which it receives from the bank. These may be in the shape of loans or some other facilities such as letters of credit and so on. The operations of the company may be all very legitimate, but its profits have a doubtful aspect as a result of receiving such banking facilities and paying interest on them. We certainly cannot condemn all the income this person received from his company as unlawful. Otherwise, we would be saying that all the efforts he and his partners put in the work of the company have no value. You realize that the efforts are more important in the work of the company, and indeed, from the Islamic point of view. What I would tell this gentleman is that the fact that he has left the company because of the nature of its operations is highly commendable. Within the context of usury, Allah says: "He who receives admonition from his Lord and stops (his usurious activities) may have what he earned in the past, and Allah will make His decision in this case." But I will also recommend this person to be very charitable and pay whatever he can to poor and needy people. I hope by so doing,i.e. having nothing more to do with usury and being very charitable, the reward he receives will offset his past mistakes. Certainly, by repenting of his past sins he has taken the first step and by being charitable he takes a positive second step which will undoubtedly bring him forgiveness by Allah.


Our Dialogue ( Source : Arab News - Jeddah )