Urdu Documentary: Hizb ut-Tahrir - A Global Political Leadership

Another Rogue Trader and the Question of Risk

Three years to the day that Lehman Brothers collapsed another rogue trader scandal has hit. Thirty one year old Union Bank of Switzerland (UBS) trader Kweku Adoboli is accused of losing £1.3 billion. Following on from such luminaries as Jerome Kerviel who lost £4.3 billion for Societe Generale in 2008 and Nick Leeson who gambled and lost £827m and effectively collapsed Barings Bank in 1995, Adoboli was last reported as updating his facebook status to “Need a miracle”. In the absence of that miracle Adoboli was  arrested at 3.30am on fraud charges (15^th September).

Post Leeson and Kerviel the major banks have ramped up their risk management operations. All serious players have teams of accountants poring over trading and position data looking for overbought positions and potential disasters. They also seek to keep traders within reasonable risk positions against agreed trader limits. It is a losing task and runs counter to the whole ethos of modern “banking”. The industry in recent years has been transformed from the conservative role of money management, cautious lender and trusted advisor for corporate finance to out of control derivatives gambler. Risk levels have ballooned and much banking business is now centered on proprietary trading (trade on their own book rather than for clients). The pressure on traders to out perform is enormous as are bonuses when they win. The temptation to take ever greater “bets” grows and compensation rules encourage it. Traders will earn relatively small base salaries with giant bonuses for those that can take big risks and win big.

The whole structure of the industry is sadly out of control. Speaking on Channel 4 news (15^th September) former City Minister Lord Myners who has held numerous city directorships was scathing in his attack on today’s banking industry:

“I question whether much of their (banks) activity has any social or economic utility at all”. He went on to describe how risk levels continue to be dangerously out of control: “Bank assets went from 50% of the UK’s GDP to now being more than 600%”. The “assets” which Myners refers to include all manner of derivative contracts which owe more to high risk/high return trading than traditional banking assets of loans, deposits and mortgages. Adoboli was trading highly contentious synthetic ETFs (exchange traded funds) in this world of high speed, high return trading – banks take positions and give assurances over made up products which are not grounded in the actual markets of shares, commodities, bonds and so on. The original idea was that derivatives would reduce exposures and risk but the opposite has happened. This derivative market is now 20 times the size of the total worlds economy which means that relatively small market movements are greatly exaggerated in this “virtual” made up derivative world with consequent enormous gains (for some) and catastrophic losses (for others).

If UBS and others are happy to gamble their businesses away in these precarious products, then one may say let them fail. But the problem is far wider than that. Under the banner of “too big to fail” Western governments have taken it upon themselves to bail out these failed companies. The fact that banks hold the common man’s current accounts should never have clouded the fact that if you gamble and fail then no government should use public money to bail you out. The Swiss government as recently as October 2008 bailed out UBS to the tune of $5 billion, while also guaranteeing $60 billion of “distressed” assets. The official response to the financial crisis was to give a green light for the banks to “gamble” their way out of trouble. Nothing has changed and the extreme risk taking culture remains.

This past week the UK government released the long awaited Vickers report into reform of the banks. Its 360 pages can be summarised as: business as usual, although (following Banker consultation) they would like to separate retail banking from investment banking and then remove some (up to 60%) of the publics responsibility for backing up failed/failing banks. It is scandalous that the report recommends that its limited objectives can only be implemented by 2019. So hundreds of billions can be put on the taxpayer’s neck over a few mad days in 2008, but we are told that essential reform to banking takes 11 years (3 years preparing this report, and another 8 until 2019 to implement).

Myners has also questioned why Vickers depended on bank provided estimates on the costs of the reforms and criticised the lack of radical thought going into its recommendations with little or no analysis of the causes of the 2008 crisis. The crisis continues and western economies remain severely depressed – Myners estimated the hit to GDP in the UK caused by the bank bailouts was 8% over the past 3 years. It is sad that analysis of the hold which banks exercise over governments, the rise of gambling derivative products which serve no useful purpose other than enabling enormous amounts of wealth to be passed to the winners of the bets, and a plethora of dubious trading practices (short selling, highly leveraged trading, securitisation of debt, high frequency trading to depress key markets, and development of monopoly situations) have all been glossed over, and continue to be.

UBS trader Adoboli will be pilloried and paraded, but the real rogues continue with official approval and with a green light to continue (and with the benefit of the public purse to subsidise their positions). What madness.

Traditional business practice dictates that partners share in rewards and risks, in fact Islam requires that losses be shared strictly in accordance with the capital of the contracting partners. If losses will be underwritten by the taxpayer there is no incentive to curb risk taking, the situation can only get worse and dramatically so.

Jamal Harwood

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Legal Reasoning with Maslahah - Part 2

3. Unrestricted Maslahah (al-Mursal):

 This is a proper and harmonious attribute which is neither accredited (mu^ctabaran) nor discredited (mulgha) and based upon this definition is not espoused by anyone. Rather, it is rejected unanimously. Any scholar who has discussed the Maslahah Mursalah based upon this meaning has rejected it. Those who permit the use of Maslahah Mursalah did not intend that it not be acceptable unrestrictedly. They only intended to state that no ruling could indicate to it as a category in itself although a ruling does indicate to its type. Therefore, maslahah mursalah according to those who espouse it is a species of the maslaha mu^ctabarah, which does not have any specific ruling indicating to it as a category in itself.

            Fakhr al-Din al-Razi (who is a proponent of maslahah mursalah) states in his book al-Mahsul: “The suitability that is neither compatible nor has an indication from a specific source (asl) is rejected by consensus. One example is the exclusion of the killer from acquiring any inheritance which has an impediment in contrast to his intent if we were to think that there was no text for it”.[i]

Hence, the action between two contradictories (al-mu^camalah bi-naqid al-maqsud) is a proper and suitable attribute according to the intellect and on the assumption that the text “the killer does not inherit” is absent, the meaning of this suitability is rejected by consensus. This confirms that the proponents of maslahah mursalah do not intend an absolute non-restriction of a source or ruling that has an indication. al-Razi also says: “a suitability that is compatible (mula’im) having no recognised source for it means that its type is considered in its type but has no source indicating to the acceptability of its category in its category and this is al-masalih al-mursalah.”[ii]

 [al-Razi’s] definition here is that al-maslahah al-mursalah is that which no accredited source attests to its category although it is suitable. He explains his words in that its type is considered within its type and brings an example stating: “the example of the effect of the type within the type is the cause of the rulings with a ruling that has no specific source indicating it such as the case with ^cAli (Allah be pleased with him) who fixed drinking alcohol in the place of slander established due to the outward indication of the thing (mazinnat al-shay’) being its place as an analogy with dwelling in seclusion with a woman taking the place of having sexual intercourse with her in private”.[iii]Therefore, maslahah mursalah according to those who hold it is one type of maslahah mu^ctabarahsince the maslahah mu^ctabarah sometimes has a known ruling attesting to it such as the attribute of intoxication that has a specific ruling as an evidence for it, which is the prohibition of intoxicants. Other times, the maslahah mu^ctabarah may not have a specific ruling that attests to it but only a ruling or rulings that indicate its type as mentioned in the above example.

 Since al-Razi read the ruling of establishing seclusion as taking the place of sexual intercourse, a general meaning where the outward indication of the thing becomes the place of the thing, there is the process of generalisation as well as a pairing of some attribute without evidence for the generalisation. The requirement for the generalisation is the cause for calling the suitability unrestricted.

 This why the statement of al-Razi and others have come saying that maslahah mursalah is suitable and compatible without a specific source to establish or attest to it. The word ‘compatible’ (mula’im) is technical and denotes those rulings that indicate a specific attribute. This is like the attribute of hardship regarding travelling indicated by more than one ruling such as: the ruling of combining the prayers; the shortening of the prayer; the ruling of the iftar, etc. So, if an attribute is not considered discredited, it is considered accredited or compatible which is different to the attribute that only has one ruling indicating it which is called the accredited but anomalous maslaha.[iv]

This is why it is said that maslahah mursalah is said also to be compatible with the ‘Aims of the Shari^cah’ (al-maqasid al-shari^cah)[v] and the Maqasid al-Shari^cah are those suitable and recognised attributes (al-awsaf al-munasabah al-mu^ctabarah) that are evidenced by numerous ahkam that exceed any limit. An example is the ‘preservation of the intellect’ (hifz al-^caql) which has no specific hukm to establish it but there is a hukm attesting to the attribute of intoxication (al-iskar) in addition to there being ahkam attesting to the act of thinking and reflecting in that those who think and reflect are praised and those who do not possess deep knowledge and lack real knowledge are censured, the exemption of any legal responsibility from the child and the mentally challenged (al-majnun) as well as other examples that are found that collectively indicate towards preserving the intellect. As a result of this, it is said that preservation of the intellect is one of the aims of the Shari^cah even though there is neither a specific hukm nor a nass to establish it. The same is said regarding the other aims of the Shari^cah.[vi] Thus, there is no such saying in the Shari^cah such as: ‘The maslahah is an evidence for a hukm shar^ci so therefore maslahah mursalah does not mean it is an evidence for establishing either the prohibition or permissibility of actions by the fact of it including a harm or a benefit.

 We want to here now pause at some of the opinions that have been transmitted by scholars and writers which are opinions and analyses sometimes far from being accurate and so are no really transmitted reports.

The opinion of maslahah mursalah has been famously attributed to Imam Malik (Allah be pleased with him) as well as to other leading figures of the Hanafi School and the Shafi^ci School or just to the Shafi^ci School. Yet others have claimed that the [opinion of maslahah mursalah] is found in all four of the Madhhabs.

Dr. Muhammad Hasan Hitu says: “The evidence of reasoning with [maslahah] mursal has taken a heavy blow. There have been conflicting reports about it as well as divided opinions…”[vii]

Dr. Mustafa al-Bugha has said: “The preferred opinion is that it may not be used as evidence because there is no evidence to accredit it. No one else except Imam Malik has adopted this view (Allah have mercy upon him)…”[viii]

 Dr. [Ramadan] al-Buti holds the opinion that: “Maslahah mursalah is accepted by all of the Companions, Tabi^cun and the four Imams…”[ix] Al-Qarafi holds to the opinion that it is accepted in all four madhhabs.[x]

 Shaykh Taqi al-Din al-Nabhani said: “Masalih mursalah is not taken as a shar^ci proof (hujjah shar^ciyyah) due to the lack of evidence indicating to it…”[xi] And he also said: “… hence it is not correct that it be taken as one of the Shari^cah evidences…”[xii]

 The Qadi Abu Bakr al-Baqillani rejected [maslahah mursalah] and entirely rejected the identification of the suitability saying that it implies that the intellect can delineate what is good and what is repugnant in addition to implying the adoption of the legislation of the intellectuals as well as the wise (al-^cuqala’ wa ’l-hukama’).[xiii]

 Ibn al-Hajib too rejected it saying: “masalih mursalah is masalih that has no basis from the Shari^cah to recognise and establish it even though masalih is still practiced and the people accept it…” He also said: “for us there is no evidence [for it] so it must be rejected just like al-istihsan…”[xiv]

 The Hanafis have strongly rejected [maslahah mursalah] so attributing them with the opinion is impossible. The opinion of their scholars is one: ‘no evidence and no recognition’.[xv]

 Al-Amidi said: “This (i.e. meaning of unrestricted suitability [al-munasib al-mursal]) is ambiguously relates to two categories (i.e. the mu^ctabar and the mulgha) and so one [category] cannot be chosen over the other hence this prevents it being used as a proof without the evidence of the consideration (shahid bi ’l-i^ctibar) by which one recognises the mu^ctabar type or the mulghatype…”[xvi]

 ^cIzz al-Din b. ^cAbd al-Salam said: “there is no-one who uses istihsan or uses maslahah mursalah…”[xvii]

al-Ghazali said: “indeed, whoever uses istislah has validly legislated and whoever has uses istihsanhas validly legislated…”[xviii]

Majd al-Din Ibn Taymiyyah said: “masalih mursalah cannot be used to establish ahkam…” and Taqi al-Din Ibn Taymiyyah said: “al-masalih al-mursalah has entered into the Religion based upon what Allah has not permitted and it resembles some aspects of istihsan, what is right according to the intellect, personal opinion and the like…”[xix]

Thus, these statements collectively taken together verge on establishing masalih mursalah as objectionable (mardudah). It also as though there is agreement that this position is attributed to Malik (Allah have mercy on him). Moreover, those who prefer this attribution to Malik, rely on analyses within some of the ramifications (furu^c) of his madhhab. However, no-one has brought any evidence to show that Malik actually held this position nor that he held its meaning [in the way they have defined it]. The first person to have attributed this notion of mursalah to Malik was Imam al-Haramayn al-Juwayni and Allah knows best. [al-Juwayni] states with bias against [Malik’s] methodology that: “it is evident that he established maslahah far from the acceptable (ma’lufah) and well-known (ma^crufah) form of maslahah within the Shari^cah… there is no such maslahahestablished in Usul and there is no such understanding for it. Rather, the view is based on his theory.”[xx] We also find the opposite where others have denied any attribution of masalih mursalahto Malik. Al-Shawkani says:

“a group of the Malikis have denied any attribution of [masalih mursalah] to Malik; one of them being al-Qurtubi. He said: Shafi^ci and some of the eminent companions of Abu Hanifah have held that [masalih mursalah] ‘cannot be relied upon and this is the position of Malik.’ Imam al-Haramayn has gone a little too far and has been less than careful in attributing to Malik such exaggeration on this matter as no such thing is found within the books of Malik nor in any of the books of his companions.”[xxi]

Dr. Hitu writes: “As for the use of [masalih] mursalah as evidence and its attribution to Malik, it is one over which there is no agreement.”[xxii]

As for al-Shatibi regarding whom some of his contemporaries attributed him with using Maslahahas evidence, then they attributed to him something he did not actually say. They took his views in totally the wrong way. He would be absolutely furious against the views that use maslahah as evidence and would consider them as being innovation (bid^can) and pure caprice (ahwa’an). That is why he devoted a section in [his book] al-I^ctisam drawing a distinction between masalih mursalahand al-istihsan[xxiii] as he understood them to be and between innovation (bid^cah) and pure caprice (ahwa’a) as a basis for using maslahah by those who seek flimsy excuses (al-mutadharri^cun). [al-Shatibi] said: “if there are no specific attestations for it, then neither its consideration nor its rejection can be established and this has two points: The first is like the reason behind the prohibition of inheritance for the act of killing. The action is between two contradictories (al-mu^camalah bi-naqid al-maqsud) even if there is no text to affirm or establish it. This type of ^cillah has no association with the regulations (tasarrufat) of the shar^c so hence it is not valid to use it either as a basis for ^cillah or as a basis for a hukm. The legislation derived by someone in this way would not be acceptable. The second is that it is suitable with the regulations of the shar^c which is that there is a jins that exists for the meaning as considered by the Lawgiver in general without any specific evidence [for it].”[xxiv] [al-Shatibi further] said: “suitability does not by itself determine or necessitate the hukm. This is the position of those who apply preferential rational discretion (ahl al-tahsin al-^caqliy).[xxv] Rather, if the meaning is apparent and we understand that the shar^c has considered it in necessitating the ahkam, only then will we accept it.”[xxvi]

Therefore, if one makes maslahah or rational suitability (munasabah ^caqliyyah) evidence for establishing a hukm where the investigator measures the benefit and the harm with his mind or his wisdom and then issues a hukm based on that [method], then this has no basis in the religion.

The reality and all that is in it and the attributes of benefit or harm are the object of the investigation (mawdi^c al-bahth) that is need of a hukm. The intellect, wisdom and understanding are the tools (adawat) to understand the reality and the hukm. The source of hukm is only the revelation.

That ruling given for permitting the adherence to maslahah or one’s whim or pleasure or even personal preferences, has to be referred back to shar^ci source that indicates to its permissibility such as choosing what to eat, wear, who to marry, establishing schools, hospitals and what the expenditure related to these matters etc. If the matter of masalih mursalah is like this and it does not contradict or oppose a text nor there being a hukm that invalidates it, then from where have these views as well as strange and odd fatawas appear from that are issued by some of the scholars in our times? Where do these views appear from that oppose and contradict what the Companions and scholars have agreed upon and sometimes clash with texts that are definitive in how they are established and in the meaning they carry.

Indeed, these revisionist views are naturally rejected by anyone who does or does not comprehend these details in usul al-fiqh. The methodology that gives rise to these views has never been used by any reliable scholar in the past. In fact, these views are not from the munasib al-mursal or masalih mursalah but from the type of maslahah that is rejected (mulgha) which is rejected by agreement and consensus as we mentioned from al-Razi and al-Shatibi. The promotion of these views as well as the endeavour to ground them in fiqh which the general people and the student of knowledge practice without care for the texts when following maslahah, is revisionism and blameworthy innovation in the Religion as well as following one’s whims. Allah (Most High) said: (It is not for a believer – male or female – that when Allah and His Messenger decide a matter to follow any other course of his or her own choice).[xxvii]

 To summarize, the term masalih mursalah has been used in the books of the scholars of Usul with three different meanings. For this reason, we find confusion in its transmission from the scholars and from Malik (may Allah be pleased with them all). So, we see some who attribute [maslahah mursalah] to all the madhhabs and see others deny it of all [madhhabs] and even Malik [himself]. Again, we see others who attribute it to the Shafi^cis and the Hanafis whereas others who deny it being so.

The first meaning considers maslahah as evidence. And so here the faqih reasons that something is either halal or haram because it is either beneficial or harmful when no text is available. This meaning is rejected by all and none of the reliable scholars has ever stated this. This meaning has gained prominence in our times due to the spread of ignorance as well as the decline in the authority of the Religion.

The second meaning is what we have mentioned in our study in that the generalization of an attribute (wasf) or meaning is extended where there is no shar^ci evidence for it. Through this generalization, the attribute acquires matters that are neither acceptable nor applicable to it even if there were no generalization. It has no other evidence for it either through a text or by itself. This meaning was held by some but rejected by the majority. Its validity has been attributed to the scholars of the Shafi^ci school like al-Amidi and al-Ghazali where they called it the recognized suitability (al-mu^ctabar al-mula’im) potentially accepting the mu^ctabar al-gharib. The Scholars of the Hanafi school totally reject this and if we find anyone who does accept it, then he is outside [of the position] of their madhhab.

The third meaning is that masalih mursalah is any action or thing that falls under a universal or general evidence (dalil kulli aw ^camm). It has evidence – whether textual or a juristic maxim (qa^cidah)[xxviii] – in virtue of the fact that it is a case (fardan) or a particular (juz’iyyatan) of cases or particulars subsumed under that universal or general evidence. Such maxims include ‘The norm is that things in origin are permissible until an evidence exists to prohibit it’ or like the maxim, ‘that by which an obligation is completed is itself an obligation’ and their like. Examples of [these maxims] are the use of ballot boxes and then the sorting and counting process of the vote registers or the use of computers for the election process. All these, despite the absence of any direct evidence permitting the use of ballots and computers or this type of election process, fall under the maxim of ‘The norm is that things in origin are permissible until an evidence exists to prohibit it’ and ‘if the evidence for the rule is general, then it takes the ruling of that rule.’

This meaning can be attributed to all the scholars of the madhhabs and perhaps this is the meaning and no other that is attributed to Malik (Allah have mercy on him).

As a note on these meanings [of maslahah], the first is rejected by consensus which amounts to deciding what is good and what is bad through the mind. The second is also rejected because the category of what is recognized is given without evidence and the method of generalization too is without evidence and hence not valid.

The third meaning is the acceptable one by agreement and this is what fiqh and ijtihad is based upon regardless of whether this sense is given the name maslahah mursalah or not. We ask Allah for correctness and guidance.

Shaykh Mahmud Abd al-Kareem Hasan

Translated by ibn Kamaludeen al-hanafi

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[i] See al-Razi, al-Mahsul fi ^cIlm al-Usul, 5:167.

[ii] Ibid., 5:167.

[iii] Ibid., 5:164

[iv] “For the division of the suitability into mu^ctabar, mursal and mulgha as well as the division of themu^ctabar into efficacious/effective (mu’aththar) and anomalous (gharib), see the Ihkam of al-Amidi, 3:246-248; the Irshad al-Fuhul of al-Shawkani, p.217 and Fawatih al-Rahmut bi-Sharh Musallam al-Thabut by al-Ansari, 2:266.” Author’s note in the text, p.6.

[v] For more on the maqasid al-shari^cah, see al-Nabhani, al-Shakhsiyyah al-Islamiyyah, 3:365-371 and al-Zaydan, al-Wajiz fi Usul al-Fiqh, pp.378-385.

[vi] The other Shari^cah aims include:

1. Faith,
2. Life,
3. Intellect,
4. Lineage and
5. Property.

See al-Ghazali, al-Mustasfa min ^cIlm al-Usul, 1:287. Although, it seems that Ibn Taymiyyah departed from considering a limited and finite set of maqasid and thus revised the scope extending to an unending index of values; Majmu^c al-Fatawa, 32:134.

[vii] See Hitu’s edition of al-Ghazali’s al-Mankhul min Ta^cliqat al-Usul, p.370.

[viii] al-Bugha, Athar al-Adillah al-Mukhtalif Fiha, p.41.

[ix] al-Buti, Dawabit al-Maslahah, p.407.

[x] al-Qarafi, Sharh Tanqih al-Fusul, p.394.

[xi] al-Nabhani, al-Shakhsiyyah al-Islamiyyah, 3:433.

[xii] al-Nabhani, al-Shakhsiyyah al-Islamiyyah, 3:437.

[xiii] al-Baqillani, al-Burhan, 2:724.

[xiv] See the Hashiyatay al-Taftazani wa ’l-Jurjani ^cala Mukhtasar al-Muntaha al-Usuli, 2:389.

[xv] See for example Taysir al-Tahrir ^cala ’l-Tahrir of Ibn al-Humam, 3:315; Musallam al-Thubut, 2:266 and 301 and al-Bukhari, Kashf al-Asrar, 3:518.

[xvi] al-Amidi, al-Ihkam, 4:160.

[xvii] al-^CIzz b. ^cAbd al-Salam, Qawa^cid al-Ahkam fi Masalih al-Anam, p.304.

[xviii] al-Ghazali, al-Mustasfa min ^cIlm al-Usul, 1:350.

[xix] al-Musawwadah, p.450.

[xx] al-Juwayni, al-Burhan, 2:721.

[xxi] Irshad al-Fuhul of al-Shawkani, p.242.

[xxii] See Hitu’s discussion in his edition of al-Ghazali’s al-Mankhul min Ta^cliqat al-Usul, pp.354-365.

[xxiii] al-Nabhani, al-Shakhsiyyah al-Islamiyyah, 3:419-426.

[xxiv] al-Shatibi, al-I^ctisam, 2:375.

[xxv] i.e. those who determine what is intrinsically right and good according to reason.

[xxvi] See al-Shatibi, al-I^ctisam, 2:374.

[xxvii] See surat al-Ahzab:36.

[xxviii] A “legal maxim” (qa^cidah) is a theoretical abstraction of a non-binding ‘rule’ or ‘principle’ that is expressive of the goals and objectives of the Shari^cah. They are derived through scrutiny and induction (istiqra’) from the corpus juris of fiqh and form two general types: 1) those that reiterate (or are mere reformulations) of principles found in the Qur’an and Sunnah and 2) those deduced by the jurist or members of a juristic school. They generally apply (aghlabiyyah) to their related particulars with exceptions. See al-Zarqa, Sharh al-Qawa^cid, p.33. There are five notable maxims (qawa^cid al-khams) with inter-juristic consensus and they are said to apply or extend to all areas or domains offiqh without exception:

1. “Certainty is not eliminated by doubt” – al-yaqin la yuzalu bi’l-shakk (Mejelle, article 4).
2. “Hardship begets felicity” – al-mashaqqah tajlibu ’l-taysir (Mejelle, article 17).
3. “Harm must be eliminated” – al-darar yuzalu (Mejelle, article 20).
4. “Custom is the basis of judgment” – al-^cadah muhakkamah (Mejelle, article 36).
5. “Acts are judged by their goals and purposes” – al-umur bimaqasidiha (Mejelle, article 2).

For evidences used for each maxim, see al-Suyuti, al-Ashbah wa ’l-Naza’ir, p.61-64.

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