Kuala Lumpur: There has happened a major reshuffling in the shariah board of International Islamic Liquidity Management Corp (IILM) which is the Malaysia-based Islamic institution and it is well established and well-known.
According to the website of IILM, the corporation has reshuffled its shariah board after losing four of its original six members including senior Saudi and Qatari scholars.
The IILM, backed by the central banks of nine countries as well as the Jeddah-based Islamic Development Bank, was founded in October 2010 to help develop cross-border markets in Islamic financial instruments.
But it has been troubled by internal management upheaval – it changed its chief executive late last year – andthe surprise pull-out in April this year of Saudi Arabia’s central bank, which was not publicly explained.
The changes to the sharia board, which monitors the IILM’s activities and instruments to ensure that they follow Islamic principles, could indicate further delays to the body’s plan to begin issuing sukuk.
The IILM announced in April that it aimed to make an initial issue worth up to $500 million in the second quarter of this year but has not yet proceeded with the plan, and it has not given a new time frame for it.
Two Saudi scholars are no longer listed as members of the IILM shariah board, including Mohamed Ali Elgari, a prominent expert who sits on over 80 shariahboards around the world.
Ahmed Ali AbdallaHamad is the other Saudi scholar no longer listed; he serves as vice-chairman on the shariah board of Saudi Arabia’s Al Rajhi Banking Corp, the world’s largest Islamic bank by assets.
The departures also include Qatari-born Waleed Bin Hady Al Mullah, chairman of the shariah boards of Qatar Islamic Bank and Masraf Al Rayan, two of the Gulf Arab state’s largest Islamic lenders.
Of the original members of the IILM’s shariah board, formed in 2010, only two scholars from Nigeria and Malaysia remain. They have now been joined by scholars from Indonesia and Kuwait; currently the board consists of four members.
It is unclear exactly when the reshuffle occurred, but Indonesian scholar Cecep Hakim’s profile on LinkedIn, an online service for business networking, shows he left the shariah board in April this year, roughly coinciding with Saudi Arabia’s exit from the IILM.
The IILM’s internal shariah coordinator, EdibSmolo from Bosnia, left the body in March this year, according to his LinkedIn profile. He declined to comment. The shariah coordinator does not sit on the shariah board but works with it to design and structure transactions, do research and perform other tasks.
The planned sukuk issue by the IILM would be part of a program that could eventually expand to $3 billion, and would be a major step in developing Islamic finance globally; it aims to address a shortage of liquid, investment-grade instruments which Islamic banks can trade across borders.
The IILM has not explained why it has taken so long since 2010 to develop the sukuk program. People familiar with the body have said it has encountered complex issues involving regulation in various jurisdictions and the choice of assets to back the sukuk.
Current shareholders in the IILM are the central banks and monetary agencies of Indonesia, Kuwait, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Turkey and the United Arab Emirates, as well as the IDB, according to its website.