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Fatwa CenterWorking for a company partly involved in Riba-based activities
Question
Assalamualaikum Dear Sheik, My name is Abdulla Yousuf. I'm a Chartered Accountant by profession. I have got a job offer at a Fund Manager Company to work as the Chief Internal Auditor. They do undertake the activity of managing the funds on behalf of the third party investors. However, investment decisions are taken by the Fund Manager (My Company) on behalf of the Investors. Predominantly (85% at least), these funds are invested in equity capital (ordinary share capital) which doesn’t guarantee a fixed return. However, a portion (around 15% maximum) of the funds is invested in fixed return bearing capital (in the way of preference shares and loans). Although the fund manager invests the investors some money in fixed return bearing capital (similar to interest), it is not their main business model. Predominantly, the business is investing the investors’ money in small and medium scale businesses as ordinary capital and providing management expertise services and making the Company’s grow. The only income for the fund manager comes in two ways. One is the management fees (around 3%) they charge from the investor based on the amount of funds undertaken to be invested and the second is, at the time of the disposal of the investment they enjoy a portion of the capital gain too (may be around 10%). The rate of the management fee and the capital gain which is enjoyed buy the fund manager is decided in advance. My question is, are we allowed to work in an environment where my Company will be involved in interest based decision for some extent? (Although it is not the main business (only 15% maximum) and although based on which the Company doesn’t take any interest but provides investment advice on that only).
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.
In order for the fund management to be permissible, the fund activity should be permissible under Sharee‘ah. This means that it should not invest its money in unlawful shares or in usurious loans.
The reason that managing funds which do so is unlawful is that it supports falsehood and helps in consuming usury, although Allaah The Almighty Said (what means): {And cooperate in righteousness and piety, but do not cooperate in sin and aggression. And fear Allaah; indeed, Allaah is severe in penalty.}[Quran 5:2]
It seems from the question that the mentioned fund does not abide by the Islamic criteria in its activity. Hence, work in it is unlawful, unless your work is restricted to the shares that are permissible under Sharee‘ah, as has previously been clarified in Fatwa 81504. But if your work includes what is unlawful, it is impermissible for you to work in that fund so long as you do not reach the level of dire necessity considerable under Sharee‘ah, like him who is on the verge of destruction and has no way to feed himself, or him who is put to hardship and difficulty so much that he cannot find clothes to cover his body or a residence to shelter him: in which case, work in it is permissible by way of averting necessity.
Necessity here should be valued according to its proper value; and once you find permissible work, you should leave work in that mentioned fund.
Allaah Knows best.
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