Investing in the Emirati National Bonds Company

Praise
be to Allah

Having looked at the website for the National Bonds Company,
and read the fatwa of its Sharia Committee, it is clear that it is
permissible to deal in these bonds, if the transaction is done in accordance
with what was stated by the Sharia Committee, but from looking at the
website it appears that the actual conduct of the company is not in
accordance with the fatwa. Hence Dr Saami Ibraaheem as-Suwaylim (may Allah
preserve him) issued a fatwa stating that it is haraam to deal in these
bonds.

 He was asked: We would like to know the ruling on the
National Bonds that are in harmony with Islamic sharia; are they permissible
or not? 

National Bonds is a private share company with its
headquarters located in Dubai, and the list of its shareholders includes
national companies, namely Dubai al-Qaabidah, and a real estate company
called I‘maar, in addition to the Bank of Dubai. The company’s capital is
150 million dirhams, which is distributed equally between the three
partners. National Bonds are purchased in notes worth 10 dirhams, with the
minimum purchase being 100 dirhams, i.e., 10 bonds. Each bond has a serial
number which is entered into a monthly draw for prizes varying between 100
dirhams and one million dirhams, which is the largest monthly prize. The
sharia committee supervises the work of the company and its compliance with
Islamic sharia, and has issued a fatwa stating that what it does is
permissible! 

He replied: 

Praise be to Allah, and blessings and peace be upon the
Messenger of Allah. To proceed: 

The program offered by the National Bonds Company in Dubai is
a kind of lottery, concerning which there is scholarly consensus that it is
prohibited according to sharia. The one who purchases the so-called bonds
pays 100 dirhams, which is the minimum purchase amount, and he is allowed to
withdraw this money after one month. Every month he enters a draw for prizes
varying between 100 and one million dirhams, as is clearly explained on the
company’s website (nationalbonds.ae). This is an exchange of money for
money, of unequal amounts, and there is delay and ambiguity, so it involves
both riba (usury) and gambling. 

As for the fatwa issued by the sharia committee concerning
this, it is in fact different from the company’s work as explained on its
website. This is clear from the following points: 

1.

The fatwa states that the contract between the bondholder and
the company is a mudaarabah (profit-sharing) contract, whereas the website
does not mention anything about a mudaarabah contract or about the nature of
the projects in which the money is invested, or about the actual rate of
profit. There is nothing on the website that defines or explains the nature
of the company’s investments; rather it clearly announces the prizes that
may reach as much as one million dirhams, and encourages everyone to
participate in the draw in the hope of winning prizes, but it does not say
anything about profits on investments. So what kind of mudaarabah contract
is it then? 

2.

The fatwa states that the prizes are distributed from the
company’s share of the mudaarabah profits by means of a draw, but the fact
that the prizes are stated to be between 100 and one million dirhams means
that they cannot be from investment profits, which cannot be defined
beforehand. 

This means that the company is committing itself to offering
prizes of specific amounts at the time when the draw is made, regardless of
the outcome of investment. So the transaction is a pure exchange of money
for money, and has nothing to do with mudaarabah. 

Furthermore, the company announces that the first draw will
be made in May, whereas it does not announce its profits until the end of
the year. So how can the prizes come from the profits when the profits have
not been determined or are not known yet?

3.

The fatwa states that it is not permissible to stipulate the
prize draw in the mudaarabah contract, whereas the company’s website states
that these prizes are the most important advantage of subscribing, and lists
the dates of the draws on the homepage and on all the pages of the website,
and it encourages the visitor to subscribe, because he may become a
millionaire. This makes the prize draw the aim of subscribing, and it is
obvious that this is one of the most important conditions, because it is the
reason for which people buy these bonds.

4.

The fatwa states that the contract is a mudaarabah contract,
whereas the website states that the subscriber has the right to withdraw the
value of the bonds after a minimum of one month has passed. This means that
the price of the bond is like a loan that the company is obliged to repay.
If we add to that the possibility of winning a prize, then it is a loan that
brings a benefit, which constitutes riba, according to scholarly consensus. 

Conclusion: the contents of the fatwa are one thing and the
real nature of the company is something else altogether. What one should do
is use this money to invest in projects that are based on real work and
production so as to earn profit on added value, instead of using it for
games of chance and prizes that kill work and do not add anything of value
to the economy. 

And Allah is the Guide to the straight path.

End quote from Islam Today website. 

And Allah knows best.