By Mushtak Parker
LONDON: The death of 79-year-old Saudi entrepreneur and philanthropist Sheikh Saleh Abdullah Kamel on May 18, 2020, in Jeddah sees the end of an era of one of the three pioneers of the contemporary global Islamic finance movement.
As the founder and Chairman of the Dallah Albaraka Group (DAG), the Saudi business conglomerate, with diverse interests in Islamic banking, finance, Takaful, public works services, transport, infrastructure, poultry, O&M, industry and media, Sheikh Saleh (as he was affectionately known) was passionate about applying the Islamic system of financial intermediation based on the Islamic ethical values of a proscription of riba (interest), of the practice of gharar (non-disclosure and secrecy in a contract) and maisir (gambling and associated speculation) because, as he once observed in an interview with me, “of my sincere endeavours to be pious and God-fearing as well as to do work earnestly and not to cheat others”.
From humble beginnings
Saleh Kamel’s business empire grew from its humble beginnings in 1969, just a few years before the Kingdom started using its sudden oil wealth, thanks to the oil price rise in 1973, to rapidly develop. The need and opportunities of home-grown companies to build roads, highways, ports and cities presented an invaluable pathway for the nascent Dallah Works & Maintenance Co, the precursor to DAG. Today, the Group employs tens of thousands of people in several countries and his personal net worth is estimated at US$2.3 billion (US$1 = RM4.36).
It is that spirit of entrepreneurship Sheikh Saleh had been keen to impart to the Saudi youth of today through his tenure as Chairman of the Jeddah Chamber of Commerce & Industry.
Kamel was also a well-known investor in the media and satellite television production. He established Arab Radio and Television (ART) and formed a partnership with MBC (Middle East Broadcasting Channel), in which he once owned a significant stake, which in turn owns and operates Al-Arabiya TV Channel. One of his endearing media gestures was to sponsor the publication of the Makkah newspaper in 2013, a local lad giving back to his community.
Advocate for institutionalising Zakat
As a philanthropist, his vision transcended corporate social responsibility (CSR) and mere giving to charities, NGOs and the like. For, Sheikh Saleh has long been an advocate of institutionalising Zakat (one of the five pillars if Islam) to unleash its full potential for the benefit of Muslim and other communities the world over.
Saleh Kamel was one of the last breeds of entrepreneur ‘bankers’ just like Sheikh Saeed Ahmed Bin Lootah, the founder of Dubai Islamic Bank, accredited to be the oldest commercial Islamic Financial Institution (IFI) in the world established in 1975. They together with the ‘royal technocrat’ Prince Muhammed Al Faisal, the son of the late King Faisal of Saudi Arabia who launched the Dar Al Maal Al Islami (DMI) Group with headquarters in Geneva, were the three pioneers of the modern Islamic banking system.
Al Marhoum Muhammed Al Faisal, sadly, passed away in Jeddah in January 2017, which leaves Sheikh Lootah as the elder statesman of modern Islamic Banking.
The three were not bankers but traders, businessmen or senior bureaucrats who were attracted to this nascent phenomenon called ‘Islamic banking’ driven by a deeply-held conviction of the Syariah-based ethical values of equity-based profit-and-loss-sharing and risk sharing finance to serve the real economy, society, the greater public good and, yes, wealth creation.
“In Islam,” Sheikh Saleh once reminded me, “we have all the (financial intermediation) tools. What we have to do is to convert short-term money into long-term finance and investments.” What he alluded to was his disappointment with the short-termism of IFIs because at that time in the noughties some 90 per cent of Islamic finance instruments and services were in short-term Murabaha (cost-plus financing) and Ijara (leasing) debt products.
In their younger days, they were the “Three Musketeers” of Islamic finance, albeit operating individually but in tandem with the single-minded goal of promoting the industry globally. They commanded attention and very often the red carpet open-limousine treatment from heads of state in Asia and Africa in particular who were wooing them under the misplaced hope that it would open the floodgates of inward foreign direct investment (FDI) flows.
Great affection for Malaysia
Of the three, Sheikh Saleh in particular had a great affection for Malaysia and was always full of praise for successive Malaysian prime ministers from Tun Dr Mahathir Mohamad and his successor Tun Abdullah Ahmad Badawi, and for then Governor of Bank Negara Malaysia (BNM) Tan Sri Dr Zeti Akhtar Aziz for their proactive policy, legislative and regulatory support in promoting Islamic banking, finance and Takaful in Malaysia.
Although his banking holding company, Al Baraka Investment and Development Co, never managed to get a standalone banking licence in Malaysia, it did own a 40 per cent stake in the local RHB Islamic Bank through its local entity Dallah Albaraka Malaysia Holdings (DAMH), which had years earlier acquired a stake in Bank Utama, which subsequently took a controlling state in the RHB Group. DAMH had earlier divested its stake in the flagship Bank Islam Malaysia and in Southern Bank.
The Dallah Albaraka Group later consolidated its banking activities through Albaraka Banking Group, which is incorporated in Bahrain and which effectively is its banking investment arm, which in turn today owns a network of IFIs in Turkey, Bahrain, Sudan, Jordan, South Africa, Egypt, Tunisia, Algeria, Lebanon, etc. The group has also been a pioneer of Takaful and Retakaful through its Tunisian entity BEST Re.
The irony of course is that despite his close relations with several Saudi monarchs especially King Fahd, Sheikh Saleh like Muhammed Al Faisal never managed to get a banking licence in his native Saudi Arabia. This reflects the sensitivity of the politics of Islamic finance in the Kingdom at that time during the 80’s and 90’s. Today, the Kingdom has several IFIs including Al Rajhi Bank, Al Jazira Bank, Bank Al Bilad, Bank Al Khair, etc.
First recipient of The Royal Award for Islamic Finance
Perhaps it was fitting that Sheikh Saleh was the first recipient of The Royal Award for Islamic Finance (RAIF) launched in June 2010 by Bank Negara Malaysia’s MIFC (Malaysia International Islamic Financial Centre) and the Securities Commission Malaysia (SC) which aims at honouring “outstanding contribution of an exceptional individual in Islamic finance”.
An ailing Saleh Kamel could not attend the award ceremony in person, but in his acceptance speech delivered on his behalf by his son Moyhiddin Saleh Kamel, he reminded that “we should also not forget the earlier initiative by the Government of Malaysia in the establishment of Lembaga Tabung Haji (the Pilgrims Management Fund), and may Allah reward those who have contributed towards the development of this institution as it has inspired and paved the way to the establishment of other institutions in the field of Islamic finance.” His other son, Abdullah Saleh Kamel, is the CEO of Dallah Albaraka Group, and has effectively been running the still largely-family-owned business.
It was Governor Zeti who also appointed him as a Member of the Governing Council of the nascent International Centre for Education in Islamic Finance (INCEIF), the Global University for Islamic Finance Education.
In recognition of his contribution towards enhancing economic development and creating jobs and well-being, Sheikh Saleh Abdullah Kamel received many other accolades including the Jordanian Independence Decoration, the King Abdulaziz Decoration of Saudi Arabia, the Al Alawi Decoration of Morocco, RAIF and the IsDB Prize for Contribution to Islamic Banking.
Pioneer of contemporary Islamic Finance
Saleh Kamel had been a pioneer of contemporary Islamic finance since the 1970s following the convening by the then King Faisal of Saudi Arabia of an extraordinary meeting of OIC foreign ministers which led to the establishment of the Islamic Development Bank in 1975. In fact, Saleh Kamel cooperated initially with Prince Muhammed Al-Faisal. But in the early 1980s the two parted company to set up their own entities in Islamic finance.
At times he came across as a maverick. When I asked him in an interview in 2006 what he thought about the progress of the Islamic banking industry since its establishment in 1975, his response was clear and present: “In this time there have been many good things but also some not so good things. Who would have said that in over three decades there would be over 400 IFIs worldwide with over US$350 billion assets under management (AUM).” The reality is that at the time of his death there are more than double that number of IFIs with an AUM estimated by Standard & Poor’s at US$2.3 trillion.
At one stage, however, he became so disillusioned with the lack of progress in the Islamic finance sector when he famously, and perhaps frustratingly, said that if he had to start again, he would not get involved in Islamic banking.
Over the next two decades or so a more sanguine Saleh Kamel seemed to have reconciled his earlier idealism with pragmatism. But he remained ambivalent right till the end about the progress of Islamic finance in the last three decades in particular – a theme which resurfaces perennially in the corridors of discourse relating to the industry.
Quantitively, (the number of players, pool of funds, choice of products, etc.) the progress has been good. But Sheikh Saleh remained doubtful whether Islamic banking has achieved a qualitative breakthrough especially in explaining the risala and the message of the ethos of Islamic economics and finance.
Islamic finance, he explained in a moment of self-reflection, differs in its mechanism and more importantly in its spirit and philosophy from conventional finance. The problem is that the perception is that the two systems are more or less the same.
“Those who started the Islamic banking movement did not try to train the traditional bankers in the spirit and philosophy of Islamic economics and finance. What worries me is that there are not many bankers and academics who understand the spirit and philosophy of Fiqh Al Muamalat (Islamic law relating to financial transactions). They only understand the mechanism. Our scholars under the influence of the ulama tend to find tools in traditional banking. We think we are good. But what we want is to design instruments according to our Syariah and not the other way around,” he explained.
Not surprisingly, he was one of the first insiders in the industry to call for it to go back to its basics and to shift from Syariah-compliant to Syariah-based financial products. Since then others such as Rafe Haneef, CEO of CIMB Islamic in Malaysia, have extended this call to include a further paradigm shift to Tayyib, meaning that the financing impact of Islamic banking should be clean and wholesome. In other words, it should consider the impact on climate change, the environment, the real economy, poverty alleviation, fair wealth creation etc.
Saleh Kamel had long been an advocate of institutionalising Zakat to unleash its full potential for the benefit of Muslim communities the world over. To him “the unique Islamic institution of Zakat” was an ideal way of mobilising funds and mitigating the “short-termism” of Islamic banking, “for short-term investment carries a higher Zakat rate and vice versa.”
He has appealed several times to Muslim countries over the years to institutionalise Zakat and claimed that Zakat is the most efficient fiscal (tax) system; and that a whole economy and national budget can be run effectively on the basis of Zakat.
He strongly rejected any suggestion by some Syariah scholars that Zakat is merely a payment to the poor, but equally strongly urged its utility in funding education, training, tourism etc. “In the West,” he once stressed to me, “there is respect for the law, but in our countries, you will find Muslims but not Islam.”
In Islam, there are indeed two types of Zakat – Zakat al-Fitr (also called Zakat al-Nafs) which is payable by every Muslim able to pay at the end of Ramadan; and Zakat al-Maal which is an annual levy on the wealth of a Muslim (above a certain level), which is earmarked for, amongst others, development, education and to help the poor and needy.
His own estimate of Zakat assets in the Kingdom were SR1 trillion (SR1 = RM1.16), but globally the estimates could be as high as US$1.5 trillion (US$1 = RM4.36).
Many of the above issues are also discussed at the annual Albaraka Syariah Scholars Symposium on Islamic Finance, which is held in Makkah during Ramadan, albeit the records of the proceedings from what I have researched did lack the compilation rigour and robustness of a top classification system.
Ups and downs
During his career, Saleh Kamel had his ups and downs. The proposed merger between ABG and The International Investor of Kuwait failed to materialise which resulted initially in court cases but was eventually settled out of court.
Alas, his initiative for the establishment of a multinational multi-billion dollar “mega Islamic bank” called Bank Al-Emaar, to take on the Western banking majors, never saw the light of day. It resurfaced now and again over the last three decades, with its most recent manifestation resulting in the Islamic Development Bank (IsDB), and Qatar and Malaysia showing a passing interest in the initiative, perhaps out of respect to Sheikh Saleh’s standing in the industry. Perhaps, if ever Sheikh Saleh would have preferred a legacy, the establishment of a mega Islamic bank would do nicely, of course with the participation of ABG.
Perhaps, his biggest disappointment came in March 1993 when Sheikh Saleh was forced to surrender the licence of Albaraka International Bank (AIB) in London, the first such institution authorised to operate under Islamic financial principles and the UK Banking Act in Britain and the West. The reason ostensibly was over disagreements with the Bank of England (BoE) over the structure of the ownership of the Bank.
The BoE had introduced new international bank ownership guidelines in the aftermath of the collapse of the Abu Dhabi-owned but Pakistani-run BCCI (Bank of Credit & Commerce International) and the “blue-chip” private bank, Barings. A BoE proposal would have seen Sheikh Saleh’s stake in AIB diluted into a minority position which was unacceptable to him.
This fighting spirit was also evident when following the 9/11 attacks, he and other prominent Saudi businessmen and princes including Muhammed Al Faisal, his one-time partner, were sued on charges of financing the attacks. The lawsuits were thrown out by the U.S. District Court of New York in 2005. He, together with the Prince, were the only ones to fight back to preserve their reputations. Dar Al Maal similarly successfully won a criminal libel case in the courts of Lausanne against a French consultant who alleged that IFIs including DMI were financing terrorism by laundering money through various Islamic finance contracts.
How fitting that “the boy from Makkah” was laid to rest in the very city of his birthplace and of course Islam’s holiest city, and how generous of the authorities of the Grand Mosque, the Masjid Al-Haram, which houses the Kaaba, Islam’s holiest site, to allow his family to hold his Janazah (funeral prayers) at the mosque, which has been closed to visitors amid the COVID-19 pandemic. The fact that this was allowed perhaps reflects Saleh Kamel’s prominence and stature in Saudi Arabia.
Sheikh Saleh Abdullah Kamel - born in Makkah in 1941, died in Jeddah on 18 May 2020.
Mushtak Parker is a London-based independent economist and writer.
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