Auditing the accounts of usurious banks

Q: Commercial banks have become a keynote of the global economy as they spread in Muslim and non-Muslim countries. (Part No. 11; Page No. 171) Dealing with them has become common among people in different fields of life.Commercial banks have been established in the Kingdom of Saudi Arabia as in other countries. The Kingdom has issued a law for them called Banking Control Law and delegated the Saudi Arabian Monetary Agency to supervise and follow up their activities. The most important of those activities are:1- Receipt of cash as current or fixed deposits.2- Opening of current accounts and letters of credit, the issuance of letters of guarantee, collecting the payment of checks, orders of payment, and any other valuable papers.3- Deducing bonds and bills of exchange, and other commercial papers.4- Foreign exchange.5- Investment in projects and companies in the Kingdom (with about 20% of its capital).6- Trading in the shares of those companies for the interest of the bank and the interest of others.All the abovementioned activities fall under the umbrella of banking transactions, and some of them are suspected of dealing in Riba (usury), such as the fixed deposits and other direct cash investments.Anyone who follows the budgets of banks working in the Kingdom will find that (Part No. 11; Page No. 172) they involve great amounts of money taking different forms and forming a great part of the wealth of the Kingdom in both governmental and private sectors. Moreover, they have deep associations with the many classes of society, including individuals and different institutions. That is why the state - in keeping the riches of the Kingdom safe and developing its economy, which is the backbone of its financial strength and enables it to achieve an honorable way of life for its people - has tightened control on the activities of those banks and enacted systems, regulations, and criteria to achieve that purpose.Among the controlling measures stipulated by the systems controlling companies and banks is requiring every bank to appoint two observers to their accounts section from the registered list of the Ministry of Commerce. The observers of accounts are required to submit an annual report of the budget and a profit and loss statement. This report should include the opinion of those two observers of accounts on how the budget represents the true financial position of the bank and how convinced they are by any illustrative data or information given to them by the bank director or by any other bank staff.As one of the chartered accountants licensed by the Ministry of Commerce to conduct the audits, I have been working in this manner for more than twenty years, I have received invitations from several banks to conduct audits for them, but I have always apologized - out of piety - since those banks engage in activities suspected to involve Riba. (Part No. 11; Page No. 173) Many of our colleagues also do not carry out audits for banks for this same reason.Because of this, the task of auditing has to be exclusively carried out by only four accountancy firms, which consist of foreign companies working shoulder to shoulder with Saudi partners who are licensed to practice auditing. The negative impact of the presence of foreign companies in this field is obvious; it gives them a golden chance to know the financial and economic secrets of the Kingdom, because of the fact that banks are among the most important financial institutions that keep minute details on the economic position of countries. This is aside from the harmful impact of such practices that are known to every wary and sincere Muslim.The task of comptrollers is to check the position of the banks and make sure that their financial activities have been carried out according to the banks' internal regulations and the general systems that control their activities. The comptroller does not interfere in the decision-making process concerning the completion of any banking operations because his mission is only to make sure that all operations are carried out in accordance with the systems and regulations. This means that the position of the comptroller is different from the position of an ordinary employee who practices banking activities and contributes to the completion of banking operations according to the level of his job in the bank. Is practicing auditing in banks, in the light of what has just been mentioned, (Part No. 11; Page No. 174) among the prohibited practices according to our Shari`ah (Islamic law)? Is the comptroller included among those mentioned in the Hadith, which includes the following: Allah cursed the accepter of Riba, its payer, one who records it, and the two witnesses to it. I wish for Your Eminence to issue a Fatwa (legal opinion issued by a qualified Muslim scholar) in this regard, taking into consideration the needs of the Maslahah (public interest) and our Purified Shar` (Law).May Allah guide us to the truth and safeguard us against falsehood; He is the All- Hearing, the All-Answering.