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Goldman’s Sukuk: Is the criticism fair?

Goldman’s Sukuk: Is the criticism fair?

To condemn this Sukuk for the alleged unscrupulous use of Murabaha proceeds is not fair says Asim Khan, managing director at Dar Al Istithmar.

January 2, 2012 3:50 by

For this to be a tawarruq transaction, it would require the presence of additional elements: a) GSI (not GSCL, as above) buying the commodities solely with the intention of immediately selling the commodities to a third party to generate cash, and/or b) GSI must sell the commodities back to the original supplier or its nominee. Neither of these elements is present in the transaction under reference. There is no indication or expression whatsoever of GSI’s intention of immediately selling the commodities to a third party to generate cash. One would have to stretch one’s imagination a bit too far to label such a vanilla murabaha transaction as a tawarruq.


The sukuk is listed on the Irish Stock Exchange in order to take advantage of regulatory and tax benefits. Such a listing in itself does not constitute an act repugnant to sharia and such interaction between Islamic structures and conventional frameworks is a reality in which Islamic finance currently exists alongside the broader universe of conventional finance.

Though the act of listing theoretically allows the sukuk to be traded, from a sharia perspective there is no prohibition on trading per se of a murabaha sukuk subject to the absolute pre-requisite that it can only be traded at par value. This renders it impractical in the present context for the sukuk to be traded in a sharia-compliant manner by investors who have been informed that “the Certificates can only be traded in the secondary market at par value (that is, in relation to Certificates of a particular Series, the amount of the pro rata Deferred Payment Price relating to such Certificates) and on a spot basis in order to comply with Shari’a principles”, and have been explicitly forewarned that there is not expected to be a secondary market in the instrument.

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1 Comment

  1. nizar alshubaily on January 22, 2012 10:50 am

    The problem with this sukuk is that there seems to be some misinformation taking place by claiming that two eminent scholars will be studying it or have in fact looked at it. Both scholars now deny this fact according to Al Arabiya web site, link attached. The issuers and their advisors have some explaining to do.


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