37-year-old local spices dealer Irshad Khan sold his car and invested all his savings in the Mudaraba investment project.
He was promised 15 percent sin-free interest on his money – 5 percent higher than that offered by conventional banks.
“The people with whom we deposited our money were all religious figures, we had great trust in them,” Khan says.
Over a thousand other people suffered the same fate.
A so-called Islamic investment fraud in Pakistan has stolen million dollars from the countries working class.
The ‘Mudaraba’ investment plan took money from around one thousand people promising sin-free high interest rates.
Tailor master Ishrat Hussain sold all of his wife’s jewellery. He is a father of a 2-year-old girl and his wife is expecting another baby.
“I also borrowed one thousand dollars from a friend, now he is asking me every day for the money. How am I going to pay him back?”
The scam lasts for around a year before it collapsed in September this year.
The managers are accused of taking millions of dollars in profit overseas.
Karachi police have arrested four men who they say were involved, says Inspector Shafiq Tanoli.
“11 investigation reports have been lodged against them and many more are being filed in various police stations of the city. Most of the targeted people are ‘moulvi’ type of religious people some of whom sold their cars, auto rickshaws, jewelries etc to invest.”
The scam claimed it was connected to Pakistan’s renowned religious university the Jamia Binoria.
But the universities Binoria’s Chancellor Mufti Naeem denies any involvement.
“If someone can prove that they have invested money via myself or inside our institution then i will take the whole responsibility of this mess, the allegations by some newspapers that Jamia Binoria has done it, all are absolutely false.”
Islamic banking in Pakistan witnessed significant growth. But experts say high profile scandals like this will slow the industry down.
“From all over the world, the growth of Islamic financing is over 17 % but in Pakistan, if you see from the last year, it has 7 to 8 percent declined,” says Islamic banking expert Nadeem Baiq.
“This means, the consumer confidence on Islamic products is decreasing, just because of this Mudaraba scam.”
But for Irshad Khan, it’s been a tough lesson. He had lost all his savings... 15,000 US dollars.
“Everyone is praying to God for recovery, we have no faith in the government to resolve the crisis.”
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