BUSINESS ETHICS IN ISLAM (Islamic Perspective Concerning Business Ethics) BY    Abdul Lateef Tijani (Sunday, 1st Nov 2015)

Outline Ethics Business Ethics Ethics In Islam Islamic Business Ethics Keenness To Earn (Halal) Earnings Trustworthiness In Business Transactions Generosity And Leniency In Business Transactions Honouring And Fulfilling Business Obligations Fair Treatment Of Workers Prohibited Matters In Business Transactions Summary and Conclusion Q/A?

Ethics May be defined as the set of moral principles that distinguish what is right from what is wrong. Has a twofold objective: it evaluates human practices by calling upon moral standards; Give prescriptive advice on how to act morally in a given situation. Ethics aims to study both moral and immoral behaviour in order to make well-founded judgments and to arrive at adequate recommendations. Synonymous with morality. An action, which is morally right, is also called an ethical one. Codes of morality are called ethical codes.

Business Ethics The branch of ethics that examines ethical rules and principles within a commercial context; The various moral or ethical problems that can arise in a  business setting; and any special duties or obligations that apply to persons engaged in commerce . Makes specific judgments about what is right or wrong; i.e. , business ethics is concerned with what is good and bad, right and wrong, and just and unjust in business.

Ethics In Islam Islam places the highest emphasis on ethical values in all aspects of human life. Islam governs all aspects of life. Ethical norms and moral codes from the verses of the Holy Qur’an and the teachings of the Prophet (SAW). Islamic teachings strongly stress the observance of ethical and moral principle code throughout the Holy Qur’an and numerous teachings of the Prophet (SAW) 

Ethics In Islam   كُنْتُمْ خَيْرَ أُمَّةٍ أُخْرِجَتْ لِلنَّاسِ تَأْمُرُونَ بِالْمَعْرُوفِ وَتَنْهَوْنَ عَنِ الْمُنْكَرِ وَتُؤْمِنُونَ بِاللَّهِ وَلَوْ آَمَنَ أَهْلُ الْكِتَابِ لَكَانَ خَيْرًا لَهُمْ مِنْهُمُ الْمُؤْمِنُونَ وَأَكْثَرُهُمُ الْفَاسِقُونَ “You are the best of peoples, evolved for mankind, enjoining what is right, forbidding what is wrong, and believing in Allah..........” (Qur’an 3:110) The Prophet (SAW) also says: “I have been sent for the purpose of perfecting good morals”. (Ibn Hambal , Vol 1 - No: 8595)

Islamic Business Ethics Islamic Business Ethics, identifies the practical elements of managing ethics within an organization that business leaders can use, offering the framework of an overall Islamic ethics model for an organization to adopt.

Keenness to Earn (Halal) Earnings Islam places great emphasis on the code of lawful and unlawful in business transactions. Qur’anic  verses disapprove the wrongful taking of the property. وَلَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ وَتُدْلُوا بِهَا إِلَى الْحُكَّامِ لِتَأْكُلُوا فَرِيقًا مِنْ أَمْوَالِ النَّاسِ بِالْإِثْمِ وَأَنْتُمْ تَعْلَمُونَ Do not devour one another’s property wrongfully, nor throw it before the judges in order to devour a portion of other’s property sinfully and knowingly. (2:188) يَا أَيُّهَا الَّذِينَ آَمَنُوا لَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ إِلَّا أَنْ تَكُونَ تِجَارَةً عَنْ تَرَاضٍ مِنْكُمْ وَلَا تَقْتُلُوا أَنْفُسَكُمْ إِنَّ اللَّهَ كَانَ بِكُمْ رَحِيمًا Do not devour another’s property wrongfully – unless it be by trade based on mutual consent. (4:29)

Keenness to Earn (Halal) Earnings A Muslim businessman should be wary of the doubtful things in order to keep himself clear in regard to his faith and his honour The Prophet (SAW) endorsed the importance of legitimate ways of earning - Asked ‘what form of gain is the best? [the Prophet] said, ‘A man’s work with his hands, and every legitimate sale’. (Ahmad, No: 1576) - Leave what makes you doubt for things that do not make you doubt. (Tirmidhi, No: 2442)

Keenness to Earn (Halal) Earnings Foremost among the unacceptable business practices strongly condemned in Islam is Riba. (interest), Allah has permitted trading and forbidden Riba (usury). (2:275)

Trustworthiness in Business Transactions Trustworthiness is one of the most important principles of ethical discipline in commercial transactions. Trust is a moral virtue and duty incumbent on a Muslim in the performance of his affairs. يَا أَيُّهَا الَّذِينَ آَمَنُوا لَا تَخُونُوا اللَّهَ وَالرَّسُولَ وَتَخُونُوا أَمَانَاتِكُمْ وَأَنْتُمْ تَعْلَمُونَ O you believers! Do not betray Allah and the Messenger, nor knowingly, betray your trusts. (8:27)

Halal & Haram Business Areas

Generosity and Leniency in Business Transactions One should be lenient and generous in bargaining. Therefore, whoever demands his debt back from the debtor should do so in a decent manner. The Prophet (SWS) invokes Allah’s mercy thus: - May Allah’s mercy be on him who is lenient in his buying, selling, and in demanding back his money [or debts]. (Bukhari, No: 1934)

Honouring And Fulfilling Business Obligations Islam attaches great importance to the fulfilment of contract and promises and requires a Muslim trader to keep up his trusts, truth, honesty, integrity, promises يَا أَيُّهَا الَّذِينَ آَمَنُوا أَوْفُوا بِالْعُقُودِ أُحِلَّتْ لَكُمْ بَهِيمَةُ الْأَنْعَامِ إِلَّا مَا يُتْلَى عَلَيْكُمْ غَيْرَ مُحِلِّي الصَّيْدِ وَأَنْتُمْ حُرُمٌ إِنَّ اللَّهَ يَحْكُمُ مَا يُرِيدُ O you who believe! Fulfil [your] obligations... (5:1) (On the Other hand, Obligations could be Divine , Social, Political, Business)

Fair Treatment of Workers Islam puts certain conditions and restrictions to obviate the chances of bitterness between the employer and employees. It is the religious and moral responsibility of the employer to take care of the overall welfare and betterment of his employees in terms of. Fair wages, good working conditions, suitable work and excellent brotherly treatment The last Prophet of Allah (SAW) has explained this principle in the following words: Those are your brothers [workers under you] who are around you, Allah has placed them under you. So, if anyone of you has someone under him, he should feed him out of what he himself eats, clothe him like what he himself puts on, and let him not put so much burden on him that he is not able to bear

PROHIBITED MATTERS IN BUSINESS TRANSACTIONS Trading in Alcohol Drug dealing & trading Sculptors & artists Production & sale of Haram goods Al-Gharar Riba based transactions. Arbitrarily Fixing Commodity / Service Prices Hoarding of Foodstuff (Ihtikar) Exploitation of one’s Ignorance of Market Conditions Al-Najsh  (Trickery) Cheating / Fraud in Business Transactions (Al-Ghashsh). Swearing Giving Short Measures Dealing in Stolen Goods

PROHIBITED MATTERS IN BUSINESS TRANSACTIONS Another aspect of business ethics is the various forms of unethical business practices a Muslim businessman must avoid in his business dealings. Dealing in Prohibited (Haram) Items Unlawful items such as carrion (dead meat), pigs and idols is strongly prohibited in Islam. حُرِّمَتْ عَلَيْكُمُ الْمَيْتَةُ وَالدَّمُ وَلَحْمُ الْخِنْزِيرِ وَمَا أُهِلَّ لِغَيْرِ اللَّهِ بِهِ Forbidden to you [for food] are: dead meat, the blood, the flesh of swine and that on which name of other than Allah has been mentioned. (5:3)

PROHIBITED MATTERS IN BUSINESS TRANSACTIONS Intoxicant And Gambling / Betting يَا أَيُّهَا الَّذِينَ آَمَنُوا إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالْأَنْصَابُ وَالْأَزْلَامُ رِجْسٌ مِنْ عَمَلِ الشَّيْطَانِ فَاجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ O you who believe! intoxicants and gambling [dedication of] stones and [divination by] arrows are an abomination of Satan’s handiwork: so avoid it in order that you may prosper. (5:90) The Prophet (SAW) is also reported to have said; Allah and His Messenger made illegal the trade of alcoholic liquors, dead animals, pigs and idols. (Bukhari, No: 2082)

PROHIBITED MATTERS IN BUSINESS TRANSACTIONS Sale of Al-Gharar  (Uncertainty, Risks, Speculation) The sale of a commodity or good which is not present at hand; or the sale of an article or good, the consequences or outcome of which is not yet known. Arbitrarily Fixing the Prices Islam grants absolute freedom to traders provided they adhere to the code of lawfulness. It does not, encourage the practice of price–fixing and leaves the traders to earn the profits from each other within the lawful limits.

PROHIBITED MATTERS IN BUSINESS TRANSACTIONS Hoarding of Foodstuff (Ihtikar) Storing foodstuffs or withholding them in expectation of rise in their prices. A handful of traders operating in the market buy the entire quantity of an item, rice for example, and store it up with the object of selling it later at the time of scarcity to draw maximum profit out of it and to dictate the prices. The Prophet (SAW) says - No one hoards but the traitors (i.e. the sinners). (Abu Da’ud, No. 2990) Exploitation of one’s Ignorance of Market Conditions An unethical practices in modern business is to exploit one’s ignorance of market conditions.

PROHIBITED MATTERS IN BUSINESS TRANSACTIONS Al-Najsh (Trickery) This is an action in which a person offers a high price for something, without intending to buy it, but just to cheat or defraud another person who really means to buy it. Cheating / Fraud in Business Transactions (Al-Ghashsh). The traders and businessmen generally have a tendency to motivate the customers by adopting fraudulent business practices. The Prophet (SWS) is reported to have said:  The seller and the buyer have the right to keep the goods or return them as long as they have not parted. ... If they have told lies or concealed something, then blessings of their transaction would be lost. (Bukhari, No: 1937)

PROHIBITED MATTERS IN BUSINESS TRANSACTIONS Swearing The traders often take recourse to swearing to emphasize that their items are of good quality / Qty which don’t exist. They try to persuade the buyers to purchase their commodity by invoking Allah’s name. The Prophet (SAW) is reported to have said: Swearing [by the seller] may persuade the customer to purchase the goods but the deal will be deprived of Allah’s blessing. (Bukhari, No: 1945)

PROHIBITED MATTERS IN BUSINESS TRANSACTIONS Giving Short Measures A form of deceit to manipulate weights and measures. It refers to the act of taking full measures from others and giving them short measures in turn. وَأَوْفُوا الْكَيْلَ إِذَا كِلْتُمْ وَزِنُوا بِالْقِسْطَاسِ الْمُسْتَقِيمِ ذَلِكَ خَيْرٌ وَأَحْسَنُ تَأْوِيلًا And give full measure when you measure, and weigh with a just balance. That is good and better in the end. (17:35)

PROHIBITED MATTERS IN BUSINESS TRANSACTIONS Dealing in Stolen Goods Almighty Allah has declared thievery unlawful and warned of severe punishment such as cutting the hand of the thief from the wrist joint if the necessary legal conditions for the award of punishment are met.

Conclusion The ethical code of Business In Islam is multidimensional, far reaching and comprehensive. Islamic ethical framework encompasses all spheres of life including business, financial dealings, and obligations. The fundamental codes of moral behaviour provide the general background of Islamic business ethics. Muslims-In-Business Must Imbibe such acts as truthfulness, trustworthiness, generosity and leniency, adherence to business commitments and contracts, fair treatment of workers, avoidance of evil practices (such as fraud, cheating, deceit, hoarding of foodstuff, exploitations, giving short measures etc.) .

Conclusion Islamic ethical and moral codes create a sense of responsibility and accountability in the minds of the believers, The Islamic ethical codes, are humane and are good for all times and absolute. Ethical and moral codes in Islam are part of the overall Islamic faith and observing them will lead to a happy state of affairs in this world and also holds the promise of manifold returns in the Hereafter. .

Wrap-Up Phrase!!!   كُنْتُمْ خَيْرَ أُمَّةٍ أُخْرِجَتْ لِلنَّاسِ تَأْمُرُونَ بِالْمَعْرُوفِ وَتَنْهَوْنَ عَنِ الْمُنْكَرِ وَتُؤْمِنُونَ بِاللَّهِ وَلَوْ آَمَنَ أَهْلُ الْكِتَابِ لَكَانَ خَيْرًا لَهُمْ مِنْهُمُ الْمُؤْمِنُونَ وَأَكْثَرُهُمُ الْفَاسِقُونَ “You are the best of peoples, evolved for mankind, enjoining what is right, forbidding what is wrong, and believing in Allah..........” (Qur’an 3:110)

Thank You!!!