Saturday, March 01, 2008

Arcapita Bank Only Owns Tangible Assets of Forba

Atif A. Abdulmalik
First just let me say this is going to be one confusing post but it's needed to lay the ground work for more posts to come.
Let's look at Arcapita Bank, formerly known as First Islamic Bank. It has several holdings here in the US including Church's Chicken, PODS, Caribou Coffee and Forba/Small Smiles.
Cresent Capital, based in Atlanta is a subsidiary of Arcapita Bank.
While foreign ownership of U.S. businesses is nothing new, the bank is paving some new ground by choosing its investments according to Islamic religious law, known as Sharia.
Because of religious law, the bank also avoids charging or paying interest. So, instead of operating like a traditional bank, Arcapita collects money for long-term investments and follows some creative methods to get a profitable return.
Use a leasing type structure the companies they acquire will sell its buildings and machinery to the bank [and] the bank will lease those assets back to the company. So, instead of interest payments, you have rental payments. Now we don't know which buildings Arcapita owns or what machinery but this is the way they invest in American companies.
Basically Forba/Small Smiles pays Arcapita rental payments every month while still actually owning the actual company, Forba. So Dan, Michael, Eddie, and Mike Roumph, Dan's partner in crime still own, always have owned Forba Small Smiles.
Here is one commentary on how this bank operates:
At first glance, companies practicing Muslim Shariah look like a conservative investor's dream -- establishments that family-oriented consumers would want to support. Companies following Shariah avoid gambling, porn and alcoholic businesses, will not charge interest and will not try to produce extreme profits. One giant Bahrain-based financial holding company that follows Shariah, until recently named the First Islamic Investment Bank (now called Arcapita), is the largest Middle East-based investment firm in the U.S. Caribou Coffee, PODS and Church's Chicken are just three of its many holdings.
The problem comes when you realize that Shariah is an all-encompassing ideology that many adherents believe should not and cannot be limited just to business. In many countries, its personal application leads to terrible human-rights violations, such as men being allowed to beat and subjugate their wives, authorities cutting off hands for stealing, and so on.
Oil-cash-rich Middle Eastern companies are investing in the U.S. and elsewhere at a record pace. Many practice the business form of Shariah. But when you and I patronize those businesses, where do our dollars actually go?
Arcapita's Web site forthrightly explains that 81 percent of the organization "is held by over 255 prominent individuals and institutions mostly from the Arabian Gulf region." This means that a huge percentage of the profit of this massive company go to 255 wealthy, influential Middle Eastern groups and individuals. And history has shown that they aren't always people with human rights or American interests at heart. In 2002 Arcapita power-broker Yusuf Al-Qaradawi defended the bloody acts of Palestinian terrorists by commending "our brothers and children in Al-Aqsa and the blessed land of Palestine generously sacrificing their blood, giving their souls willingly in the way of Allah." He later stepped down.
I have always loved Caribou Coffee, but as I walked by one recently, I hesitated to go in. I'm really not sure that the 255 Middle Eastern investors that own most of it have our national values or interests at heart. And if they fervently support business Shariah, it seems highly likely that some of them use their wealth and influence to spread family Shariah as well. When there is a choice of coffee shops, do I really want to support all that with my own money?

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