HOW CLOSE ISLAMIC BANKS ARE TO GLOBAL FRAUD- LEARNINGS FROM DUBAI ISLAMIC BANK IN THE TIME OF SUB-PRIME CRISIS
This paper attempts to reconstruct and achieve learning from the mega financial crime that occurred at Dubai Islamic Bank (DIB) during the global crisis and juxtapose it with fraudulent practices from a global perspective with the aim to acquire a broader knowledge on fraud, especially in shariah-based organizations. Thus, this paper could conceivably contribute to the rarely covered topic concerning financial crimes within Islamic organizations. Additionally, descriptive, comparative, and analytical research are exerted in this study. As for the findings, the scandal divulged that the significant power of the government exercised through mandating faith-based banking and acquiring major shareholding does not seem to prevent white-collar frauds much to the outrage of civilized lawmakers. This implies that just like its conventional counterpart, Islamic banking is not immune to fraud. In addition, the paper highlights that the most offensive misconducts found in the case are: i) the fraudulent activities were concealed or kept in secrecy; ii) there was a lack of 'shoulder to shoulder' knowledgeable people to oversee the risk and warning signs; and finally iii) the modus operandi employed was collaborating. Accordingly, the study refreshes and stresses to the influential characters involved, namely, respective regulators and top-level officials of the organization on the importance of robust, prudent, and sustainable practical conduct for they are the accredited people whose enforcement and in-company culture will distinguish the right from the wrong.