Quin-essential Cases: Suit challenges U.S. Treasury funding of Islamic religion tax
By: Quin Hillyer
Examiner Columnist
December 23, 2008
Conservatives and other critics of the U.S. Treasury’s $700 billion Wall Street bailout argue it is based on flawed economics and represents an unconstitutional delegation of legislative powers to the executive branch.
But the first major court challenge to the bailout involves neither of those arguments.
Instead, now comes Iraq War veteran Kevin J. Murray arguing that part of the bailout creates an unconstitutional “establishment of religion.” In short, it violates the Constitution’s First Amendment. Murray’s suit in federal court was filed on his behalf by the Thomas More Law Center.
How so?
Murray notes that the Treasury took a 79.9 percent interest in insurance conglomerate AIG. That makes AIG a government-owned and –run business. And AIG has a division that practices “Shariah-compliant finance.”
Shariah-compliant finance, according to the Thomas More Law Center, “subjects certain financial activities, including investments, to the dictates of Islamic Law and the Islamic religion.”
Further, More adds: “An important element of Shariah-compliant financing is a form of obligatory charitable contribution called zakat, which is a religious tax for assisting those that ‘struggle [jihad] for Allah.’ The amount of this tax is between 2.5% and 20%, depending upon the source of the wealth.
“The zakat religious tax is used to support Islamic ‘charities’ financially, some of which have ties to terrorist organizations that are hostile to the United States and all other ‘infidels,’ which includes Christians and Jews.
“The Holy Land Foundation for Relief and Development, recently convicted for providing material support to Islamic terrorist organizations, is an example of an Islamic ‘charity’ that qualifies for receipt of the zakat.”
In his lawsuit, Murray claims the government is financing, directly through its ownership of AIG, “commercial practices which are pervasively sectarian.” The Supreme Court has repeatedly ruled that government sponsorship of “pervasively sectarian” organizations violates the First Amendment.
Murray also argues that by virtue of the government having a 79.9 percent stake in the company, “in law, the choices of AIG are deemed to be those of the federal government.” Furthermore, “with the aid of public funds provided by [the bailout], AIG employs a ‘Shariah Supervisory Committee’” – a committee that “must engage in a deep and penetrating analysis of Shariah” in order to make its investment and charitable decisions.
Plaintiffs say this means that an organ of the U.S. Government, AIG, is directly acting on the basis of specifically religious-based distinctions – which, of course, would be in clear violation of the First Amendment’s Establishment Clause.
To be sure, Murray’s lawsuit is controversial. Prominent legal blogs, including those usually seen as somewhat right of center, have generally criticized its arguments. UCLA First Amendment Law Professor Eugene Volokh, for instance, argued that the Shariah-finance portion of AIG’s operations is merely incidental.
“The government investment decisions don't have a ‘primary religious purpose’,” Volokh wrote, “because the obvious purpose is to prop up important companies – and have them continue making as much money as possible – and not to advance Islam. The government no more cares about advancing Shariah through the AIG bailout than my local Ralph’s supermarket cares about advancing kosher laws by selling products that are certified kosher.”
To which More’s co-counsel on the Murray suit, David Yerushalmi responds by saying that the government is more than just a passive investor in AIG. (Yerushalmi is general counsel of the conservative Center for Security Policy).
“The government is not lending money here,” Yerushalmi contends, “It is not making a grant. It owns and controls AIG. What AIG sells and promotes is as much state action as if the government decided to open up Catholic public schools to bail out the crumbling Catholic school system.”
The Shariah-compliant financial entity within AIG is literally “obligated to invest in Muslim military industry,” Yerushalmi said, but it is forbidden to invest in any military-related entities that aren’t dedicated to Islamic causes or jihad.
If that’s not an “establishment” of religion, Yerushalmi says, then the concept has no meaning.
As Murray’s lawsuit advances through the federal courts, it has the potential to cast a huge shadow on multiple fields, from the economy – what if the Treasury is forced to withdraw its support of AIG? – to church-state law and even diplomacy.
Whatever the ultimate courtroom outcome of the suit, Murray, Yerushalmi and More raise issues directly affecting essential
constitutional principles and possibly affecting American national safety as well.
Quin Hillyer is associate editorial page editor for The Washington Examiner. He can be reached at qhillyer@gmail.com.
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