Subject : Ruling when People in Charge of a Provident Fund Invest a Portion of its Earnings in Unlawful Business

Fatwa Number : 2680

Date : 12-09-2012

Classified : Current Financial Issues

Fatwa Type : Search Fatawaa

Question :

I work at one of the establishments which has a staff provident fund. (5%) is deducted from the salary of each employee and, equally, the establishment offers (5%) per month. After some time, it was discovered that those in charge of the fund have signed a contract with one of the firms that sells electronics, but this wasn`t done in line with the provisions of Islamic Law. What is the ruling on the profits that we receive at the end of each year and should fund participants get rid of the ill-gotten portion of those profits?

The Answer :

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

Based on your question, it seems that the fund participants aren`t obliged to get rid of the ill-gotten portion of these profits and they aren`t considered sinful. This is because of two things: 

First: The unlawfulness of investing these funds is not clear, as evident from the question, and since it is unconfirmed, then, in principle, it is lawful and permissible.

Second: You (Employees) weren`t aware of the details of the investment method and a Muslim isn`t obliged to examine every step that his partner does regarding the investment. However, he should demand the latter to be keen on making lawful money and avoiding suspicious matters in general. If he abides by this piece of advice, then thanks to Allah, but if he doesn`t, then he is the one liable before Almighty Allah. And Allah the Almighty knows best. 

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