Abstract
This article treats the arguments on “shari’a compliance” of the Kuwait Investment Authority (KIA), the Sovereign Wealth Fund (SWF) of Kuwait. KIA is one of the oldest and largest SWFs and has received considerable attention recently. When KIA was established in 1953, it did not have Islamic tendencies. KIA has, however, gradually appeared to assume an Islamic character.
The issues of “shari’a compliance” of KIA have been raised in the Kuwait National Assembly. The background of this phenomenon is that the number of the Islamist members has increased since the late 1970s, particularly after the 1990s. Among the problems concerning “shari’a compliance,” the following two issues are contentious points: first, the investment in companies that deal in alcohol, and second, the recent situation of the international financial market and the transactions including considerable uncertainty.
This paper analyzes the relationship between KIA and Islamic finance, paying attention to the consistencies and the discrepancies between them. Although KIA is not an Islamic financial institution like Islamic banks, it is clarified that KIA is not considered to violate shari’a. KIA conducts its activities under the observation of the people and the parliament, in which the Islamists predominate.
