Theme: Business Ethics in Islam

It was narrated by Ibn ‘Umar (may Allah be pleased with them both) that a man told the Prophet (ﷺ) that he was being deceived in business transactions, and he replied, “When you make a purchase say, “Khilabah is not allowed”. Then the man made a habit of saying that.

(Source: Sahih Bukhari, hadith No. 2117, Sahih Muslim, hadith No. 1533)

‘Khilabah‘ or deceit, as mentioned in the hadith, is an act of deceiving someone by concealing or misrepresenting the truth, which is abhorred in Islamic transactions and is definitely not in tandem with the religion’s moral code.

Islam advocates a clear understanding between parties involved in a transaction or contract. The essence of Islamic Business ethics is to prevent any unjust practices and potential disputes from happening. The deception mentioned in the hadith above may refer to a range of unethical transactions such as fund misappropriation, the omission of critical information, or a deliberate attempt to cheat the other party in a business transaction.

The absence of clarity and ethics may lead to fraudulent and deceptive activities to happen. This is because ambiguous and deceptive business activities create room for the concept of ‘zulm’ (oppression/transgression) to occur. The rights of all parties should always be protected in any Islamic Financial transaction.

Those who wish to carry out transactions or businesses that involve other people (i.e., collaborators, clients, investors etc.) should be transparent in details and information. This is the reason why Islam instructs clear terms and conditions to be set in any business dealings. A fair and just audit system should also govern any business activities for an organisation to uphold the ethics that Islam propagates.