We look back at an interview with pioneering Emirati businessman Haj Saeed bin Ahmed Al Lootah originally published in December, 2002, nearly 18 years ago.
From braving the hazards of the sea in a quest for pearls to founding the Dubai Islamic Bank, it has been a long and arduous walk.
But today, Saeed bin Ahmed Lootah can remember those days with a smile – of achievement; and one laced with anecdotes. He recalls the time when as a 13-year- old boy he travelled to India and Basra, in Iraq with Saif Al Ghurair. “By the way Saif Al Ghurair is three years older than me. When I tell him so he gets angry,” he quips. Born in 1923, Lootah started working on a ship when he was seven years old or even less. Seventy-odd years later, he talks proudly about the Dubai Islamic Bank, which mushroomed from an idea during a conversation with the Late Ruler of Dubai Sheikh Rashid bin Saeed Al Maktoum. “Sheikh Rashid told me he never took interest on his money from banks. So I started pondering over the establishment of an Islamic bank. I got back to him with the idea and he told me to work on it confidentially.”
Lootah’s forefathers lived in Dubai for 200 years and then shifted to Ajman, driven by the demands of livelihood and its proximity to the sea.
In the 1940s, his father decided to return to Dubai along with the family. They stayed in Port Said in Deira, named after a city in Egypt in the aftermath of the 1956 attack on Egypt by Britain, France and Israel. The British objected to the name, says Lootah.
As houses at that time were modest, Lootah suggested to his father to switch to the construction business from pearl trading.
He also recalls Sheikh Rashid who stood by him in times good and bad.
I met Lootah in his office in a modern building on Salah Al Deen Road in Deira. His office on the second floor is open to everyone who seeks religious, economic or any other kind of advice. Despite his age, he is active and well versed in computers. He opened the conversation by touching on poetry, education, economy, the media, Arab satellite TV, economic programmes and UAE dailies among other topics.
Lootah did not ask for a list of questions. He was prepared to answer any query on the economy and education.
The following is the full text of the interview:
What were the first steps taken to build the economy?
First, I will ask you: What does a man need from the economy?
The man needs a good standard of living and a happy family. This is the case for individuals.
But for companies such as banks I ask why we establish a bank. Surely to contribute to the development of the country, activate the market and help businessmen with their trade.
This is the mission I understand of the banking industry. I had this concept when I decided to establish the Dubai Islamic Bank. I made a comparison between Islamic banking and conventional banking. For instance, let us assume there are two banks operating in one country, in the same market and are supervised by one central bank. Each has a capital of Dh50 million. But one of them adopts the Islamic banking system while the other embraces the conventional, interest-paying system. The central bank system allows each bank to withdraw deposits amounting to 15 times its capital. Each bank will then have Dh750 million in addition to the capital of Dh50 million. Therefore, the total will be Dh800 million.
Assuming that the two banks posted 11 per cent profit, each bank will have Dh88 million. But the conventional bank would have to pay Dh 75 million say at an interest rate of 10 per cent, while the Islamic bank and its depositors are partners. It will not pay any money to them until the balance sheet is drawn up at the end of the financial year. The bank's net profit is then distributed among all depositors according to each one's deposit and maturity date.
The bank expenses are covered through other revenues such as credit, money transfers and other services. So what's the final result?
I offer this table to show the advantages of Islamic banking over conventional banking. Figures are in million dirhams.
This table shows that the conventional, interest-paying bank has Dh23 million, which is less than half the capital. And based on the companies' system this indicates that it is bankrupt.
In the case of the Islamic bank, it is showing profit because the balance after deducting the loss is Dh48 million. As the system differs in the two cases, will the goals also vary? For example, what are the significant goals of the Dubai Islamic Bank and have they been fulfilled?
Naturally, the goals also vary.
Our goals are based on the spirit of co-operation.
• Protecting the bank, its name and financial position.
• Protecting the founders.
• Protecting the depositors who invest for the good of the public.
• Boosting agriculture and increasing agricultural production.
• Boosting industries
• Encouraging businessmen and activating the market.
• Helping businessmen to enter new fields.
• Providing jobs to UAE nationals.
• Achieving economic development in various fields.
• Boosting ties with other countries.
• Keeping money and savings of the public.
• Providing banking services of the highest standards according to Islamic Sharia without dealing in riba (interest on money) and by using state-of-the-art technology in computers and telecommunication and information systems.
• Investing funds prudently to achieve optimum and not maximum profits, for the mutual benefit of customers and the bank.
• Co-ordination with other financial bodies that apply Islamic Sharia to help create a base and regulations for an Islamic financial system.
• Development of Islamic society in all sectors of the economy by investing in industry, agriculture, commerce and real estate in order provide job opportunities.
• Promotion of social benevolence through Islamic methods, particularly Zakat.
• Contributing to the welfare of society in line with the five main tenets of Islam, protection of life and purity of mind, property, honour and social justice.
• Promoting the habit of savings and encouraging people to invest wisely within the parameters of Islamic Sharia through investment and financial instruments to suit individual requirements.
• Making capital available for entrepreneurs for economic projects and creation of alternative instruments for finance according to Islamic Sharia.
Are you the first businessman to establish an Islamic bank ?
The system was originally there. I did not invent it. I only got details of the business from scholars, pearl traders and our forefathers who never dealt in (riba) interest. I thought why don't we set up an Islamic bank. This is how the idea was born.
When did you start thinking of this project?
I founded the bank just before Ramadan in 1975, the first in the world.
During Ramadan the same year, the Development Bank, an international Islamic bank which does not deal with the public, was opened.
What was the reaction to the Dubai Islamic bank?
Several economists started to visit us and sought expertise and advise. They inquired on how the Islamic banking system works and what are the requirements. The system was later adopted in Saudi Arabia and Bahrain. We helped many businessmen with bylaws of an Islamic bank.
What were the difficulties and who helped you to overcome them?
I suggested the idea to Sheikh Rashid, may Almighty Allah have mercy on him, after he told me that he does not accept interest on his money from banks. Sheikh Rashid's statement was like a bylaw for an Islamic bank.
I pondered over the idea and got back to Sheikh Rashid as I was a regular visitor to his majlis. He ordered the Dubai Government's Legal Advisor, whose first name was Hamdi, to facilitate matters for me. The first thing we needed to do was establish a board of directors. I thought of a group of UAE nationals from outside the family.
I will never disclose this. This will remain a secret.
Anyway, on the eve of signing the articles of incorporation, they did not show up. I was in a difficult situation. What do I do, where do I go and how do I handle the matter? I did not know. What was the reason for their withdrawal?
I do not know... and until today, I do not have a reason. I sought them out one by one and each said later: 'I don't know or go to so and so.'
I was very sad. I made a telephone call to my brother Sultan and told him about the matter. He asked what suggestion I had. I replied, let us take up the challenge together. It was not a matter of money, we wanted to have other partners. I remember that I banged the phone out of anger, embarrassment and sadness.
How did you manage to get out of that impasse, whether concerning capital or the board of directors?
At the time there was a tender from the Ministry of Defence inviting bidders for a construction project. We offered the least price in the hope that we would win it.
We were not concerned about profit. Our offer was less by Dh30 million compared to the others.
This was in keeping with Sheikh Rashid's directives that whoever offers the least price will win the tender. At the time a decree concerning the establishment of the bank was issued. Things went smoothly as we were awarded the project. I understood that Almighty Allah had rewarded me by not having any partner in the bank. Later on, we suffered no red tape or delay in work.
Conventionally everything requires a meeting of the board of directors. One agrees, the other opposes and the third is absent.
After all we were working together as a family, two brothers, a cousin and another relative. Today I say whoever is bound to others can make no decision on his own and cannot work with free hands.
However, I told the bank's manager:
'Though I am the decision maker, you register any mistake that is caused by my decision and I will take the responsibility.'
What was the initial capital of the Dubai Islamic bank?
We started with a capital of Dh50 million. We received a telephone call from the Ruler's Court regarding a clause we included in the offer for the Ministry of Defence's project. They asked us to cancel the clause and to take the tender. They offered to increase the amount to more than the capital we had invested. From that project we won more than the bank's capital.
So S.S. Lootah means Saeed and Sultan Lootah. When was this bond forged between the two brothers?
S.S. Lootah is the first construction company in the UAE. It was established in late 1956.
What were the major works carried out by the company? And how did Sheikh Rashid stand by you in the 1950s and after?
Sheikh Rashid, may Allah have mercy on him, was a Sheikh, politician, businessman and builder. Once I was at Dubai Municipality when a young man told me that we were a part of Sheikh Rashid's generation who got everything easily.
I was angry and asked him to visit me in the office. The following day, he visited me and I showed him a file that proved that all our work was based on tenders. I told him that we were granted nothing for free and Sheikh Rashid never gave things aimlessly.
Everything was straight forward and based on the principle of transparency. Every job was offered in a tender to which every businessman was invited.
We contributed to constructions in Jumeirah which was desert as we felt that it was the desire of Sheikh Rashid. The same thing happened in Garhoud. When Sheikh Rashid wanted to construct an area he started to distribute plots of land to members of the public. Most of them did not understand the reason why he did so. On the contrary, I grasped the meaning and worked hard. We also were the first to put concrete in Rashidiya.
How did S.S. Lootah come into being?
This requires a profile of our family. My family was living in Dubai for 200 years. They later moved to Ajman and remained there for 50 years. In the 1940s, my father decided to return to Dubai along with the family. As the houses were modest, I suggested to my father to enter the construction business instead of trading in pearls. And that was the start. It was a small business.
You mentioned dealing in pearls, did you work at sea and trade in pearl?
Yes, we worked at sea and most Lootah family members were pearl traders.
Some members were divers, others worked on board ships of the East India Company and travelled between Dubai and Basra and Dubai and India. But as I told you in the 1950s this business was down. This was why I opted for the construction industry. The business grew until my brother Sultan and I established this leading company.
Which were the other companies created on the basis of this vision?
Many companies by the grace of God.
But I never care about money and companies as much as principles and projects that are for the good of the public. Yes, we have a lot, but more important is a successful and useful work programme. This is the mission we adopted in economy and education.
What about education and when was the idea of establishing faculties such as Dubai Medical Faculty, schools and private institutes born?
Education in the UAE is imported now and when we imported it we did not study our needs or whether it suits our systems and way of life. We did not study its future results either.
Education was restricted to people of a certain age. However, we believe that education should be from the birth to death. It has no limit. This prompted the establishment of an online university for distance learning. It is aimed at housewives or men at work of any age.
You said you have a mission in Islamic economy, what is your mission in education?
I answer this question through a conversation I had with the US ambassador in the UAE in the mid-1980s when the Iraq-Iran war was raging. The ambassador expressed his desire to visit me. I preferred that the meeting be held in my house. I asked him what he wanted to know about me. Did he want to know who I was supporting, Iraqi President Saddam Hussein or the Late Iranian Leader Ayatollah Khomeini ?
He replied that he wanted to get acquainted with a leader in economy and education.
I asked would he like to talk about the economy or education? He said education.
I told him that political systems in various countries, whether rich or poor, are endeavouring to achieve a strong economy, a high standard of living and stable politics. I believe that education is the foundation to develop individuals and the nation.
I asked where was this type of education which would help achieve these goals in a world torn by wars and poverty. He said I was right. I went on to say that education is the reason for progress or backwardness of any country. There are certain countries which invest in education with the wrong intentions.
They exploit inventions of their scientists to spoil minds and souls of the people of under developed countries, especially Muslim ones by exporting unethical and low-standard art to them. So we should have educational systems based on well-studied plans to achieve development.
What is the alternative education from your point of view?
I established the Islamic School in late 1963. The first thing I did was to transfer my children from their schools to the Islamic School. They are now successful managers, officials and activists in society. A student studies for only nine years in the Islamic School instead of 16 years in the conventional schooling system. The seven-year difference affects the economy heavily as we have a population of 2 million with 30 per cent of them studying in schools. The waste in investment is massive.
This school is located in Lootah Town, what is the story behind this town and how did it come into being?
When uncle Saleh bin Nassir Lootah, who was the patriarch of the family, died, I was named his successor. We were a big family and our needs were massive. I spoke to Sheikh Rashid about our desire to move from Port Said to another area where we could build a separate house for each member of the family.
He endorsed the request and I showed him the area where Lootah Town was to be built.
He liked the choice and advised me to grow trees around the area like a green belt. As for the name, Sheikh Rashid suggested that the area be called Lootah Town.
How many members are there in the Lootah family?
Around one thousand or more.
What is the meaning of the word Lootah? Is it a name of profession or a place?
The name Lootah started to be used recently. We originally hailed from Abu Humeir tribe which moved from Abu Dhabi to Al Mamzar area in Dubai. Our grandfather was married to the daughter of the chieftain.
He bought an Indian boat which he used to import dates from Basra. He employed Indian seamen who use to travel to Karachi and India. One day the seamen presented him with a gold container called ‘lootah’ in their language. He was then known by this name.
The Dubai Medical College... was it not an adventure into an unknown field to this region?
People think it was an adventure, but today the faculty is successful with scores of students graduating every year. It is recognised the world-over. We also succeeded in reducing the number of academic years from eight to four. Our graduates are working
in Britain and the U.S. Our students have pursued post graduate studies and opened clinics. And this is also the case with students of the Faculty of Pharmacology.
As I told you, the system in our schools is three years in primary school, three others in secondary education and three years in specialisation. If this system is adopted in the UAE, we would save Dh42 billion in seven years. I submitted this information, but no one reads or discusses the matter with us.
Did you frequent Sheikh Rashid's majlis? What lessons did you learn from him?
Sheikh Rashid used to have five meetings a day. One was held from dawn to 8am, another up to 1pm, a third in the afternoon, a fourth in the evening with businessmen and the last at night. I used to meet him in the early morning, evening and night majlis. If anyone was late for the early morning majlis Sheikh Rashid would ask where he had spent the night.
Did you travel with him abroad?
Yes, I accompanied him on visits to London, Iran and Pakistan. Sheikh Rashid used to select his delegation according to the purpose of each trip. For instance, the Late Hamad Al Futtaim and I had nothing to do with nationalism and related issues which were high priority at the time.
Where did you study?
I studied for four months with the Mutawwa. I learnt reading, writing, the Holy Quran and basics of arithmetic. But my actual schooling was pearl calculations which are complicated.
Do you know when you were born?
Yes, I was born in 1923. I worry for our youth who have achieved nothing because of imported education. Even the West has not benefited from its education, and the crimes and social collapse are evidence.
Tell me about the first capital you invested?
I had nothing. Not a single dirham. I had only a profession and someone who has one may not go astray.
What was your first profession?
My father presented me with an old rifle. Some people asked him why he wanted to kill his child. He told them that I needed to learn.
I started dismantling and fitting the pieces together. It became a hobby. I also used to make my furniture and fix everything in the house. This was my first capital.
How many wives do you have?
I am married to four wives and have 10 children.
Why did you leave the Dubai Islamic Bank?
I pray to Allah to protect us from the enemies and devils. The bank performed perfectly at all times. But there were persons who brought sorcery to this country and dominated certain weak men. This is a long story and I do not want to get deeper into it.
You mean borrowing from the bank and escaping?
Yes, there was a person who controlled the bank manager using sorcery and got a loan without guarantees. The manager gave him the sum from my own money which I deposit in the bank for Zakat.
This occurred many times until it was uncovered after three years.
In his concluding remarks Lootah said that it is necessary to comprehend marriage in the Islamic way and not in a fanatic manner. He believes divorce is a peaceful co-existence not separation. He also referred to the media and its role saying the media does not care for the good of the society as much as it cares for entertainment and broadcasting senseless programmes.