NYT report opens Axact’s real can of worms

The New York Times report on Axact, a self-identified software firm in Pakistan that the Times alleged is a front for a highly profitable fake degree business, is not exactly a bombshell.

The Times reported that customers around the world – including a jailed police criminologist in Britain who claimed to have degrees from an Axact-owned university; accountants, airline employees, and nurses in the Middle East; a former US Olympic swim coach; and a woman in Michigan — have fallen for the scheme.

Axact’s credibility had been questioned in individual lawsuits and other arenas, but the Times reporting, including interviews with former employees, captured the breadth of the firm’s questionable practices.

Axact has posted a response on its website that accuses the Times of defamation and promises “strict legal action.” Others will undoubtedly push back as well. The author of the Times story, Declan Walsh, was the paper’s Islamabad correspondent before he was expelled from Pakistan in 2013 for reasons that remain unclear.

“Some Pakistanis do, indeed, see this article as a reason to smear their country, in the same manner as they habitually view foreign press coverage. But what’s been striking is the large numbers that have applauded this story as an overdue spotlight on shadowy business practices that risk causing great damage to the same national reputation,” Mr. Walsh told The Journal.

Still, many Pakistanis have long suspected that Axact was involved in unsavory activities. When Axact was accused of improprieties in the past, the company’s response on at least one occasion was a precursor to how it has replied to the Times: The company filed a defamation suit.

One big unknown is the potential impact on Pakistan’s information technology sector. India may be more widely recognized for its IT successes, but Pakistan has enjoyed its fair share of achievements.

In recent years, Technology Review recognized an IT expert at Lahore University of Management Sciences as one of the world’s top young innovators, and several Pakistani software applications earned international awards.

Although Pakistan is a relatively small player in global IT, its ranks are growing, with about 1,500 registered firms and 10,000 IT grads entering the market annually.Could the Axact scandal taint an industry that is a major success story in a country that is seemingly a magnet for bad news? Axact grandiloquently (and falsely) describes itself as the “world’s leading IT company.” Still, the firm does sell some software products.

It’s possible Axact’s preexisting reputation as an outlier will help Pakistan’s IT industry escape this affair relatively unscathed. Pakistani journalist Farieha Aziz tweeted at me Monday: “I don’t think anyone ever really considered Axact as part of the IT sector. It was always more of a stand-alone entity.”

Regardless, Axact will face scrutiny in the coming days and weeks. So could Bol, the splashy new media network that is planning to launch this year and has attracted some of Pakistan’s most prestigious media personalities. Bol promises “to bring a revolution” to the country’s crowded mediasphere. But the force behind Bol? Shoaib Ahmed Shaikh, the chief executive of Axact.