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May 20, 2015

Axacting questions


May 20, 2015

Within a day the scandal involving the Karachi-based company, Axact, has led to a wave of revelations. It all started with the New York Times dropping a bombshell on Monday, with a report claiming that Axact has been running the world’s largest fake degrees business. While the company’s website calls it the ‘world’s leading IT company’ and its CEO calls it ‘Pakistan’s leading software exporter’, the NYT says it is neither. It’s real business, claims the report, is to run an elaborate network of websites to provide fake degrees from fake universities that exist only on the internet. And much to the amusement of many, quite a few of the fake degrees had forged signatures of US Secretary of State John Kerry. Axact has responded by calling the report ‘baseless, substandard, maligning, defamatory...and a figment of imagination.’ It has also blamed Pakistani newspapers for maligning it for launching the Bol Media Group, and pointed to the fact that the Times reporter who wrote the story, Declan Walsh, was expelled from Pakistan for ‘controversial’ reporting. The response does not respond to the allegations themselves. On Tuesday, Axact’s Karachi and Islamabad offices were raided by FIA officials.
Needless to say, this whole incident has brought no credit to Pakistan or its people. The crimes committed by Axact may turn out to be fraud on one of the most massive scales ever seen. The former employee of the organisation whose conscience led him to blow the whistle on the company’s practices has uploaded videos which corroborate all that he has said about the company. Importantly, we need to know why Axact’s name is not on the list of software-exporting companies and why is it not known to organisations involved in software development. The reasons, it appears, are simple. Axact has produced no product and has no clients for what it says is its main business. Its clumsy denials of the superbly researched NYT investigative story seem

simply to expose it further. It has been unable to say anything in its defence. There are rumours that further evidence regarding its activities may surface after details of the FIA’s visit become public. The Senate has also stated that a standing committee would be set up to look into what is one of the biggest scandals to shake a country accustomed to scams of many different kinds. This one, however, could outweigh them all.
What we also need to ask is why the truth about Axact did not surface earlier. It is hard to believe our investigative agencies were totally blind to what was happening. Reports have suggested that Axact paid only Rs2 million in corporate taxes last year and had only Rs6 million in paid up capital. The Axact CEO Sohaib Ahmed Shaikh was reported to have paid just Rs24 in tax for the same year. For a company that in its legal notice issued to NYT claims to be the ‘largest IT company in all terms - revenue, infrastructure and human resource’, these figures are astounding. The Axact affair has made the mainstream and social media buzz with activity. More people appear to be stepping forward to say how they were led astray by the slick marketing of the company. The onus is on Axact to disprove the detailed allegations on it. Since 2008, the company has continued to restrain newspapers from reporting on it through legal notices. On Monday, legal notices were issued to bloggers who had merely reported the response to the scandal. We are clear that the NYT report does not confirm guilt, and that only a thorough investigation by state investigators and a court conviction would do that. However, the Axact fake degrees scandal has already sent shock waves around the country. The fact that Axact is the official company backing the Bol Media Group is not going unnoticed either. The bottom line: serious questions have been asked about Axact’s money. Vague answers and blame game will not do.

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