Authorities raid firm over fake degree claims

Following an investigation by The New York Times, or NYT, into an alleged global fake degrees business, Pakistan law enforcement agencies have raided the offices of Karachi-based IT company Axact and have also begun probing the company’s accounts.

During the raid, records, computers and electronic devices were seized for forensic investigation.

At a press conference on Wednesday, the interior minister said: “I have ordered an inquiry into the NYT allegations; it is a sensitive issue and it will take some time to reveal the facts.”

In its investigation published on 17 May, The New York Times suggested the Pakistan-based Axact company ran a “vast education empire” selling online degrees and diplomas from a large number of schools, colleges and universities which apparently did not actually exist, charging US$350 to US$4,000 for various diplomas and degrees.

Pakistani academics described the allegations as “stunning”. But Axact has strongly denied the allegations.

According to The New York Times the software company headquartered in Karachi, and employing more than 2,000 staff, reaped tens of millions of dollars from clients globally in an education business that appears to span at least 370 websites.

In other allegations newspapers have claimed that Axact had not paid full tax on its enormous profits from the scam.

But Kamran Khan, president of Axact's Bol TV, told a local TV station, Geo News, on Tuesday: “Axact company has not evaded any tax as per law of the land as IT companies are exempt from tax. We have not done any fake degrees business.”

The company said in a separate statement “Axact condemns this [NYT] story as baseless, substandard, maligning, defamatory, and based on false accusations and merely a figment of imagination published without taking the company’s point of view.”

Shocking

Chairman of the Higher Education Commission of Pakistan Mukhtar Ahmed told University World News : “The news is shocking for us. It is a cybercrime if the allegations are true. We will take action or cooperate in any matter which comes under our jurisdiction, and is referred to us by the FIA’s [Federal Investigation Agency’s] Anti-Cyber Crime Wing.”

Pakistan’s Interior Minister, Chaudhry Nisar Ali Khan, ordered the country’s Federal Investigation Agency, or FIA, to take control of Axact’s offices in the cities of Karachi, Islamabad and Rawalpindi. Some 100 employees were taken into custody, but later released on security bonds.

The FIA in its raids on Tuesday also seized two main servers from Axact’s Karachi office with 30 terabytes of data. FIA Deputy Director Kamran Attaullah said the data would help determine the authenticity or otherwise of The New York Times’ claims regarding Axact’s association with bogus colleges.

The New York Times editorial board on Wednesday claimed several Pakistan based companies were involved in the business of fake degrees. Commenting on the government of Pakistan’s raids, the board said the Pakistan government had no other option but to act against Axact.

The NYT board observed: “It is difficult to believe that the Pakistan government had no clue about this fake degrees business, as millions of dollars were being transferred to Pakistan.”

Pakistan’s Federal Board of Revenue has also started investigations into Axact’s income and tax detail, while the Securities and Exchange Commission of Pakistan, the regulatory authority for business companies in Pakistan, has also issued show-cause notices to Axact for its alleged involvement in an illegal business.

Axact company has, however, denied all the allegations stating that all charges are part of malicious propaganda by its rivals against a thriving business and that the company had faced such allegations in the past as well, but the “rivals” had to retreat.

Criticism

While many government agencies were mobilised in the wake of The New York Times article, parliamentarians said investigations should have begun earlier.

Asad Umar, a member of the National Assembly and central leader of Tehreek-e-Insaf or PTI, an opposition party led by former cricket star Imran Khan, told University World News that since the government has police, intelligence agencies, investigation agencies [with] cybercrime specialists, a full-fledged Ministry of Information Technology and a regulatory body like the Securities and Exchange Commission, it would have no credible excuse if illegal practice was found to have taken place.

Leader of the opposition in the Senate, Aitzaz Ahsan demanded the government conduct a thorough investigation and if malpractice was found, to take the strictest action against those involved.

The provincial assemblies of Punjab and Sindh provinces, where Axact has offices, have tabled resolutions demanding the federal government act swiftly on the allegations.

Chairman of the Senate Mian Raza Rabbani said the news had come as a shock and he constituted a committee of senators to look into this matter and recommend actions to the federal government.