[Unraveling Axact’s
complex system of payments and revenues — much of which former employees have
said is routed through offshore companies — is one potential challenge for the
seven-member government investigation team announced by Interior Minister
Chaudhry Nisar Ali Khan on Wednesday.]
By Declan Walsh
 |
|
People gather at the
entrance of an Axact company building after a raid by the Federal
Investigation Agency. Credit Farooq
Naeem/Agence France-Presse — Getty Images
|
LONDON — Heavy scrutiny by
investigators, politicians and the fractious Pakistani media sector has mounted
over the past week for Axact, a Karachi-based software company that
has made millions selling fake degrees through a sprawling empire of school
websites.
The tax authorities, the
Interior Ministry and the Securities and Exchange Commission of Pakistan,
among others, have announced inquiries into the company’s operations. Its
Karachi headquarters and a smaller office in Islamabad were sealed after a raid
by the authorities earlier in the week. The company’s founder, Shoaib Ahmed
Shaikh, has been summoned to an interview with federal investigators.
Axact has thrived for
more than a decade on its ability to hide links between its operation in
Karachi and hundreds of fictitious online schools, many of them claiming to be
American. But more such links are coming to light in the days since The New
York Times published a detailed account of the
company’s operations, and Axact’s chief executive has begun shifting his tack
in public statements.
At first, Mr. Shaikh
insisted that the only link between Axact and the hundreds of fake school sites
was that his company sold software to what he called “associates and partners.”
In a television interview on Wednesday, however, he conceded that Axact
provided office-support and call-center services for those websites. Still, he
continued to deny being a part of any scam.
“Axact does not issue any
degree or diploma, whether real or fake,” Mr. Shaikh said in the interview.
In the past few days, the
company’s array of fake online universities and high schools has gone silent.
In calls and text messages to 111 websites identified as being operated by
Axact, a New York Times reporter was unable to establish contact with a single
sales agent.
The scandal has driven
intense coverage by the Pakistani television news media, much of it on stations
whose owners were already at odds with Mr. Shaikh, ostensibly over his plans to
start his own television network, Bol, in the coming months. Television crews
have been camped outside the company’s Karachi headquarters all week.
Away from the media
glare, people at differing ends of Axact’s elaborate degree scheme have
continued to come forward with their accounts.
Sikander Riaz, who said
he worked as a sales agent under the pseudonym Hank Moody for six weeks last
summer, was one of a dozen people who contacted The New York Times to identify
themselves as former Axact employees, and were able to provide consistent and
detailed descriptions of the organization.
Mr. Riaz, a 22-year-old
communications student, said he had been tasked to sell degrees for Harvey
University and Nixon University out of an Islamabad-based call center for
Axact.
“Our punch line was that
we could give customers a degree in 10 to 15 days,” he said.
Another former employee,
who asked to be identified only as Ahmad, part of his full name, expressed
regret. “I feel bad about people I ripped off,” he said. “I could never tell my
family that I sold degrees that destroyed people’s lives.”
Ahmad said he averaged
sales of $500,000 per quarter, on behalf of fake high schools with names like
Belford, Lorenz and Adison, during a three-year stint at Axact. By the time he
left in 2012, the company was taking in $80,000 to $100,000 a day, he said, providing
copies of his pay stubs to prove he had been employed by Axact.
He said that many of his
early customers were young Americans seeking a high school diploma to fulfill a
requirement for enlisting in the Army to fight in Iraq and Afghanistan. “We would
celebrate like crazy if we hit $125,000 a day,” he said.
Unraveling Axact’s
complex system of payments and revenues — much of which former employees have
said is routed through offshore companies — is one potential challenge for the
seven-member government investigation team announced by Interior Minister
Chaudhry Nisar Ali Khan on Wednesday.
Former employees said
that Axact uses at least 20 offshore companies to process customer revenues,
pay suppliers and purposefully create a shield between Axact and the financial
affairs of its websites. Many of those companies the employees identified, such
as EduConnect and Education SP,
have their own websites and say they sell educational software.
One such firm, Connect Shift,
which is registered in Cyprus, lists Mr. Shaikh as its chief executive,
according to company registration records.
Axact has left some
traces of American connections as well. They include mailboxes in California,
Colorado and Texas, and two Bank of America accounts at a branch in Florida
that two former customers of Axact-run school sites said had been provided as a
place to send payments.
By several accounts,
Axact’s main financial and logistical hub outside Pakistan is in Dubai, where
its holding company, Axact FZ, is located. Reporters for The Khaleej Times
newspaper who visited the registered office of Axact FZ this week described a
deserted glass cubicle with a desk and two chairs.
For years, former
employees said, Axact’s diploma certificates were shipped to customers across
the globe through a courier service in Dubai, to give the impression of being
based in that city’s free trade zone. But that facade nearly collapsed in 2009,
when a technology journalist from Saudi Arabia started looking more closely.
The journalist, Molouk
Ba-Isa, was following up on a report that Rochville University had awarded a
masters in business administration to an American pug named
Chester. Although Rochville’s physical location was a mystery, Ms. Ba-Isa
learned from a courier company official in Dubai that the degree originated
from Axact’s office in Karachi.
But when The Arab News
published her report, naming Axact, she said her editors received a strongly
worded legal threat from company lawyers, and the article was removed from the
Internet. This week, Ms. Ba-Isa said in an email that she felt vindicated.
Former customers of the
fake online schools spoke of frustration and anger in their dealings with
universities they thought were based in the United States.
Mary, a businesswoman in
Dubai who wanted to be identified only by part of her name, said she spent
$210,000 with Paramount California University in the hope of a genuine
third-level business qualification.
“I was paying for an
education, not buying a degree,” she said. “I’ve only got a high school
education, so I did it for my own self worth, and nothing else.”
Mary said she and her
husband enrolled for business degrees they hoped to study for at home over the
winter. Instead she found herself being pursued and hectored by sales agents
into making ever-greater payments for fees, registration and legalization. As
she started to suspect a fraud, her confusion turned to denial and then anger.
“I didn’t know where to
turn,” said Mary, who has hired an American lawyer to help seek a refund.
“People say, ‘How could you be so stupid?’ I was one of the stupid ones.”
Griff Palmer contributed
reporting from New York, and Saba Imtiaz from Karachi, Pakistan.
