Islamabad: In the year since Pakistani investigators raided Axact, a Karachi-based software company accused of raking in hundreds of millions of dollars with a vast internet degree scam, Pakistani and US investigators have been busy dismantling its operations.
Fourteen Axact employees, including the chief executive, await trial on charges of fraud, extortion and money laundering. Bank accounts in Pakistan and the United States have been frozen. Investigators have uncovered a tangled web of corporate entities — dozens of shell companies and associates, from Caribbean tax havens to others in Delaware, the Gulf and Singapore — used to funnel illicit earnings back to Pakistan.
New details suggest that Axact’s fraud empire, considered one of the biggest internet scams on record, is bigger than initially imagined. Over the past decade, Axact took money from at least 215,000 people in 197 countries — one-third of them from the United States. Sales agents wielded threats and false promises and impersonated government officials, earning the company at least $89 million (Dh326 million) in its final year of operation.
Case appears in jeopardy
Those findings stem from financial and customer records, company registrations, sworn testimony, communications between Pakistani and US officials, and hundreds of hours of taped phone conversations filed in court.
The case against Axact, which at first seemed a rare instance in which tycoons with powerful connections were being held to criminal account, has increasingly appeared in recent months to be in jeopardy. The leading prosecutor quit with little explanation, hinting that he had come under political pressure to soft-pedal the case. A trial date for the company’s executives has not been set, and several judges have dropped out of the case. Some media analysts, noting that Axact’s jailed chief executive, Shoaib Ahmad Shaikh, has publicly boasted of his work for the Pakistani military, speculate that his powerful connections may work in his favour.
“There’s been a huge amount of speculation and analysis and deep-throated conspiracy theories,” said Hasan Zaidi, a filmmaker and media analyst based in Karachi.
“Initially, there was a lot of surprise that Axact’s operations were being tackled so quickly, particularly given the view that it was being backed by the boys,” he added, using a common euphemism for the military’s Inter-Services Intelligence spy agency. “But now the interest has died down, and I don’t think it will ever be solved — even through a court case.”
Axact had been in business for nearly 10 years at the time of the arrests in May, and the company and its founder appeared ever more eager to step into the public spotlight, seemingly unconcerned about the risk. Most prominently, Axact was preparing to introduce Bol, a television network with 2,200 employees that had started test transmissions in the days before the police raids.
Comparing himself to Microsoft’s Bill Gates, Shaikh had touted Axact as Pakistan’s leading software exporter.
Once the police investigation began, Shaikh instructed subordinates to burn company documents at a vacant lot and to destroy computer drives, some of which were later cast into the sea, another executive testified to the police.
Fake degrees
But Shaikh could not prevent the seizure of a vast trove of data, some recovered from computer disks as they were being deleted, that led investigators to conclude that Axact’s main business was providing fake degrees.
The police found more than 1 million blank educational certificates and evidence of 300 fictitious educational websites, many with American-sounding names like Columbiana and Brooklyn Park, that sold fake degrees to hundreds of thousands of people around the world. Some knowingly bought effortless degrees to pad resumes or to help in immigration, and a handful have been publicly embarrassed.
Last month, Myanmar’s new finance and planning minister, Kyaw Win, admitted that his doctorate came from Axact’s Brooklyn Park University. “Now I am ashamed to call myself a PhD,” he said.
Many other customers, investigators quickly realised, had fallen victim to an elaborate and aggressive fraud, going to Axact-run websites for a legitimate online education only to be intimidated into making ever larger payments.
Shaikh insists that he earned his wealth through legitimate software exports. He has hired Shaukat Hayat, a lawyer whose client list includes Pervez Musharraf, the former Pakistani president, to defend him.
In a telephone interview, Hayat said the case against Shaikh and his fellow executives had been cooked up by the news media. “They have not committed any illegal action,” he said.
Shaikh also faces scrutiny from US investigators. In a letter to the Pakistani authorities in February, US officials said the FBI had identified Axact as a “diploma mill” that operated a “worldwide web of shell companies and associates.”
Three of the main shell companies, registered in Delaware, were found to have been owned by Shaikh or his associates, the letter said.
Other company documents point to shell holdings in the British Virgin Islands, Cyprus, the Gulf region and Panama. In several instances, Shaikh appears to have used a pseudonym, Ryan Jones, to sign company documents. He became a citizen of St. Kitts and Nevis, a small Caribbean island that sells passports to rich investors.
His sister, Uzma Shaheen, who lives in Chicago, has been called to testify. Documents filed in court show that Shaheen transferred more than $37 million from US bank accounts to Axact in Pakistan in recent years.
Still, much of Axact’s global network remains undisrupted. It controls 32 other bank accounts that are thought to contain millions of dollars, according to prosecution documents.
— New York Times News Service
