Axact Scandal Heats Up Further: Call For Proper Inquiry

The Axact scandal continues today as the firm battles allegations that it issues fake degrees in Pakistan. Officials are investigating the allegations, but the company blasted the probe, suggesting that investigators have already decided that it is guilty.

There are also new allegations which suggest that Axact may have dodged taxes.

Axact still fighting allegations

Further, Axact alleges that the investigation “seems to be done in haste and without lawful procedure.” The company posted this response on its Facebook page and website:

Michael Mauboussin: Here’s what active managers can do

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkThe debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More

“We request the government to order a proper judicial inquiry into these false allegations made against Axact. The inquiry being conducted right now seems to be done in haste and without lawful procedure. For instance, sealing Axact’s Islamabad office, seizure of computers, etc. They are now asking to submit a list of queries in less than 24 hours. It seems like that the way the inquiry is being done is due to the pressure from the competitor media organizations. We also fear that the way the inquiry is being conducted points to the fact that they already have a verdict against Axact in mind.”

Investigators raided the company’s headquarters following the initial accusations in the media. According to the Khaleej Times (via The Nation), Axact’s Dubai officers have been closed for over two years. Strangely, the firm’s website lists the Dubai office as its “corporate head office.”

Journalist says he has proof of Axact scandal

The Axact scandal began with a report in The New York Times which claimed that it sells fake academic decrees online. The company has not been officially accused of any wrongdoing and maintains its innocence. DND and other Pakistani outlets report that no country, including the U.S., has expressed concerns about Axact with Pakistani officials.

Declan Walsh, the reporter who sparked the scandal with his article in The New York Times, told the BBC on Wednesday that he has evidence to back up his claims. He said he has spoken with “many former employees” of Axact and that he has “many other documents as well.” He added that if a court calls for those documents to be submitted, he will do so.

Axact scandal may include tax evasion

The Express Tribune heaped even more burning coals on Axact’s owners today, broadening the Axact scandal by suggesting that the company may be dodging taxes in addition to selling fake academic degrees. Pakistan’s Federal Board of Revenue has reportedly begun investigating Axact Pakistan’s assets that are located in other countries, including the United Arab Emirates and the U.K. The Express Tribune cites a report from the FBR’s Directorate General Intelligence and Investigation for the information.

The report is said to claim that Axact evaded Rs420 million in taxes between 2009 and 2013. The firm is a subsidiary of M/x Axact FZLLC, UAE, which the publication states “has 100% share capital.” Axact’s directors, husband and wife Shoaib Ahmed Shaikh and Ayesha Shoaib Shaikh, reportedly own just a single share in the company. The price of one share is listed as 10 rupees.

The document also reportedly states that Axact operates in Karachi, Dubai and Islamabad and runs eight divisions and products. The company is said to have over 8.3 million customers and bank accounts in more than 100 different countries.

Further, it reportedly states that 97% of Axact’s income between 2009 and 2013 was tax exempt. The firm was said to have paid just Rs46,78,594 in taxes during those years and claimed a refund of Rs2,79,71,059.