Pakistan

Avoiding tax, Axact moved Rs8 billion from UAE to Pakistan

Company failed to prove money was generated through software sales

Our Correspondent May 23, 2015

Company failed to prove money was generated through software sales. PHOTO: AFP

KARACHI:

Axact moved more than Rs8 billion in tax-free, foreign currency from Dubai to Pakistan over the last four years, a Federal Investigation Agency (FIA) probe has revealed, as the bureau prepares to register cases of money-laundering, tax evasion and illegal use of cyberspace against the IT company.

Investigators scrutinising Axact’s financial records, including audit reports and balance sheets, said the company transferred foreign exchange worth Rs1 billion to Pakistan in 2011. This amount, they said, was presented as income from the sale of software and IT-related services. The company moved the funds without paying any tax by taking advantage of government concessions aimed at promoting software export.

In 2012, Axact moved thrice the amount to Pakistan, investigators said, avoiding tax using the aforementioned concessions. The company continued this practice over subsequent years until, by 2014, it had moved as much as Rs8 billion to Pakistan without paying any tax on the income, they added.

According to investigators, the money was transferred to Pakistan via Dubai through transactions involving a few hundred to thousands of dollars.

Sources said Axact is adamant that this foreign exchange was generated by the sale of software and IT services.

But investigators said the company has failed to provide documentary evidence to back up the claim. If the income was generated from any means other than the sale of software and IT services, then Axact has committed money-laundering, they added.

FIA officials are preparing to lodge three to four cases against Axact on charges of money-laundering, tax evasion and illegal use of cyberspace based on irregularities found in the company’s financial records. The agency’s IT and forensic experts have also collected important evidence from emails and computers, sources said.

The FIA director is set to present a comprehensive report on evidence against Axact collected so far to Interior Minister Chaudhry Nisar Ali Khan today (Saturday), they said. A decision on whether cases will be registered immediately or if investigators will be given more time to collect additional proofs will be taken after the meeting, the sources added.

Published in The Express Tribune, May 23^rd, 2015.

COMMENTS (42)

Haris | 9 years ago | Reply @viqas atique. You must be kidding...really? if only what you have said in your comment is true..it is enough to land you in jail for a long long period.

ABKhan | 9 years ago | Reply Ohhh now found their real criminal act. Instead of laundering money out of the country like our honorable prime minister, they were laundering it inside the country.

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Umar Akram | 9 years ago | Reply @viqas atique. Shame on you! You two have done the country a lot of damage internationally! Not only FIA, FBI and other agencies will also cooperate and prove that offshore companies in Panama, Bezile, Cyprus and other tax heavens with ownership in names of others all point back to you two for running diploma mill websites network! And shame on poor quality of service, frankly SCAM services you provided through Essay and course writing websites and design services through craftive.com!

Muhammad Kashif | 9 years ago | Reply @ All, We are cursed nation. We cannot protect our good or bad deeds as nation. We lost a growing entity like Axact , We will loose much more. (What about money laundering going on in UAE, Saudia, Qatar, Bahrain, Bank of America, Merill Lynch, Many famous financial entities , they still operating. We are nothing as a nation. (Axact wrong doings could have been managed in a secret investigation) We destroyed our Goodwill as nation.

Bewildered | 9 years ago | Reply "Axact moved Rs8 billion from UAE to Pakistan" Shouldn't Axact rather be given some national award for bringing in large amounts of precious foreign exchange to Pakistan, unlike our politicians and bureaucrats who launder money out of Pakistan and still are honorable and respectable. I remember the scheme NS government had started where anybody can legally bring in any amount of foreign exchange without disclosing the source or legitimacy of the funds. How are the Axact transfers illegal then?

pothead | 9 years ago | Reply How come no one is mentioning "dawood f ibrahim" ??

roarwali | 9 years ago | Reply There are people out there who support Axact by saying it has provided jobs to many and pushing IT to new level in Pakistan (no matter how unfair means they have employed in doing so). The argument is not valid. Although all companies around the world do cheat to avoid taxes but not to the level of Axact. Also, what astonished me the most is the 26 rupee tax the owner has paid last year.

Ashah | 9 years ago | Reply These Guys brought in money into the country and that is considered money Launderying ?

asikk | 9 years ago | Reply @Asad S: Asad why are we and the media not asking for the other forms of corruption to be looked at too? After all the action here also was taken based on a media report ! where are the media reports on the rest and the goose chase after them? We should rise and engage all these forms of corruption. For me the company brought some money into the country and paid a lot of households good money not the reverse which is the tradition in Pakistan. Hence lets investigate thoroughly but give these guys the benefit of doubt till proven properly in court. At one time GEO was anti Pakistan as per the media which is an even bigger crime is it not? what happened all the air went out of the balloon !

asikk | 9 years ago | Reply Not condoning anything as things need to be investigated but would like state that this 8 billion rupees equates to only 75 million dollars approximately! That funnily enough were brought into Pakistan. How many Pakistani politicians move much more than this amount out of Pakistan to their safe havens abroad. The truth is that Pakistan has been corrupted to the core by our own elected politicians and its plain to see in all sectors of society. Perhaps evolution will help us rid ourselves of this cancer. Dont think Express Tribune would publish this comment !

salman | 9 years ago | Reply @Logitech: I suggest we prosecute everyone. It doesn't seem right that cases against politicians are stuck in courts for twenty plus years....

Zaheer | 9 years ago | Reply The Axact Gate scandal is only a business rivalry between media owners specially the electronic media as the Axact is going to launch a tv channel and as everyone is aware that this company is hiring seasoned journalists and other technical staff on a very high salaries and perks which others can't digest. Honestly speaking this scandal has put aside the real issues of the masses, each and every channel has forgotten the water crisis, power crisis, law & order situation, militancy, extremism, terrorism, extortion and many other important issues directly affecting a common man as electronic media in the country is busy in creating hype against a future business competeter. Needless to say that in past also Memogate scandal emerged and burried but no one remember it now and all media is silent about it. As far as tax evasion is concerned our politicians are at number one in it.

Umar Akram | 9 years ago | Reply @viqas atique. Axact is a symbol of IT prosperity in Pakistan. I consider these allegations as jealousy of American software companies. They don't want us to grow in technology, rather being dependant on them. I still support you even if you have done money laundering because u have brought money inside my country. I don't care what media says. I just support our Pakistani based company.

Sufia.zamir | 9 years ago | Reply @viqas atique. Isn't Mr Ali Ghaffar in HR? What is his relation with IT? How can you call a HR guy the star of IT? Can you please let us know what your IT products are? Mr Shoaib mentioned smartphone apps in his interview with kashif Abbasi. Indeed a legitimate product, but a relatively recent one. if AXact has been in operation all these years, what we're it's IT products before that? Also if as Mr Shoaib said, an institution does not need to be accredited in America, please explain why MUST university has been accredited by international accreditation organization? Was there any need to do so? I'm sure there are countless examples of universities which have been accredited by you.

Viqas Atiq | 9 years ago | Reply I appreciate the great response received from my comment. If you people were working for Axact I would give you guys a positive memo and make your quarterly bonus a reality. Axact is a company founded by people just like yourselves. We have hundreds of people working for us. People like Ali Guffar, Zeeshan Ahmed and Abdul Rehman Haroon among many others are stars of Pakistan's IT industry. We should be celebrating that the company grew the IT industry in Pakistan and was pioneering online education, As Mr Shoab said in his interview a institution does not need to be accredited in America. We have agreements with universities which we will show the FIA who are penalizing us because of media pressure. There are hundreds of families that our company has supported and countless we continue to support despite what is being done to us. But we will rise once again like eagles!

Talking. Point | 9 years ago | Reply @Viqas Atique: And if they ask you to recruit anyone and anything including dogs , again it is not your fault. What if they ask you to silence your critics ? Again not your fault? Please do have the minimum legal perspective to know that the agents are as much responsible for their principal's actions and vice versa. In your case , the bogus universities websites all lead the trail back to you!

unknown | 9 years ago | Reply action on the basis of a simple New York Media Times report against a company bringing foreign exchange worth in millions to the country to support its economy otherwise the co may have transferred this amount to any other tax free country like other looters who have transferred billions of foreign exchange out of the country and no action against them by agencies.

raider | 9 years ago | Reply AXACT should approach LHC to get them be declared innocent and clean chit too easily just with comments "case is not eligible to be heard

Mohammad | 9 years ago | Reply foreign incoming or remittances are tax free..a straight law in Pakistan. I am with anyone, even if he is a criminal who brings money to Pakistan for investment.. you can't bully the people bringing money into Pakistan and creating thousands of Jobs.. in this case.. how many jobs will be created at Bol TV? wake up your senses!

MK | 9 years ago | Reply So Mr Viqas (comment above) you were the getaway driver basically. Not your fault the people in your car had just robbed a bank. Land of the pure.

Spyrogyra | 9 years ago | Reply So they brought money into Pakistan? Are they crazy? Woe be unto them! It is now also very clear that ET has a bone to pick with this company. Suggest they read the various acts providing legal cover to foreign exchange brought into the country. Don't try to link it to a tax issue till there is a court verdict. And sure, go ahead and censor this comment.

sufia.zamir | 9 years ago | Reply @Viqas Atique, actually Im glad you are here, because I have some questions. how do you explain the news report that all of axacts universities are on the same servers as axact.com and bolnetwork website? And how come over 370 universities turned out to be fake, which you allege are your clients? Do you not vet your clients? How about today's report that Axacts revenue stream could not be linked to any IT/software products?

Employee | 9 years ago | Reply I'm an employee and I support axact. Business is all about profit. What Axact did maybe morally wrong. That's also a maybe but legally they didn't. There is a market out there. Somebody's gotta make a buck out of it. Every money making business is an idea Mr Shoaib Shiekh should be made entrepreneur if the year instead of being prosecuted. I don't expect the comment to publish ET

Farhan | 9 years ago | Reply @Viqas Atique: Why did you sold degrees to people without giving them any proper trainings?

Salman | 9 years ago | Reply @Viqas Atique: Good one Viqas! Love your sense of humour! :-)

DUMHaiKyaa | 9 years ago | Reply FIA should charge not only this company but also to those people who bought those degrees, dont they know that without study how can you get lgitimate degrees...

Israr | 9 years ago | Reply @Viqas Atique: Next time when you are telling blatant lies, please don't append "Inshallah" to your rubbish.

Declan Pakistani | 9 years ago | Reply @Viqas Atique: So don't u do background check of your clients , or deal with any one yup want next time you would be dealing with Mexican cartel and say it's not our fault if they didn't told us they were selling drugs , we just provided them sales team .

common-sense | 9 years ago | Reply The problem, Mr. Viqas, is that your company owns those fake universities as well. You telling us that you provide web hosting and what not for those fake universities, but didn't know they were fake OR that you didn't have anything to do with them is a lie. You were selling (and up-selling) degrees for these fake universities (which you claim you do not own) through a call center and trying to extort money from unsuspecting customers. Your statement is like saying you were a hired gun to commit crimes on behalf of your client, but that you did not know they were crimes hence you should not be held responsible for it. This is preposterous and will not stand in a court of law. You are done and your 15 minutes of fame are over. Good bye and good riddance.

Sohraab | 9 years ago | Reply @Logitech: Paethetic indeed...you mean to say that we should forget about the Billions these crook politicians shifted from Pakistan to their Businesses abroad. No Sir, You may Target AXACT but should be equally aggressive on these Goons in politics.

Asad S | 9 years ago | Reply Lots of people here in the comments justifying the wrong doings of AXACT and comparing it with politicians. Two wrongs don't make a right . If they did some kind of fraud let the due process take place.

Hassan | 9 years ago | Reply @Viqas Attique are you for real ? lol ... the So-called USA based university asked you to print their degrees having Jhon F kerry sign ? ... I hope FIA raps this up quickly, and put all of you in jail for tarnishing the country's image and humiliating the Pakistani nation.

Syed Zair Abbas Zaidi | 9 years ago | Reply Axact Have been an stimulus in growth in IT sector in Pakistan,But What really caught Them funding of Unknown resources to generate them ? But I have a Few Question from Global Companies and My dear Pakistan Political Peoples If HSBC in UK and globally do Billion of Pound Tax evasion and still Known for Good ? BCCI bank is closed down in order to give Chance to European Bank does BBCI Bank is doing Money Laundry ? The answer is our political and government people have to be shame on them rather then looking at the axact company Mr Nawaz Sharif Have been a political criminal having many properties in U.K and His son have a plaza in East London If you need information I can guide you more (these properties are million of Pound worth that is all belong to people of pakistan and Steel mill in Saudi Arabia is also belong to people of pakistan If Taxation and FBI are really working seriously in order to clear pakistan start from the top otherwise no use of making gamic scandal It is like a unknown person in Nawaz sharif last tenure from karachi he give 1 Billion Rupees in order to move to dubai becasue Nawaz sharif put him in jail

Viqas Atique | 9 years ago | Reply These are all baseless allegations. We run a very decent business helping students to improve their lives. Our only fault was to provide call center, credit card processing, platform, web hosting, email and chat services to universities. If these universities turn out to be fake its not our fault. If they ask us to handle printing of degrees for them its not our fault...we just print them. We will strongly challenge all of this in court Inshallah.

Iqbal Aftab | 9 years ago | Reply Let See! Who catch the cat at the end, in the End very Big Commission for the Brothers & Co. and there will be others beneficiaries too. A whole Big Case to gain and People of Pakistan always Losers in such raids, enquires & investigations. A very big Fish in the net but what the gain for the State nothing, even though the agencies did not allow to start the Channel for this Company but the Government was sleeping unless the Foreign Newspaper meant to wake the State. Money will be whiten in no time just some commission and the case will be fine. Some money comes in, some will go out and all will be settled. The Government is all there for making the settlements and arrangement. Did anyone saw a fight with big crocodiles, No never in the world, so how could it be in Pakistan, the enquires will linger on & on. So Big Crocodiles in the Company and who is the Daredevil in Pakistan! And I think No one in the Government yet! So I again say Let See!

Logitech | 9 years ago | Reply The much-repeated excuse that "Nawaz and Zardari are also criminals, so why are we prosecuting Axact if we are not moving against these politicians" is nonsensical. So what do you guys suggest? We prosecute no one? How is that a better solution? Axact acted like a mob/mafia in Pakistan. It would threaten and silence anyone who dared to speak out against the company. I am glad there is at least some accountability in this country.

Umar Khan | 9 years ago | Reply

If the income was generated from any means other than the sale of software and IT services, then Axact has committed money-laundering, they added.

IFs and BUTs ... Dear FIA, first do your job and then comment on media ...

Sajid Rabbani | 9 years ago | Reply They are caught because they have no political background. Otherwise, you know !!!!!!

Ha Ha Ha | 9 years ago | Reply Now the question is was FBR sleeping again?

shahid | 9 years ago | Reply Aren't they better than our 'respected political gods' like Zardari and Nawaz Sharif who launder money out of Pakistan?

sad | 9 years ago | Reply IT and forensic experts of FIA. What a joke. Definitely a disgrace to real experts (obviously i am not one). These inept losers could not trace hameesh khan during his skype conversations. Same happened in case of Uzair Baloch. Saw some article which detailed how easily could that be done.

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