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The spectacular crash of Shoaib Shaikh's digital empire
He was the ultimate salesman, and today he finds himself making the most important sale of his life.Shoaib Shaikh was born into a middle-class family, the son of aSindh High Court lawyer who also served some years as the principal of the Islamia College, according to people close to him. The middle sibling amongstfive, Shaikh is the only son. In the year of his greatest trial, he entered the age of 41 — that tipping point where a man’s mind begins to ask, “what have I accomplished in life?”It is not known how Shaikh is answering that question in the solitude of his prison cell these days. He has some of the best lawyers money can buy in Pakistan. In the court, he is represented by Shaukat Hayat, whose client list includes formermilitary dictator turned president, Pervez Musharraf, and who has also served as prosecutor in the hijacking case against Nawaz Sharif in 1999-2000.Hayat insists his client is being held in a ‘C’ class cell in Karachi Central Jail. Television crews who have visited the facility recently, however, came back with footage of Shaikh in a cell in what is called the “Asif ZardariBlock” in the prison where the former president spent his yearsin confinement — hardly ‘C’ class.Shaikh is faced with the challenge of persuading the judges that he is an honest businessman; that his meteoric rise to national infamy was borne out of his legitimate business of software exports. And that the allegations against him – of running a fraudulent enterprise involved in offences ranging from forgery and fraud to extortion and money laundering – are entirely motivated by his rivals’ desire to see him eliminated from the field.It is proving to be a hard sell. Thus far, all his appeals have been rejected. An application forbail was turned down as well as the one to unfreeze his frozen accounts. Yet another, for transferring him to ‘A’ class facilities in prison, has also beenrejected.But Shaikh remains steadfast. “He is very confident,” says Hayat when asked about his client’s state of mind. “According to him, he has committed no crime. He earned a lot of foreign exchange for the country through lawful means via a software company which was registered and had an export licence.”Shaikh’s foray into media appears to have been the starting point of his undoing. Histelevision channel, Bol, which never formally went on air but did begin a test transmission, was only a rumour for a number of years. But in a spurt of hiring in the last months of 2014 – which accelerated through the first months of 2015 – saw the payroll rise to almost 2,300 people, according to Amir Zia, who was tapped to head the print platform of Bol.“Most of that team is still intact,”says Zia, “only a handful of people have left due to the massive propaganda done against Shaikh”.Every floor of the [Axact offices] was full of people who were simply making phone calls, demanding more and more money from those who had purchased degrees from one of Axact’s fake universities. That is all they did over there.The “massive propaganda” began with an article inThe NewYork Timeswhich punctured thestory in which Bol had enveloped itself. That story, published on May 28, 2015, claimed that Axact, the software house behind Bol, was engaged in a massive online fraud: sellingeducational credentials from fake universities that did not exist except as websites. The story triggered round-the-clock coverage from television channels in Pakistan and prompted a criminal investigation by the government.Within days afterThe New York Timesstory appeared, Axact’s offices in Karachi and Islamabadwere raided, Shaikh was arrested along with 30 other employees of the company, and all Axact accounts and those of its senior officers were frozen.And along with all that came down his media empire. The stalwart talk-show hosts, anchorpersons and senior newsroom managers he had hired for Bol – on salaries way higher than any other media group in Pakistan can afford to offer – started leaving to safer destinations.The investigators have not just sealed the Axact offices all over Pakistan, they have also confiscated a large number of computer servers supposed to have all the data about the company’s activities. These servers, containing almost 700 terabytes of data, have been forensically examined, according to the prosecution team. The judicial examination of all that data is likely to be an important part of the prosecution’s case.“We have recordings of hundreds of phone calls in that database,” says Zahid Jamil, oneof the prosecutors. “The investigation shows that every floor of the [Axact offices] was full of people who were simply making phone calls, demanding more and more money from those who had purchased degrees from one of Axact’s fake universities. That is all they did over there.”AFPSome of the recordings were played in open court; they showed callers impersonating government employees, from countries as varied as the UnitedArab Emirates and the United States. These callers were demanding that the client at the other end of the call either pay for an additional “certification” or face cancellation of their credentials, deportation and possibly criminal prosecution.Shaikh has, according to the prosecution team, cooperated with the authorities in pinpointing other employees who have further incriminating hard drives in their possession. In at least four raids by the Federal Investigation Agency (FIA), he accompanied officials to the homes of those employees for the retrieval of the data drives from them.The alleged degree scam had at least 200,000 victims all around the world, according to details pieced together by the investigators. Hayat is sceptical of this. “Not a single foreigner has made a complaint against [Shaikh],” he says. “If the scam isglobal, why are there no complainants other than the FIA? How is it that the financial system, with its detailed information gathering [about international transactions], has not detected any wrongdoing?”On June 13, 2015, the FIA Corporate Crime Circle in Karachi sent the charge sheet against Shaikh to a court. He hasbeen charged on seven counts under the Pakistan Penal Code and on one count each under theElectronic Crimes Ordinance 2002 and the Anti-Money Laundering Act 2010. Two weeks later, the FIA submitted a supplementary interim charge sheet which carried some additional charges. And on July 9, 2015, yet another interim charge sheet was submitted thatcharged Shaikh on one more count under the Anti-Money Laundering Act. Later in October,a third case under the same act was filed against him for usinghundiandhawalanetworks for illegal transfer of money to and from Pakistan.Also read
erson of the Year 2015All these ever-sprawling cases and numerous sets of charges against Shaikh, however, have not yielded a trial so far. “Why has the court not framed charges, despite the passage of more than seven months to Shaikh’s arrest?” asks Hayat. “We have still not been given anyevidence against him.”Prosecutor Jameel argues that the volume of data to sift through is so large that it will take time to build the case against Shaikh. In other cases ofsimilar nature, he argues, it has taken the prosecution a couple of years before it was able to puttogether all the required documents, forensic and physical evidence. But he remains confident that his team will be ready to file a final chargesheet against Shaikh very soon.Even then, his trial and punishment will take years to complete. In the interim, he may perfect a sales pitch to plead innocent and prove himself as such. A sales pitch, after all, is what he is best at. His company’s promotional literature reveals a mind keenly tuned to marketing. One flier, for instance, features the words “job” and “career” crossed out; under them the word “lifestyle” is written in bold letters.That is what Shaikh told his employees, too — that they were signing up for a ‘lifestyle’, not a job. That lifestyle included access to a company yacht, clubhouses, beach huts, in-house gyms and swimming pools at the offices, chauffeur-driven cars, free laundry services, five-star dining facilities and many other creature comforts. All these luxuries embody the perfect middle-class yearning for a shortcut to the top.Shaikh built his enterprise with an energy and determination that left his competitors and rivals flummoxed. But now we wait to see if there is any poetic irony in his predicament. As a court prepares to decide whether he himself availed illegal shortcuts to accumulate his riches, it remains to be seen how the biggest sales pitch of his life plays out.
The spectacular crash of Shoaib Shaikh's digital empire - People & Society
He was the ultimate salesman, and today he finds himself making the most important sale of his life.Shoaib Shaikh was born into a middle-class family, the son of aSindh High Court lawyer who also served some years as the principal of the Islamia College, according to people close to him. The middle sibling amongstfive, Shaikh is the only son. In the year of his greatest trial, he entered the age of 41 — that tipping point where a man’s mind begins to ask, “what have I accomplished in life?”It is not known how Shaikh is answering that question in the solitude of his prison cell these days. He has some of the best lawyers money can buy in Pakistan. In the court, he is represented by Shaukat Hayat, whose client list includes formermilitary dictator turned president, Pervez Musharraf, and who has also served as prosecutor in the hijacking case against Nawaz Sharif in 1999-2000.Hayat insists his client is being held in a ‘C’ class cell in Karachi Central Jail. Television crews who have visited the facility recently, however, came back with footage of Shaikh in a cell in what is called the “Asif ZardariBlock” in the prison where the former president spent his yearsin confinement — hardly ‘C’ class.Shaikh is faced with the challenge of persuading the judges that he is an honest businessman; that his meteoric rise to national infamy was borne out of his legitimate business of software exports. And that the allegations against him – of running a fraudulent enterprise involved in offences ranging from forgery and fraud to extortion and money laundering – are entirely motivated by his rivals’ desire to see him eliminated from the field.It is proving to be a hard sell. Thus far, all his appeals have been rejected. An application forbail was turned down as well as the one to unfreeze his frozen accounts. Yet another, for transferring him to ‘A’ class facilities in prison, has also beenrejected.But Shaikh remains steadfast. “He is very confident,” says Hayat when asked about his client’s state of mind. “According to him, he has committed no crime. He earned a lot of foreign exchange for the country through lawful means via a software company which was registered and had an export licence.”Shaikh’s foray into media appears to have been the starting point of his undoing. Histelevision channel, Bol, which never formally went on air but did begin a test transmission, was only a rumour for a number of years. But in a spurt of hiring in the last months of 2014 – which accelerated through the first months of 2015 – saw the payroll rise to almost 2,300 people, according to Amir Zia, who was tapped to head the print platform of Bol.“Most of that team is still intact,”says Zia, “only a handful of people have left due to the massive propaganda done against Shaikh”.Every floor of the [Axact offices] was full of people who were simply making phone calls, demanding more and more money from those who had purchased degrees from one of Axact’s fake universities. That is all they did over there.The “massive propaganda” began with an article inThe NewYork Timeswhich punctured thestory in which Bol had enveloped itself. That story, published on May 28, 2015, claimed that Axact, the software house behind Bol, was engaged in a massive online fraud: sellingeducational credentials from fake universities that did not exist except as websites. The story triggered round-the-clock coverage from television channels in Pakistan and prompted a criminal investigation by the government.Within days afterThe New York Timesstory appeared, Axact’s offices in Karachi and Islamabadwere raided, Shaikh was arrested along with 30 other employees of the company, and all Axact accounts and those of its senior officers were frozen.And along with all that came down his media empire. The stalwart talk-show hosts, anchorpersons and senior newsroom managers he had hired for Bol – on salaries way higher than any other media group in Pakistan can afford to offer – started leaving to safer destinations.The investigators have not just sealed the Axact offices all over Pakistan, they have also confiscated a large number of computer servers supposed to have all the data about the company’s activities. These servers, containing almost 700 terabytes of data, have been forensically examined, according to the prosecution team. The judicial examination of all that data is likely to be an important part of the prosecution’s case.“We have recordings of hundreds of phone calls in that database,” says Zahid Jamil, oneof the prosecutors. “The investigation shows that every floor of the [Axact offices] was full of people who were simply making phone calls, demanding more and more money from those who had purchased degrees from one of Axact’s fake universities. That is all they did over there.”AFPSome of the recordings were played in open court; they showed callers impersonating government employees, from countries as varied as the UnitedArab Emirates and the United States. These callers were demanding that the client at the other end of the call either pay for an additional “certification” or face cancellation of their credentials, deportation and possibly criminal prosecution.Shaikh has, according to the prosecution team, cooperated with the authorities in pinpointing other employees who have further incriminating hard drives in their possession. In at least four raids by the Federal Investigation Agency (FIA), he accompanied officials to the homes of those employees for the retrieval of the data drives from them.The alleged degree scam had at least 200,000 victims all around the world, according to details pieced together by the investigators. Hayat is sceptical of this. “Not a single foreigner has made a complaint against [Shaikh],” he says. “If the scam isglobal, why are there no complainants other than the FIA? How is it that the financial system, with its detailed information gathering [about international transactions], has not detected any wrongdoing?”On June 13, 2015, the FIA Corporate Crime Circle in Karachi sent the charge sheet against Shaikh to a court. He hasbeen charged on seven counts under the Pakistan Penal Code and on one count each under theElectronic Crimes Ordinance 2002 and the Anti-Money Laundering Act 2010. Two weeks later, the FIA submitted a supplementary interim charge sheet which carried some additional charges. And on July 9, 2015, yet another interim charge sheet was submitted thatcharged Shaikh on one more count under the Anti-Money Laundering Act. Later in October,a third case under the same act was filed against him for usinghundiandhawalanetworks for illegal transfer of money to and from Pakistan.Also read
erson of the Year 2015All these ever-sprawling cases and numerous sets of charges against Shaikh, however, have not yielded a trial so far. “Why has the court not framed charges, despite the passage of more than seven months to Shaikh’s arrest?” asks Hayat. “We have still not been given anyevidence against him.”Prosecutor Jameel argues that the volume of data to sift through is so large that it will take time to build the case against Shaikh. In other cases ofsimilar nature, he argues, it has taken the prosecution a couple of years before it was able to puttogether all the required documents, forensic and physical evidence. But he remains confident that his team will be ready to file a final chargesheet against Shaikh very soon.Even then, his trial and punishment will take years to complete. In the interim, he may perfect a sales pitch to plead innocent and prove himself as such. A sales pitch, after all, is what he is best at. His company’s promotional literature reveals a mind keenly tuned to marketing. One flier, for instance, features the words “job” and “career” crossed out; under them the word “lifestyle” is written in bold letters.That is what Shaikh told his employees, too — that they were signing up for a ‘lifestyle’, not a job. That lifestyle included access to a company yacht, clubhouses, beach huts, in-house gyms and swimming pools at the offices, chauffeur-driven cars, free laundry services, five-star dining facilities and many other creature comforts. All these luxuries embody the perfect middle-class yearning for a shortcut to the top.Shaikh built his enterprise with an energy and determination that left his competitors and rivals flummoxed. But now we wait to see if there is any poetic irony in his predicament. As a court prepares to decide whether he himself availed illegal shortcuts to accumulate his riches, it remains to be seen how the biggest sales pitch of his life plays out.The spectacular crash of Shoaib Shaikh's digital empire - People & Society
