ISLAMABAD: A meeting of the Senate Standing Committee on Finance on Tuesday witnessed a heated debate over the issue of fake degree scam involving the IT firm, Axact, as some senators assailed the Securities and Exchange Commission of Pakistan (SECP) for having failed to keep a check on the activities of companies registered with it.

The meeting, held at the Parliament House, was presided over by Senator Salim Mandviwala.

The members of the committee sought replies from SECP officials about the role of the commission as a corporate sector regulator if a registered company is involved in illegal business activities.

Senator Kamil Ali Agha of PML-Q wondered how could the SECP be unaware of alleged illegal activities of Axact over the past many years.

He said the country was already facing an image problem and this fake degree scam had brought more bad name to it.

Senator Ayesha Raza of PML-N criticised the firms which were auditors of Axact for ignoring violation of SECP rules by the company.

SECP Chairman Zafar Hijazi, however, informed the committee that the commission was not a regular for the IT sector.

“The SECP is a registration office for all companies, but it regulates only a few sectors,” he added.

He said there was no negligence on the part of SECP in the case of Axact.

When the case of fake degrees emerged, the commission conducted an inquiry and forwarded its report to the Federal Investigation Agency (FIA), he added.

SECP officials informed the committee that Axact was incorporated in 2006 as a Pakistani company with no foreigner or foreign-based director.

Mr Hijazi said that SECP officials scrutinised the seven-year record of Axact and found nothing illegal or improper and that the company had all corporate compliance without any objection or complaint.

The committee was informed that the auditor of Axact was one of the only 100 QCR-rated auditors in the country.

The Commissioner of SECP’s Company Law Division, Tahir Mahmood, said that the only possible crime committed by Axact in terms of SECP laws was that the company got involved in the education business while it was registered as an IT firm.

“But nobody has ever been penalised over this issue,” he said, adding, “as a matter of fact this clause of declaring the ‘object’ of business is on the decline all over the world.”

He said companies were required to get registered and they were allowed to enter any lawful business.

On Mr Mahmood’s comment almost all senators burst out together, asking the SECP to be strict on the conduct of registered companies.

Senator Nasreen Jalil of MQM wondered about the subdued reaction by the United States even though Americans and other westerners were the most affected.

The committee was informed that the subsidiaries of Axact were Bol News, Labaik Ltd and Bol Enterprises and that there was no wrongdoing found in these businesses.

The chairman of the committee remarked: “This means despite all this hype in the media the company will come out clean.”

“Yes it looks that way unless FIA is able to find things like money laundering, fraudulent means to promote business or fake degrees,” the SECP chairman said.

Published in Dawn, June 3rd, 2015

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