THE NSW government has frozen funding to Sydney’s largest Islamic school after an Education Department audit found the school’s owners were charging the school millions of dollars in improper fees.
The department last night confirmed it had ceased funding of about $4.5 million to Malek Fahd school, after an investigation into the payments the school made in management fees and backdated rental fees to its owner, the Australian Federation of Islamic Councils, the nation’s peak Muslim body.
In August last year, The Australian revealed that the Malek Fahd school in Greenacre in Sydney’s southwest had handed over $5.2m in fees to AFIC, in what the audit established was in breach of government funding guidelines.
A spokesman for the department said last night that following the audit — and the explanation given by the school’s management — funding had been frozen for the school.
“After receiving information from the school, the department provided advice to the minister, who approved the formation of an independent review panel to evaluate the school’s compliance with the not-for-profit requirements,” the spokesman said.
“Until the outcome of the panel’s report is known, funding has been suspended.”
It is understood the investigative panel is looking at how and where government funds have been funnelled from the school, and how the school could continue to be funded by the state government in the future.
The school will continue to operate with commonwealth funding. A spokesman for Federal Education Minister Peter Garrett said the federal government would provide $12m a year, with funds from school fees and other income accounting for another quarter of the school’s funds.
According to the school’s financial statement, it received a total of $19.6m in state and federal government funding in 2010, accounting for 74 per cent of the school’s overall funding, with just over $4m being provided by the state government.
According to documents obtained through the Australian Securities & Investments Commission, in 2010 the school paid $3.15m in unexplained “management fees” to AFIC, which included $2.2m in “management fees back charge”.
The school was also charged $2.59m in back rent after it retrospectively altered a lease agreement for the school land in 2009.