Posted on July 31, 2012

Sydney Islamic School Ordered to Repay $9m

Anna Patty, Sydney Morning Herald, July 31, 2012

Sydney Islamic school Malek Fahd has been forced to repay $9 million in NSW government funding because it was found to be transferring money to a Muslim organisation.

The NSW Minister for Education Adrian Piccoli has written to the school asking it to repay the money because it had breached requirements preventing it from operating for profit.

Mr Piccoli said the school did not receive services in return for money it gave to the Australian Federation of Islamic Councils.

“I have instructed the NSW Department of Education and Communities to terminate the school’s funding,” Mr Piccoli said.

“I have also written to the Association of Independent Schools of NSW to advise that low SES National Partnership funding should also be terminated.”

The school receives more than $1 million in annual funding for disadvantaged students through a five-year national partnership agreement between state and federal governments.

Geoff Newcombe, executive director of the Association of Independent Schools NSW, said today he would write to the school saying its national partnership funding for 2011-12 would be withdrawn.

“We are in the process of writing to the school now to say the national partnership funding has been cancelled,” Mr Newcombe said.

“Our aim is to work closely with the school for the benefit of the students so that they can be readmitted to the program once the school is operating as a not-for-profit school.

“The AIS will work closely with the school to ensure its governance structure is such that it will operate as a not-for-profit school and hence be entitled to state funding.”

Mr Piccoli said that, for the school’s state government funding to be reinstated, it would need to provide credible evidence that services were being provided in return for the money being transferred to the Australian Federation of Islamic Councils.

“I continue to have serious concerns about other financial transactions at the school, including the systemic lack of record keeping and documentation,” he said.

Mr Piccoli has written to the Federal Minister for Education, Peter Garrett, saying that he had referred the matter to police and the Australian Securities and Investment Commission.

The Federal Department of Education commissioned an independent audit of the school in December last year to find whether it was spending its public funding on the education of students.

A spokeswoman for Mr Garrett said the Commonwealth was satisfied that Commonwealth funds had been used for legitimate purposes.

“However, the examination did reveal a number of transactions that did not appear to represent value for money to the school,” she said.

“While the use of public funds are not implicated in these transactions, it has raised some concerns about the governance of the school.”

In April, Mr Garrett announced that education ministers around the country had agreed to streamline reporting requirements of non-government schools, particularly those relating to financial decisions and governance.

He said there were nine different regulatory systems and every non-government school had to work under both state and Commonwealth regulations.

“I’m very pleased that my education minister colleagues have agreed with my suggestion to work together to streamline regulations and provide better accountability over the use of public funding,” he said.

“Non-government schools receive significant public funding and all governments have a responsibility to ensure this funding is being used appropriately.

“The vast majority of non-government schools are doing the right thing with taxpayers’ money, but we always need to be vigilant and make sure public funding is being properly spent.”

Malek Fahd has excluded year 11 and 12 students who are not high performers. The Herald revealed the some students were forced to complete HSC subjects at TAFE.

The principal of Malek Fahd, Dr Intaj Ali, said he disputed Mr Piccoli’s findings that the school was operating for profit and intended to challenge the decision.

“The School will take the appropriate steps to have this decision reviewed and is confident that ultimately the correct outcome will be achieved,” he said. “Malek Fahd wishes to reassure all parents, students, staff and the wider community that its focus remains on the delivery of quality education for our students and it will continue to work with both the NSW and the Federal Education Departments.”