The nation’s peak Muslim body is extracting millions of dollars in rent and fees from a successful Islamic school in Sydney that draws most of its funding from taxpayers.

Documents reveal the Malek Fahd Islamic School paid the Australian Federation of Islamic Councils $5.2 million last year alone, an amount equal to one-third of the school’s educational funding from the federal and state governments.

An investigation by The Australian has uncovered millions of dollars in funds charged to the school, including unexplained “management fees”.

The school has also been charged $2.59m in back rent after AFIC retrospectively altered a lease agreement in 2009

Last year, it paid $3.15m in “management fees” to AFIC, which included $2.2m in “management fees back charge”.

AFIC, also known as Muslims Australia, has not explained how the fees are being spent by the organisation, despite detailed questions from The Australian.

Malek Fahd, in Greenacre in Sydney’s west, received $15.7m in educational funding from the commonwealth and NSW governments last year, accounting for 74 per cent of its overall income.

According to the school’s financial statement, it received a total of $19.6m in government funding last year, with the figure boosted by cash from the federal government’s Building the Education Revolution program.

The school of about 2000 students is widely considered a success story for Islamic education in Australia, rating 15th in NSW HSC system ratings last year and in the top 10 in 2007.

The school is listed as independent and is a separate legal entity from its landowner and founder AFIC. Government funds are given directly to the school, not to AFIC.

Both are not-for-profit organisations, with the school entitled to a range of tax concessions as a charitable institution.

In 2008, a lease was signed between the school and AFIC that set annual rent for the Greenacre property at $1.3m, but documents reveal that in 2009 the lease was changed to increase the rent to $1.5m a year. The agreement was backdated to January 2004, resulting in a one-off payment of $2.59m going to AFIC.

According to the school’s last financial report, another deal saw the school hand over a lump sum of $2.2m in backdated management fees to AFIC, with another $959,800 handed over for management costs in that year.

Neither the school nor AFIC can explain what the management fees are charged for.

AFIC president Ikebal Patel, who has held the role since 2007, is also the chairman of directors of the school. He was briefly removed from the position of AFIC president by the AFIC congress in 2008, but was reinstated after a complex federal court challenge to the legitimacy of the vote.

When asked by The Australian how he explained the fees being charged to the school and where and how AFIC was spending the funds, Mr Patel said: “The financial statement is out there. If you want to discuss anything else I’m happy, but I’m not going to discuss any of this.”

Mr Patel has not replied to questions in writing about how the large fees were justified or where the money was being spent.

Mr Patel would also not answer questions as to how much he or other members of the AFIC executive were personally drawing in income or any other payment from AFIC funds.

Intaj Ali, the school’s principal, told The Australian that “all questions about the school’s finances should be directed to the school’s director, Ikebal Patel”.

However, it is understood that Dr Ali – a respected educator who has been principal since the school’s inception in 1990 – is privately furious over the manner in which AFIC has been using the school’s funds.

Senior figures at the school and in the Islamic community are angry the school is being denied its funds to reinvest into the school, which has large classes and generally caters to students of non-English speaking backgrounds and of lower socioeconomic groups. The school receives proportionately larger government funding for this reason.

The Greenacre school site was purchased by AFIC in 1989 for about $2.2m with funds from the Saudi royal family. The school, which charges fees of about $1200 a year, has been responsible for funding the construction of its own buildings.

Along with Mr Patel as chairman of directors of the Malek Fahd, the school’s board also has several other AFIC executives. These include AFIC vice-president Hafez Kassem, treasurer Mohamed Masood and assistant AFIC treasurer Ashraf Usman Ali.

Neither the commonwealth nor the NSW education department has provided comment on the matter, but The Australian understands the school’s funding issue has been brought to the attention of NSW Premier Barry O’Farrell’s office.