The NSW state 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.
In 2008, a lease was signed between the school and AFIC that set annual rent for the Greenacre property at $1.3m, but documents show that in 2009 the agreement was backdated to 2004 to $1.5m a year, resulting in a separate $2.59m payment to AFIC.
Malek Fahd is characterised as an independent school for the purposes of funding, and is a separate legal entity from the land owner AFIC. Government funding is provided to the school, and both the school and AFIC are not-for-profit organisations, entitling them to tax concessions.
Following the reports in The Australian, the state government passed a bill sponsored by Greens MP John Kaye stating that the school had breached the NSW education act by paying the fees.
AFIC president Ikebal Patel, who is also chairman of directors of the school, initially refused to comment on the payments from the school when asked by The Australian, but later said the payments were “simply the formalisation of some pre-existing arrangements and the recovery of some assistance given to Malek Fahd and other schools as they were starting out”.
“AFIC has a policy of recovering this assistance when the school is in a position to repay it so that AFIC can use these funds to assist in the establishment of additional schools,” he said in August last year.
Mr Patel did not return calls from The Australian last night.
The school’s board also boasts several other AFIC executives, including vice-president Hafez Kassem, treasurer Mohamed Masood and assistant treasurer Ashraf Usman Ali.
Mr Garrett has also launched a federal investigation into AFIC schools nationwide, with details of the audit report expected to be handed down shortly.
The Australian Federal Police has confirmed it is investigating Canberra Islamic Primary School, of which Mr Patel is also chairman of the board.
Police are investigating how a forged letter of support, supposedly from an ACT Islamic leader and senior tax office official, entered into an application for the Canberra Islamic school to expand into a high school last year.
Malek Fahd, which has almost 2000 students, has been hailed a success in Muslim education, with the school finishing sixth in the state in mathematics last year.
Last night, the school’s principal, Intaj Ali, provided no comment over the latest developments, but The Australian understands he and other senior members of the school have long been concerned about the fees being charged by AFIC.
Mr Patel is leaving the presidency of AFIC after the expiry of his term this year, but is running as vice-president and secretary of the AFIC executive committee.
A vote on the presidency will take place this weekend. It was brought forward following concerns from AFIC members about the current leadership of AFIC.
RELATED:
MuslimVillage.com has been reporting on the relationship of AFIC & Malek Fahd since 2006.
Damaging AFIC Internal Report Leaked
April 27 2006
by Ahmed Kilani
Source: IslamicSydney.com
In an embarrassing blow to the Australian Federation of Islamic Councils (AFIC), a report \highly critical of its operations and financial practices has been leaked a few days before the federation is to hold its annual general meeting and elections – you can read the report here: https://muslimvillage.com/pdfs/worell-report.pdf
By accident or design, yesterday afternoon a previously secret internal report investigating the operations of AFIC was leaked to IslamicSydney.com. This is the report that was mentioned in a recent article that appeared in The Weekend Australian – “AFIC accused of ‘using school to milk funds'”.
The report and one other document were sent to the public IslamicSydney mailing list by the state president/chairman from the Northern Territory Dr. Waqar Ahmad.
Once it was made public, we decided to further distribute the report because it is in the Australian Muslim community’s interest that they be made aware of what the people that are claiming to represent them are doing in their name. Every Muslim who reads this report will have grave concerns from its findings.
One standout is the fact that AFIC derives 13% of its income from interest based accounts – $297,000 in one year alone (2004). How can an Islamic peak body justify dealing and profiting from riba (interest) which is clearly forbidden in Islam is a question many Muslims will be asking.
It is also interesting to note that the reports findings were all previously hidden from the public. The question must be asked, what else is the Australian Muslim community not being told?
Perhaps all concerned Muslims should show up at the AFIC conference to be held this weekend at the AFIC Head quarters at 932 Bourke Street, Zetland and ask them to explain themselves.
Whether they do or not, it is about time for the Muslim community to stop being so apathetic and to start to work towards correcting the many wrongs that have been done in their name for so many years.
It is inconceivable that AFIC is sitting on literally millions of dollars, when month after month independent Islamic organisations who are doing the real work in the community are struggling to raise funds for many important projects at the grassroots level. One can only imagine what these funds could do in the hands of the right people.
Petition Demanding AFIC Disclose All Dealings
As concerned members of the Australian Muslim community, we call upon AFIC and/or its nominated officers to answer or make public immediately the following:
1 – All their audited accounts and those of any related entities for the last 5 years.
2 – With the intention of trying to establish who, in exact numbers each of the state councils and ultimately AFIC actually represent, I also call on AFIC to make publicly available a list of every member organisation, its financial status as a member and the number of members it represents; for each member organisation of every state body that they claim to represent.
For example, when is the farcical situation regarding the NSW council going to be resolved? The NSW Muslim population (which makes up more than 60% of the entire Australian Muslim community) is effectively without any real representation due to the AFIC appointed one-man-band stooge Muslim Council of NSW.
3 – We call for the scrapping of the archaic ethnic based system and the implementation of a new system that will ensure the direct involvement of the grassroots Muslim community in electing its leaders and for complete transparency and accountability of all management and financial dealings undertaken by any elected/appointed individuals.
4 – Why is AFIC deriving income from interest based sources? Who was aware of the interest derived income and why is it that no state or executive council member has ever bothered to inform the Muslim community of this clear violation of Islamic teachings?
5 – An independent commission of inquiry be established to investigate any previous or current financial and/or management wrong doings by any AFIC executives, committee members, employees or related parties.
If AFIC, including any newly appointed executive committee, refuses to adequately answer or address any of these preliminary concerns in a timely manner it must relinquish its self appointed role as the representative of the 400,000 Australian Muslims it claims to represent.
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You can get more analysis and discussion on this at the MuslimVillage.com Forums
https://muslimvillage.com/forums/topic/22382-damaging-afic-internal-report-leaked/