Malek Fahd Islamic School told to repay $11 million by NSW Education Minister Sarah Mitchell

The nation’s largest Islamic school is in financial difficulty. Could this new move by state education minister Sarah Mitchell be the one that breaks it?

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Australia’s largest Islamic school faces repaying $11 million of taxpayer money after being hit with a noncompliance declaration by the NSW government.

Western Sydney’s Malek Fahd Islamic School is also at risk of losing its ongoing state funding.

The Daily Telegraph understands NSW Education Minister Sarah Mitchell wrote to the school’s board last month, asking it to submit a time frame for the recovery of grants received in 2014 and 2015.

Ms Mitchell’s demand is in line with a recommendation from the Non-Government Schools Not-for-profit Advisory Committee, which found the school operated for profit during those two years.

NSW Education Minister Sarah Mitchell, who has asked Malek Fahd to repay the money.

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Another recommendation from the advisory committee was to suspend ongoing funding until Malek Fahd introduced new governance rules and was no longer providing financial support to the Australian Federation of Islamic Councils (AFIC).

School chairman John Bennett said those concerns were being “resolved”.

“The school is providing information to the state government as requested to satisfy its requirements,” Dr Bennett said in a statement.

He declined to be interviewed and would not answer written questions about the consequences for the school if the government was unable to be satisfied.

What the new $11 million bill means for the school’s finances remains unclear.

Malek Fahd is already repaying $4 million over seven years after being found to have operated for profit from 2010 to 2012, when it was paying AFIC inflated rents and for uncommercial loans.

To pay off that debt, grants to the school are being cut by $575,000 annually until 2024.

Malek Fahd Islamic School in Greenacre. Picture: The Daily Telegraph

That loss of income saw it plunge to a $600,000 loss in 2018, financial statements show.

It has yet to file 2019 accounts with the Australian Charities and Not-for-profits Commission.

That $4 million figure was a reduced settlement agreement reached in 2017.

The full debt is also $11 million. According to a note to the school’s 2018 financial statements, the entire sum falls due if it “ceases to operate, becomes insolvent or is placed into liquidation”.

The Non-Government Schools Not-for-profit Advisory Committee ruled three years ago Malek Fahd had operated for profit in 2014 and 2015, when the school was still run by AFIC, which founded it in 1989.

Malek Fahd chairman John Bennett. Picture: News Corp Australia

The school sought an internal review of the advisory committee’s decision. When that failed, it went to the NSW Civil and Administrative Tribunal. In February, NCAT’s appeal panel said Ms Mitchell should follow the committee’s recommendation on repayment as well as the suspension of all financial assistance.

In his statement, Malek Fahd's Dr Bennett said “the previous board was replaced in 2016. The new board initiated comprehensive governance reforms, rectified improper practices, appointed new management and restored confidence in the school community.”

Malek Fahd has 2800 students across sites at Greenacre, Hoxton Park and Beaumont Hills.

Originally published as Malek Fahd Islamic School told to repay $11 million by NSW Education Minister Sarah Mitchell