Bill Shorten warned over Cocoon SDA Care NDIS scandal in 2023

The former chief executive of a NDIS firm that is now at the centre of a federal investigation has released messages she sent to then-minister Bill Shorten alerting him to serious concerns in 2023.

Cocoon SDA Care former employee and whistleblower Tanya Quinn.

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A whistleblowing former chief executive of Cocoon SDA Care sent then-NDIS minister Bill Shorten messages in 2023 alerting him to serious concerns about the disability care business, which is now facing investigations into broad-ranging allegations.

Tanya Quinn has come forward with an extraordinary account of her fleeting experience as head of Cocoon, a business that has raked in tens of millions of dollars of National Disability Insurance Scheme funding as it cares for some of the nation’s most vulnerable people.

After becoming alarmed about the practices she was seeing and about allegations being raised by senior staff, she sent Mr Shorten a message on LinkedIn.

NDIS firm Cocoon SDA Care’s co-founder Zaffar Khan. Picture: LinkedIn

“Good morning Bill, I am writing to you to request an urgent meeting with you and your staff as I believe I have uncovered the largest NDIS … (scandal) to date,” she wrote.

“I am the CEO of Cocoon SDA Care (just appointed on Monday), with between 1000-1600 staff and hundreds of occupied SDA (specialist disability accommodation) homes and a turnover of 50 million plus.”

The message, sent on August 4, 2023, went on to outline serious allegations regarding the governance of the company and alleged investor rip-offs.

There seemed to be concerns around how the firm passed a midterm NDIS audit “as there are no basic processes followed and they didn’t pick this shadow director is key personnel who runs the full operation”, she added.

The “shadow director” referred to was former bankrupt Zaffar Khan, who Ms Quinn and other company insiders say was running the business.

Ms Quinn told The Australian that despite also speaking to responsible federal agencies, she ­believed other whistleblower executives weren’t contacted and that her concerns were not fully investigated at the time.

The Federal Court was last week told the National Disability Insurance Agency launched an investigation into Cocoon’s parent company Horizon Solsolutions last October, and that it had become the largest operation of its kind.

“You’ve just got the tip of the iceberg there,” she said of The Australian’s reporting on the company over the past two weeks.

“I’ve been waiting for this for two years. I’ve given all this information. NDIS have had it, Bill Shorten’s office has had it, since August 2023.”

Federal authorities received 32 tip-offs about Cocoon and Horizon from late November 2020 to early February this year, The Australian has reported.

Ms Quinn was one of the whistleblowers.

She was previously in contact with Mr Shorten in her role at another organisation providing NDIS services.

On the same day as her original message to the minister about Cocoon, she received a personal response from Mr Shorten’s deputy chief of staff and press secretary Antonia Magee.

“Hi Tanya, I work for Bill Shorten. He has asked me to call you … Give me a call when you can.”

Ms Quinn also disclosed information to the NDIA the same day, and was contacted by a senior intelligence analyst soon after, emails show.

She sent another message to Mr Shorten on September 12, 2023. “I appreciate your assistance but nothing has been done from NDIS to stop these guys from trading and taking advantage of vulnerable people or investors. (Eight) people have lost their jobs as a result of whistleblowing,” she wrote.

On October 4, 2023, she wrote to Mr Shorten again, taking issue with an NDIS Commission social media post that encouraged people to take advantage of whistleblower protections.

“What whistleblower protections. Single mum of a child with a disability myself down 250k a year … that’s what you get for doing the right thing?”

Mr Shorten’s adviser Daniel White replied the same day. “Thank you for your engagement and ongoing contact with the National Disability Insurance Agency regarding this issue. The Australian government will not tolerate the misuse of funds intended to support people with disability. Unfortunately for legal and operational reasons our office can’t comment on any fraud/compliance investigations that may result from a tip off however, we have asked the NDIA to make contact with you today.”

She told The Australian she ­initially did consulting work with Cocoon for six or seven weeks.

“They knew they were in some trouble, looking back now. They said ‘we’ve made mistakes’. They were just, I think, in over their heads.”

It became clear to her that Mr Khan, the business’s co-founder, was in charge. She referred to the other co-founder and sole director Muhammad Latif as more like an employee, with limited say over the company.

Many of her comments align with information provided separately to The Australian by other company insiders.

Mr Khan previously went bankrupt in New Zealand after his taxi business went bust.

He is also listed on Australia’s national personal insolvency index as having a personal insolvency agreement to settle debts, executed on August 31, 2020, The Australian can reveal.

Personal insolvency agreements are legally binding and can be a way of avoiding bankruptcy.

“This individual is subject to the provision of Part X of the Bankruptcy Act,” index records state. “A Personal Insolvency Agreement has been accepted by creditors.”

Ms Quinn said: “Latif doesn’t have, really, any say in anything that goes on in that organisation. You can’t buy a pen without Zaffar signing off on it. Zaffar hired me. They flew me up to Queensland to meet Zaffar. And probably about two weeks after I met him, he offered me the CEO role. He said he needed, like, a white face because people didn’t trust him, because he looks like a cab driver.”

They met through a lawyer who was a mutual friend.

She was told Mr Khan had “turned over a new leaf” and was “wanting to do some good for the community”.

Some of the names associated with the company, including former Howard government minister Gary Hardgrave, impressed her. “It was all smoke and mirrors. When I went up there I got the sense everybody was brand new. I thought that was a bit of a red flag,” she said.

The business was “almost like a cult”, with people telling Mr Khan what he wanted to hear.

Her executive assistant manager and human resources manager from her previous organisation joined her.

“ … when we sort of looked at the way they were onboarding people, I was like, right, that’s not compliant,” she said.

It seemed as though “everyone that you spoke to was fresh, and they just seemed like they were wanting to have a conversation with me”, she said. “People were saying, ‘Oh, thank God you’re not related to him’, and, ‘I’ve just got this concern’, or `I’ve noticed this’, or ‘I’ve noticed that’. The whole team was coming to me, saying, we’ve got concerns about this, that, and the other, so I just took a bunch of notes.

“Then I immediately called a meeting with (other employees). And they just sang like canaries.”

The staff raised concerns about the company, as well as their concerns for hundreds of investors in Australia and overseas.

Going through the financial records, she had questions about the company’s solvency. She downloaded material including bank statements.

“It was a mess, just an absolute mess,” she said. “I downloaded everything I could. I went directly to Bill Shorten, went to ASIC, went to Quality and Safeguards, ATO. Just gave them all the information I had, and then nothing happened.

“When I followed up, I had a meeting at the NDIS (Commission), and they took the details and said, ‘we’ll call you, we’ll get you back in to sign your statement’. And then they never, ever did. And I’m still waiting.”

Seven or eight people lost their jobs as a result of coming forward, and she had been offered no protection, she said.

“I saw something online where the NDIS (Commission) was talking about protections for whistleblowers,” she said. “I sort of responded to him. I said: ‘You’re misrepresenting the situation’. I came forward with what I think is like a massive scandal, and I think I’ve got evidence. We’re talking hundreds of millions of dollars and you’ve offered me nothing, no protection.’”

Ms Quinn says people put their jobs on the line to raise concerns about Cocoon.

Ms Quinn said the company threatened legal action against her. “I had to pay for my own legal team to represent me. And NDIS have done absolutely nothing,” she said.

Ms Quinn was an independent candidate in the federal election in the seat of Parramatta, campaigning on the NDIS. Her campaign material described the NDIS as “broken, bloated and buried in paperwork”.

Mr Khan said on Tuesday morning that Ms Quinn was contracted to work as chief executive and “she filled that role for a few days”.

He added: “During her contract, alleged issues and incidents regarding her conduct were raised by staff with management. These were investigated and her contract subsequently ended.

“Cocoon operates with a strong internal complaints and reportable incident management scheme and we will act on and investigate any issues that might arise which could undermine our values and commitment to safety and quality.”

Ms Quinn said Mr Khan’s comments were “absolute rubbish” and that all her statements were backed by documents.

A manual NDIA audit of Horizon’s NDIS claims has left it unable to pay staff, but some workers say they are discovering superannuation missing going back to at least last year. The company last year avoided bankruptcy by reaching an agreement to pay off an almost $10m debt to the tax office.