NDIS provider Cocoon SDA Care under investigation by watchdog
A disability care business servicing some of the most vulnerable people in Australia is in turmoil, staff walk out, as it faces a federal investigation into taxpayer funding.
A disability care business co-founded by a former bankrupt businessman that services some of the most vulnerable people in Australia is in turmoil, failing to pay its staff and suppliers as it faces a federal investigation into its taxpayer funding.
While Cocoon SDA Care has been promoting itself as one of the nation’s best places to work, some of its staff have been frantically chasing unpaid wages in a crisis that calls into doubt the safety of National Disability Insurance Scheme participants in the company’s care.
The company provides specialist housing and around-the-clock care for NDIS participants, operating in every state and territory, and was last year named one of the country’s fastest growing businesses with a claimed workforce of 2400.
Watchdog the NDIS Quality and Safeguards Commission has an open investigation under way into the provider, alongside partner agencies in the Fraud Fusion Taskforce, The Australian can reveal.
The fraud taskforce combines the resources of more than 20 agencies and was launched 2½ years ago to fight rampant abuse of the NDIS, which currently costs about $46bn a year.
Staff are walking off the job, including South Australian support workers who have gone on strike, and some clients have been trying to exit due to mounting concerns about safeguards, according to company insiders and documents leaked to The Australian.
Cocoon SDA Care blames its cashflow problems on a federal audit that has held up its funding, and has insisted the quality of care has not been compromised.
Co-founded by former taxi driver Zaffar Khan, an investment spruiker who previously went bust in New Zealand, the firm emailed workers on Tuesday through its people and culture department apologising for delays in paying wages dating back to five weeks earlier.
“I want to start by sincerely thanking each of you for your continued patience, dedication, and resilience during what has undoubtedly been a difficult and uncertain time,” the leaked email states. “We truly recognise the financial, emotional, and professional impact this situation has had, and we are deeply sorry for the strain it has caused.”
It adds that the wage delays are “due to the NDIA (National Disability Insurance Agency) withholding funds, which significantly affected our cashflow”.
“What we haven’t yet shared is that since the first week of March, Cocoon SDA Care has been undergoing an intensive audit … by the Payment Integrity Team of NDIA. This process has been complex and thorough, and we’ve worked hard to meet all of their requirements.”
In November last year, the business celebrated taking out 14th spot on The Australian Financial Review’s list of the country’s fastest-growing companies.
“We’re thrilled to share some incredible news: Cocoon SDA Care has been recognised as one of Australia’s fastest-growing companies, earning a coveted spot on the 2024 AFR Fast 100 list!” the business posted online.
An accompanying AFR article sponsored by Cocoon SDA Care did not mention Mr Khan’s past financial difficulties that followed rapid business expansion.
In April this year, Cocoon SDA Care said on its website and social media channels it had been “officially recognised as one of The Australian Financial Review’s Best Places to Work”.
“This remarkable recognition is a reflection of not only our strong submission, but more importantly the voices of our incredible team members,” the website states. “Through a staff survey conducted as part of the AFR review, our employees shared their feedback, experiences, and perspectives – helping Cocoon SDA Care shine on a national stage.”
The Cocoon group of companies, co-founded by Mr Khan and fellow entrepreneur Muhammad Latif, has grown to include businesses offering tourism services for people with disabilities, a staff training college, construction operations, respite care and a franchise and investment arm.
Cocoon SDA Care now claims to have more than 200 homes and another 700 under construction.
Mr Khan is listed as “corporate strategist” for the Cocoon group of companies and previously founded the Dial a Home Doctor service with Mr Latif in 2013.
His personal website states his former business Ideal Cabs trained the unemployed to drive taxis and “grew to the second largest in New Zealand”, with operations expanding to “car yards, a financing company and several other ventures”.
He blamed his “confidence and complacency” for mistakes that led to bankruptcy, and said after “losing everything” he borrowed money for his flight back to Sydney and started driving a taxi.
A New Zealand Herald report from 2001 states authorities ordered the Auckland taxi firm to close after repeated warnings and extended deadlines for failing to meet standards, which included some cars being unregistered.
Cocoon SDA Care’s email to staff this week said wages dating back to March 24 would be progressively paid over this week and next. “We know previous payroll dates were not met, and we apologise sincerely,” the email states.
In a separate staff email on April 17, Cocoon’s management team said the company remained “strong and resilient”.
The business did not respond to questions from The Australian.
Do you know more about this story? Contact David Murray on murrayd@theaustralian.com.au
‘Time to let people know’: former energy infrastructure tsar’s shock diagnosis
As Andrew Dyer travelled the country dealing with the renewable energy transition, he carried a private struggle. Now he reveals how he juggled his demanding role with a devastating diagnosis.
Best exercise to tone your back
A strong back is not just a defence against injury and joint pain, it can look great too.