Dodgy NDIS provider Cocoon facing ban
The NDIS watchdog is moving to ban rogue provider Cocoon SDA Care and its nominated director permanently, as a whistleblower calls for an inquiry into a “broken” system she says could be wasting billions of dollars of taxpayer funds.
The NDIS watchdog is moving to ban rogue provider Cocoon SDA Care and its nominated director permanently, as a whistleblower calls for an inquiry into a “broken” system she says could be wasting billions of dollars of taxpayer funds.
Former Cocoon chief executive Tanya Quinn says the Cocoon case provides stark evidence of serious flaws in NDIS registration and regulation.
“I’ve been saying for years registration is not worth the paper it’s written on, and ‘you guys aren’t regulating the people when they breach’,” Ms Quinn said.
“You don’t need to be a provider to be outraged about this. This is a massive chunk of the budget, and it’s money wasted.”
Ms Quinn was speaking after revelations in The Australian that the men behind Cocoon – ex-bankrupt Zaffar Khan and his longtime business partner Muhammad Latif – were able to keep operating despite failing audits and being the subject of a flood of complaints over more than four years.
Ms Quinn did consulting work for Cocoon SDA Care and was then hired as its chief executive. She was immediately alarmed at Cocoon’s practices and at allegations of company wrongdoing raised with her by senior staff, she told The Australian last week.
In August, 2023, days after starting the job, she alerted then-NDIS minister Bill Shorten and reported her concerns to the National Disability Insurance Agency, the NDIS Quality and Safeguards Commission, the Australian Federal Police, the Australian Taxation Office and the corporate watchdog ASIC.
The business was an immediate danger to vulnerable people with disabilities, investors and taxpayers funding the social program, she warned at the time.
On Sunday, Ms Quinn said she was told to “keep quiet” and to let authorities handle the situation after she reported the serious allegations.
The company is now at the centre of a major investigation into its NDIS payment claims and has been temporarily suspended after recent site visits identified serious safeguarding concerns. “Why did it take so long for action to be taken?” Ms Quinn said.
A timeline of events is emerging through court filings.
A Federal Court affidavit states that on November 9, 2023, the NDIS Commission issued Cocoon’s parent company Horizon Solsolutions Australia with three infringement notices.
This was a result of three women with disabilities being locked out of their home in South Australia after Horizon became involved in a dispute with the owner of the house and stopped paying rent, The Australian has previously revealed.
On January 3, 2024, the NDIA’s intelligence and analytics branch referred Horizon Solsolutions Australia to the serious and complex noncompliance team in the agency’s fraud branch.
But the referral wasn’t allocated to a case officer in the noncompliance team until October 8, 2024, according to the affidavit, filed by the team’s director Karen McDonald.
No explanation is provided for the nine-month delay in a case officer being assigned.
The team only became aware on December 3, 2024, of the NDIS Commission infringement notices issued more than a year earlier, the affidavit states.
A total of 32 tip-offs were made to the agency about Horizon between November 29, 2020, and February 11 this year.
On March 4, Ms McDonald recommended that all new Horizon NDIS payment claims be manually reviewed. This was accepted by the fraud investigations branch manager the same day, and by the review team the following day.
Separate Federal Court filings state that Horizon and Mr Latif received notices from the NDIS Commission on March 10, informing them of proposed orders banning them from being involved in providing services to people with disabilities.
The commission had also proposed refusing Horizon’s application to continue to be a registered provider of services to people with disabilities.
The watchdog invited Horizon and Mr Latif to respond.
Horizon has taken the NDIA to the Federal Court to try to force an end to the manual review of claims, which it says has destroyed its cash flow and prevented it from paying staff.
The person in charge and pulling the strings of Cocoon is former taxi driver Mr Khan, numerous company insiders have told The Australian.
He previously went bankrupt in New Zealand, was the subject of consumer protection warnings in 2007 and was accused in a 2015 civil case of promoting a scheme that had a “fraudulent design”.
He has been listed on Australia’s national personal insolvency index since August 2020 as having a personal insolvency agreement to settle debts.
Cocoon has been transitioning NDIS participants to other companies with related directors and owners, according to company insiders, support workers and documents obtained by The Australian.
These include Essential Care Services, owned by Mr Khan’s son-in-law Jawad Shah, who is listed as Cocoon’s national compliance manager and is married to Mr Khan’s daughter Fariha Zafar.
Another company, Caring 4 All Abilities Pty Ltd, is owned by Mr Khan’s daughter Umm-I-Ayman Zafar; in corporate records, she shares a residential address with her father.
A third is named as Crescent Disability Services, but its ABN is for Crescent Respite Facility, owned by Cocoon executive director Pranay Kumar and previously owned by Fariha.
The Australian last week revealed another business Mr Khan and Mr Latif were running, Connecting Abilities Australia, failed NDIS audits in 2021 and was refused re-registration in 2022. However, they continued offering NDIS services under other company names.
Ms Quinn said that within days of her being appointed chief executive, past problems with the company came up during a board meeting she attended with Mr Khan, Mr Latif and a state operations manager. Mr Latif “brushed over it” during the meeting as some “billing and registration problems” they had had with one of their companies.
Afterwards, the operations manager and her daughter spoke to Ms Quinn about what had happened. Ms Quinn believes the issues related to the company Connecting Abilities. “They told me all the stuff about the failed audit and that they didn’t disclose all the properties, and that none of the properties were meeting SDA regulations,” she said. “When I confronted (Mr Latif) with that, he said ‘she’s a liar, she’s a troublemaker’. He had me fire her and her daughter on the spot … This all happened within a week. It was just absolutely insane.”
She added: “The fact that an organisation can just jump in and out of companies without actually having made any changes or improvements to their process tells me that the entire system for regulation and registration is broken.”
Ms Quinn said she warned authorities in 2023 she would go to the media after becoming concerned that Cocoon was still operating and that she had not been asked back to sign a statement.
An NDIS Commission investigator assured her in about October of that year that a major investigation was underway.
“She said to me it’s a massive project, that they have a team of people working around the clock dedicated just to this, and I just needed to be patient,” Ms Quinn said. “And if I spoke out publicly, it would tip them off, as in Cocoon, give them the opportunity to cover their tracks and jeopardise any case they have. So I didn’t say anything.”
Ms Quinn said the NDIS needed a total rebuild. “Coming from an out-of-home care, aged care background, where it’s quite regulated, coming into this, it’s like the wild, wild west. The stuff I’ve seen would curl your toes and we’re dealing with the most vulnerable people in the community. We need a royal commission.”
The NDIS Commission said it could not comment while an active investigation was underway.
Mr Shorten, now University of Canberra vice-chancellor, issued a public statement on Saturday outlining his handling of the case and his record of cracking down on fraud.
“This matter was handled urgently, with the Fraud Fusion Taskforce taking immediate action to contact Ms Quinn after she had spoken to my office,” he said. “When passing on the information to the agency, my office was advised to desist further investigation and leave it to the appropriate investigators, which was the protocol.”
Mr Shorten oversaw the creation of the national Fraud Fusion Taskforce.
Mr Khan and Mr Latif, who have denied wrongdoing and defended their practices, have been approached for comment.
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