Suspended NDIS provider Cocoon SDA Care’s secret bonus scheme exposed

NDIS provider Cocoon SDA Care offered staff secret extra bonuses for signing up clients with significant disabilities, in a program condemned for creating an incentive to pressure those needing support to act against their own best interests.

Cocoon SDA Care co-founder Zaffar Khan has appeared in a YouTube video making extraordinary claims about his success, as leaked documents reveal the firm offered bonuses to staff an incentive program condemned by peers.

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NDIS provider Cocoon SDA Care offered staff secret extra ­bonuses for signing up clients with significant disabilities, in a program condemned for creating an incentive to pressure those needing support to act against their own best interests.

Outlined in documents leaked to The Australian, the program offered staff up to $5000 for signing up each new NDIS client needing one-on-one around-the-clock support.

Smaller bonuses were offered if staff at the company brought in people with disabilities needing less support, according to the documents.

It can be revealed as a damning audit report emerged on the firm, which had its NDIS operations suspended by federal authorities this week, and as co-founder Zaffar Khan appeared in a YouTube video making extraordinary claims about his success.

The Specialist Disability Accommodation Alliance, representing 72 providers nationwide and industry best practice, said incentive programs could lead to pressure on people with disabilities to make choices against their own interests.

“SDA providers offering participant referral fees is widely considered poor practice,” chief executive Jeramy Hope said.

“It creates a financial incentive to prioritise filling vacancies over what’s best for the individual, which can lead to undue pressure on participants and their support networks to accept housing that may not suit their needs.

“This undermines the principles of autonomy, choice and control that are central to the NDIS. People with disability deserve to choose their home free from external financial influences, based solely on what is right for them.”

The documents leaked to The Australian show staff were ordered to keep secret the program in which they were offered bigger bonuses for bringing in National Disability Insurance Scheme participants needing the most care and support.

Read the full auditor’s report (PDF)

The incentives program was designed for service and “relationship” managers and team leaders, collectively referred to as “Cocoon Champs”, and was effective from the start of April this year, the documents state.

“You agree to keep all program-related information confidential and not disclose it to any third party,” the document states.

The “financial incentive structure” outlined in a document under the name of Cocoon’s parent company offered $1000 to staff for bringing in NDIS participants for medium-term accommodation, in-home care and less than 24/7 support.

New clients needing only community participation or short term accommodation earned staff a $500 bonus.

The firm has been suspended from operating under the NDIS after site visits identified ­serious safety concerns. It is also under investigation by agencies from a fraud taskforce and is in turmoil after failing to pay staff, The Australian revealed in the past week.

Providing around-the-clock care to some of the nation’s most vulnerable people, the company claims it has 2400 workers, more than 200 houses and another 700 homes under construction.

The National Disability Insurance Agency said on Thursday about 350 people with disabilities on the NDIS were affected by the suspension of parent company Horizon Solsolutions Australia Pty Ltd’s registration.

Separately, the independent auditor’s report on Horizon, attached to its 2024 financial statement, detailed the company’s debt of almost $10m to the tax office, close shave with bankruptcy last year and shambolic operations and record keeping.

“Inadequate documentation, incomplete disclosures, unsupported entries, and weak internal controls affected our ability to verify the accuracy and completeness of recorded amounts and disclosures,” the report from auditors Trigon Business Advisory states.

“These conditions, coupled with inconsistent and sometimes unclear records, can create an environment that heightens the risk of errors or intentional misstatements going undetected.”

The report adds: “Numerous transactions related to expenses, revenue, loans, and related-party dealings lacked proper invoices, contracts, or other documentation. Critical documents, such as certain lease agreements, purchase contracts, and the 2024 budget, were not provided.”

Some expenses were misclassified as revenue, potentially overstating financial performance, the report states.

“Management indicated that some employees who left the company may have engaged in ‘overseeing and overclaiming’.

“The company owed $9,546,902 to the ATO and was ­issued with a bankruptcy notice. However, management successfully negotiated a payment plan approved by the ATO … and the default judgment was set aside.

Despite Cocoon SDA Care’s troubles, co-founder Zaffar Khan appeared in a YouTube video uploaded in January that claims he went from cleaning toilets to building a multibillion-dollar empire, The Australian can reveal.

“By the grace of God, Zaffar Khan’s company is valued at $2bn,” the host exclaims.

Mr Khan, born in Pakistan, says his first job was as a factory ­labourer before he became a restaurant cleaner, “including cleaning toilets”, and taxi driver.

“I started giving taxi tuition in my house, later I bought an office, and another office and another office in a three-storey building. I became the largest in Australia. I was second to the minister of transport,” he states in a mix of English and Urdu.