Australian Federation of Islamic Councils to repay $22 million

Australian Federation of Islamic Councils agrees to repay millions in misappropriated payments to nation’s largest Islamic school.

Students leave Malek Fahd Islamic School in Greenacre. Photo: File

The peak body for Muslims in Australia has agreed to repay $22m in misappropriated rent payments, loans, service fees and property to the largest Islamic school in Australia which amounts to about half the total by the school being tested in the NSW Supreme Court.

The Australian Federation of Islamic Councils has agreed, without admission, to hand back almost $10m worth of payments once made by Malek Fahd Islamic School to the organisation and a property worth $12m at Beaumont Hills in Sydney which it purchased but which was done so under the name of AFIC.

Orders were made by Justice Michael Ball this morning.

Malek Fahd Islamic School originally claimed some $45m had been siphoned from it over a period of 15 years by AFIC, which founded the school in 1989 but which, apart from a three-month amnesty on rental payments, has never helped it financially.

The school is facing the loss of $19m worth of federal funding each year on account of its past links with AFIC.

A trial began yesterday in the NSW Supreme Court between Malek Fahd and AFIC and heard that the Muslim body’s powers over the school were like the “Clocktower of Faisalabad” in Pakistan which can be seen from all directions in the city.

The court heard AFIC rewrote the school’s constitution in the early 1990s to give it “absolute control” over the school and the ability to appoint all of its directors.

Later, AFIC executives went so far as to write to directors of the school telling them there was “no reason” for them to ever actually visit the school, attend fundraisers, talk to parents or even turn up unless it was to drop off their children.

In the 2000s Malek Fahd’s directors were required to sign additional declarations in which they agreed to act at all times “in the interests of AFIC.”

During the purchase of land at Condell Park and later at Hoxton Park in Sydney Malek Fahd’s silk Kelly Rees told the court that not only was the school required to pay for these purchases on behalf of AFIC but that subsequently it was required to pay rent as well.

The trial heard this morning that when the school raised concerns about the fact it appeared to be paying rent above market value — some $1.5m a year on its Greenacre site which was valued at $400,000 a year — it led to extreme upheaval on the board of AFIC.

“A mock federal council of AFIC was held and some members of the executive committee unlawfully occupied the federal office resulting in an injury to somebody, motions of censure were passed against some members,” Ms Rees told the court.

Bank accounts were frozen in what AFIC’s old guard described as a “coup” and, desperate for cash, a proposal was made that directors “drive out to Malek Fahd to physically collect the rent cheques.”

The trial continues.