Al-Noori Islamic school funds frozen

A SECOND Islamic school in southwest Sydney has had its funding frozen by the NSW government after concerns about financial anomalies.

Mohummed Lazki

A SECOND Islamic school in southwest Sydney has had its funding frozen by the NSW government after concerns about financial irregularities.

The NSW Education Department is conducting an investigation into the Al-Noori Islamic Primary School in Greenacre after concerns were raised by its former auditors about property transactions taking place in the school's name.

The probe into the school of 700 students comes after audits of Sydney's largest Islamic school, Malek Fahd High School also in Greenacre, led to the freezing of NSW funding and federal Education Minister Peter Garrett raising concerns about its financial structure.

The Australian understands the investigation will centre on the use of a $750,000 recurrent government grant to the school to buy two adjacent properties last year.

Over the past 10 years, the school in the southwestern suburbs has purchased 19 residential properties, with a high school currently under construction. Following the drawing up of Al-Noori Islamic's 2011 financial report, the school's auditor this year took the unusual step of revoking an acquittal of the school's finances.

It is understood auditor Jeff Matchett, from Byrons Chartered accountants, withdrew his approval of the school's financial report over concerns that several hundreds of thousands of dollars had not been appropriately used on the purchase of the property.

The school is about 80 per cent funded by the state and federal governments, with state grants making up for $8.8 million of the school's $10.5m revenue in 2010.

A spokesman for the department yesterday confirmed that funding to the school had been frozen pending an audit.

"The Department of Education and Communities commissioned an independent audit of the school's finances to determine if breaches of the NSW Education Act or associated guidelines have occurred," he said.

"Once the audit is complete, the school will be given an opportunity to respond to the auditors' findings.

"Until the audit's outcome is known, funding to the school under the act and other public sources administered by the department has been suspended."

Mohammed Lazki, the school's chairman, has denied any wrongdoing and says any property purchased was for the benefit of the primary school and high school under construction.

"I welcome any audit -- our books have always been transparent . . . We are a charitable organisation," he said.

Mr Lazki said the dispute with Byrons had been caused by a disagreement over fees.

He said he had not been informed the recurrent state funding had been frozen, saying he was aware only of a "standard" investigation taking place.

As well as the residential properties purchased by the school since 2002, Mr Lazki's company, Cynmon, also owns a house, not under development, between the primary school and proposed high school purchased in 2008.