Third Islamic school hit with funding freeze on financial concerns

A THIRD Islamic school in Sydney has had its funding frozen by the NSW government.

A THIRD Islamic school in Sydney has had its funding frozen by the NSW government after concerns were raised about the use of millions of dollars in public funds.

The Australian Islamic College of Sydney in Mount Druitt, in Sydney's west, is now under investigation by the NSW Education Department after receiving information about financial irregularities at the school.

They are believed to relate to millions of dollars in payments to a western Sydney Muslim organisation responsible for the management of a mosque on the grounds of the school.

The department has confirmed that the school of 750 students -- receiving about 85 per cent of its funding from the public purse -- was now the subject of a special audit and would have its state funding frozen pending the review.

"In February 2012, the department was informed of alleged irregularities by the Australian Islamic College, Sydney, in the use of public funds administered by the NSW government," a departmental spokesman said.

"These allegations involved the school's compliance with its obligations under the NSW Education Act 1990, which specifies that government financial assistance is not to be paid to non-government schools operating for profit." Three of the 18 Islamic schools in NSW are now under audit with their state funds frozen, with the Mount Druitt school joining Malek Fahd College and Al-Noori school at Greenacre in Sydney's southwest.

The Australian understands that a fourth school under audit, McDonald Performing Arts College in Strathfield in Sydney's inner west, recently had its funding reinstated after being warned about possible conflicts of interest over the sale of former boarding houses by the school's directors.

The Australian Islamic College of Sydney's land is owned by the not-for-profit Islamic Association of Western Suburbs Sydney Inc, which the school paid rent to of $455,000 in 2009 and $480,000 in 2010.

However, over the same period the college extended over $3 million in unexplained loans to the association. An investigation of the college's 2010 financial records held by the Australian Securities & Investments Commission, has revealed the school loaned the association $1.58m in 2010 and $1.9m in 2009.

According to ASIC records, of the college's $7.1m in revenue, just under $6m came from state and federal government funds.

The school's chairman of directors, Hafizur Rahman Survery, said he could not comment on the audit or why the loans had been made to the association.

Dr Survery, along with the entire college board, are also members of the association. The association's primary role is to manage the Rooty Hill Islamic Centre, which holds a mosque on the same site as the school, redeveloped recently for $4m. On a YouTube video the association boasts of "the most modern mosque facilities in NSW, and it was built by Pakistanis and other Muslims".

Last year, The Australian revealed Malek Fahd College, with almost 2000 students, had paid over $5m in unexplained management fees and backdated rent to its property owner, the Australian Federation of Islamic Councils.

An audit commissioned by federal Education Minister Peter Garrett found millions in transactions that it described as "not in the best interests of the school".

The AFIC-owned Canberra Islamic School is the subject of an Australian Federal Police investigation, after a forged endorsement, supposedly from an ACT Islamic leader and tax official, was found in its departmental application to convert to a high school.