Lost funding appeal may force closure of Islamic school

The future of Australia’s largest Islamic school is in doubt after a court dismissed its appeal to keep commonwealth funding.

Students outside the Malek Fahd Islamic School on Waterloo Road, Greenacre.

The future of Australia’s largest Islamic school is in doubt after a Federal Court dismissed its appeal to keep millions of dollars in funding from the commonwealth.

Malek Fahd Islamic School, which has several thousand students and staff at three campuses in Sydney’s southwest, is considering a High Court appeal after losing a crucial bid to maintain its roughly $19 million a year in federal funding.

The school was one of six affiliated with the Australian Federation of Islamic Councils that came under review in 2015 over concerns they were not being ­financially well managed.

Malek Fahd was appealing a decision by the Administrative Appeals Tribunal that held the school was being operated for profit and against education funding laws. AFIC, the court found, had used vastly inflated rents and other charges to strip money from the school.

School board chairman John Bennett said yesterday’s judgment would be read thoroughly before a decision was made on its next move. “One is to make application to the High Court — that’s certainly on the cards — the others are to contact the department (of education) and appeal to the minister to try and have a meeting,” Dr Bennett said. “This is not the same school as two years ago. Things have moved a great deal.”

He said it was unclear whether the school would remain open, but the board would “look into all avenues to make sure the pupils go about their education”.

Federal Education Minister Simon Birmingham said the government did not tolerate “misuse of taxpayer funding for schools”. “I contacted the NSW Minister for Education, Rob Stokes, and our departments will work together to support the school’s students, families and staff,” he said. “I urge Malek Fahd’s management to clearly outline plans to give the school community certainty for the future.”

Last May, Malek Fahd lawyers had laid out three grounds for ­appeal: that the AAT had misinterpreted the word “applied” in its decision, that the AAT had made an error of law in concluding the school was being run for profit, and that the AAT had made an error of law in how it managed conditions imposed on the school.

“The appeal must be dismissed with costs,” judge Nye Perram found.

In separate legal proceedings in the NSW Supreme Court, AFIC was asked to pay $22m to Malek Fahd in misappropriated rent, loans, service fees and ­property.