Sydney’s Malek Fahd Islamic School will appeal a tribunal’s decision to uphold a federal government move to cut the school’s funding.
The Administrative Appeals Tribunal found that while improvements have been made to how the school is run, federal funding would continue to leak to the Australian Federation of Islamic Councils (AFIC).
The government originally moved to strip the school of federal funding after it found the school was filtering money through to AFIC through inflated rent and services that were never provided, breaching the requirements under the Education Act.
The misuse of funds included a 25-year arrangement for Malek Fahd to lease the property for its Greenacre campus from AFIC at the substantially inflated rate of $1.5 million a year.
Malek Fahd's lawyers argued that the school had stopped payments to AFIC and began legal proceedings seeking repayment of funds, damages, and release from a number of its obligations.
But tribunal deputy president Bernard McCabe said while he was satisfied many things had changed since a March 2016 management overhaul, the school was continuing to accrue liabilities to AFIC.
He said Malek Fahd had no plan to deal with the ongoing implications of the Greenacre lease and that commonwealth funding - worth about $19 million annually - would continue to leak from the school to AFIC.
"In those circumstances, the only appropriate course is to affirm the decision under review," he wrote in his judgment.
"That is a hard outcome for MFISL (Malek Fahd Islamic School), and for the students and community it serves.
"But the ultimate responsibility must be laid at the door of the previous management of MFISL."
Chair of the school's board, Miriam Silva, told SBS News the board was disappointed with the tribunal's decision.
"The school board was obviously very upset by the decision from the tribunal, especially on what we would consider almost a technicality around the lease of the Greenacre property, and the fact that the tribunal had noted so much progress had gone on in the school, but almost hadn’t moved on from what had gone on in the past," she said.
"The next move will be to appeal to the Federal Court, we have 28 days to appeal and we will do that."
She said the lease was being contested in court, but the school had received legal and accounting advice that rent still had to be accrued for the landlord, even if it was not being paid.
"The litigation in place at the moment may change the amount of rent due to AFIC or another valuation may change the rent due to AFIC, but we would have to have that conversation with the department of education as well to make sure that they agreed with the amount of rent that should be paid to AFIC," Ms Silva said.
Lawyer for the school, Rick Mitry, said a stay of the tribunal’s orders would also be sought in the Federal Court.
"If we get that order then that will suspend the effect of the refusal of the appeal so that the school can continue to receive funding until the completion of the hearing of the appeal in the Federal Court," he told SBS News.
"I think that they have good strong grounds for the appeal, and hopefully they’ll win that appeal."
Mr Mitry said the school board was working to wind back contracts with AFIC, which took time, and it was for that reason the tribunal believed the school was still not complying with the Education Act funding requirements.
"This takes time, it’s not going to be able to totally satisfy those requirements overnight," he said.
However, AFIC president Keysar Trad told SBS News the federation was seeking legal advice in relation to the claims the school board had made in relation to the contracts.
"The board has made allegations about my organisation that are not fully correct and they seem to try to shift the blame completely over to my organisation rather than try to do what the minister had asked them to do," he said.
Mr Trad said AFIC had relinquished control of the school in March 2016 and there was now no "easy fix to this problem".
"We would love for the school to reopen and I think the best way for the school to convince the government is to talk to the government in good faith and talk to us as landlords in good faith instead of taking us to court and suing us in an exercise the government lawyers have already said was not a proper way," he said.
"My heart goes out to all the children and their parents, [but] at the moment the board has not met the minister’s requirements and we’re happy to assist them in meeting those requirements as landlord, because we care for the future of the kids, but at the moment the board has taken a very hostile, accusatory approach to AFIC."
Education Minister Simon Birmingham said Australians expect that every taxpayer dollar committed to education is genuinely expended on education.
"With this decision, our attention now turns to working with the students and their families, the teachers and the whole school community about how we best support them through this difficult time," he said in a statement.
Ms Silva said the legal process had been distressing for the school community, but she praised their resilience and said she expected the school would be able to open for term one.
"The parents and the teachers and the kids are just extraordinarily resilient and extraordinarily amazing and extraordinarily supportive," she said.
"The board will continue to work in the interests of the school and the students and we certainly do hope that AFIC will meet with us and we can come to some agreement that the department is happy with and we will just do everything we can to look after the interests of the students and the school."
- with AAP
