Dodgy educational salesmen exploit 'grey area' to rise from Phoenix Institute's ashes

Michael Bachelard

Some of the salesmen who rorted the private vocational education system last year are back in action, this time allegedly falsifying English language tests and completing student assignments in another bid for Commonwealth cash.

Broker Hari Krishna Peddasetty Reddy, who was one of the salesmen working for the disgraced Phoenix Institute, has been holding training sessions for "brokers" in his Kensington office.

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Phoenix Institute closure leaves students, government in the lurch

Michael Bachelard explains how today's closure of Phoenix Institute is merely the tip of the iceberg in a vocational training industry rife with corruption.

There he allegedly lays out a new scheme that involves sending language and assessment tests to a call centre in India to be completed.

Mr Reddy is said to be one of a loosely related network of people testing new regulations designed to clamp down on the multibillion-dollar rorts of 2015.

Hari Krishna (Krishna) Peddasetty Reddy, a vocational education salesman, is allegedly trying to reboot the industry Photo: Facebook

A spokesman for the regulator, the Australian Skills Quality Authority, said its latest review of training organisations had identified 19 "providers of concern" that would be investigated, with "particular emphasis on their marketing and enrolment practices".

An education department spokesman said they were auditing a number of education providers relating to their relationships with brokers, "and may take action" against them.

Misbehaviour by colleges and salesmen in the multi-billion dollar VET FEE Help scheme last year saw the ACCC take four colleges to court for false, misleading and unconscionable conduct, and another paying back $44.5 million to the government.

The listed company, Australian Careers Network, the parent of Phoenix Institute, went into administration still claiming $253 million from the Education Department.

Australian Careers Network, the parent of Phoenix Institute, went into administration last year, still claiming $253 ... — Australian Careers Network, the parent of Phoenix Institute, went into administration last year, still claiming $253 million from the Education Department.

The scheme cost the Commonwealth $3 billion in 2015 alone while only 7 per cent, at most, of online students completed their course.

New laws were introduced in January to ban cold calling and free laptops, and impose strict literacy and numeracy tests on all students without year 12 qualifications.

Hari Krishna Peddasetty Reddy has been holding training sessions for "brokers" in his Kensington office. Photo: Supplied

The government will pay colleges only for new students who complete assessment tasks and progress through their course.

But they have not stopped the problem.

The Phoenix Institute of Australia had offices on Queen Street in Melbourne's CBD.

Fairfax Media has been told that a number of colleges are once again hiring dodgy sales companies, lured by the money still available from the government for signing up students to over-priced, $20,000 online diploma courses.

According to a source in education sales, Mr Reddy said he was selling courses for three colleges.

Those who have been to meetings in his office say that Mr Reddy and his partners have "found a grey area to work in".

The salesman finds new "students", often using a "lead generation" company to get around the ban on cold-calling.

The salesmen would not directly offer free laptops, "but the customer can ask during the verification call to the college: 'Am I going to receive all the education tools I need'. Then they get a laptop".

Once the broker has the person's basic information, he or she creates an online identity. The student never hears from the college again, but his or her profile is accessed from a call-centre offshore.

"He's got some contacts in India and these people will be doing all the assessments and the post-requirements," according to the source.

The source said he believed the colleges must be aware of the scam.

Mr Reddy had told prospective salesmen that they would receive about $750 per student they signed up.

Under the old scheme, the Federal government advanced these payments to the college; now the money will come in tranches as assessments are completed.

Either method, however, generates a HECS-style debt for the "student", with a lifetime limit of $100,000 per individual.

Asked by Fairfax Media, however, Mr Reddy denied even selling vocational education.

"Someone actually approached me for VET FEE Help, but I said [I] don't want to do it. We are into commercial lighting," he said.

"Some people are doing, but I really don't want to get into that one."

A company associated with Mr Reddy, Aztec Global, claims it is owed $2.58 million in the Phoenix Institute administration.

Andrew Zachar, from Brisbane-based education broker, iPear, said he had been to a meeting in Melbourne where a number of salesmen had discussed getting around the new rules.

He would not reveal details, but said, "Indians are doing things I don't want to mention, but I know about," he told Fairfax Media.