By Eryk Bagshaw
Australia's peak administrative Islamic body is refusing to relinquish land being used by one of the state's largest schools despite the potential for it to save the school from being shut down.
The Administrative Appeals Tribunal upheld the federal Department of Education's decision to strip funding from the 2400 student school on Thursday after it found the school was operating for a profit through millions of dollars in inflated rent payments and loans made to the Australian Federation of Islamic Councils.
Children leaving the Malek Fahd Islamic School in Greenacre.Credit: Nic Walker
The tribunal found "the ongoing burden of the uncommercial arrangements with the Australian Federation of Islamic Councils" meant the board was still not a "fit and proper person" to run a school.
The decision has laid bare the bitter rift between AFIC, a charity that administers six Islamic schools around the country, and the Sydney school's council.
Saudi Arabia's late King Fahd (right) meets Palestinian President Yasser Arafat in 2001.Credit: Getty Images
On Friday, the school council pleaded with the federation to separate itself completely from the school by handing over the grounds to the community.
"The school was established through a gift by the King of Saudi Arabia, not to line the pockets of AFIC," a spokesman said.
Malek Fahd, literally meaning King Fahd in Arabic, was named after the late Saudi King Fahd.
According to the school council the Saudi monarch gave the AFIC a multi-million dollar gift to buy land and establish the school in Greenacre in 1989.
Malek Fahd board member Miriam Silva, pictured in 2011.Credit: Domino Postiglione
It now receives some of the highest levels of public funding of any private school in the country. It has earned $76 million, up two thirds of its budget, since 2012.
The school council's chair, Miriam Silva, said the AFIC "had not received a cent" since court orders were given to halt payments to the federation last year.
Malek Fahd School students pose for a picture after achieving excellent HSC results.Credit: Daniel Munoz
She questioned how the school had come to pay rent on a gift originally given by King Fahd.
"I'm presuming that he would have entrusted AFIC to set the school up in the right away," she said.
AFIC president Keysar Trad.Credit: Wolter Peeters
AFIC's president Keysar Trad said the federation established Malek Fahd after receiving a $1 million gift from King Fahd and accused Ms Silva of "blame shifting," "sub-judice" and "contempt" for suggesting the federation should relinquish its control over the school lands.
"The latest newsletter from the school board calling on AFIC to hand over ownership of school land...is an attempt to take ownership of community property without proper justification," said Mr Trad, who was appointed AFIC president in August.
"We are the landlord, they are the tenant, we always have been. The school council has cancelled every meeting we have requested with them.
"We want to negotiate a market value arms length lease, that is what the government wants."
The school, which significantly out performed its peers in the year's HSC by scoring 90 or above in 18 per cent of their exams, has vowed to appeal the decision in the federal court, and is expected to continue to receive funding while the appeal process is underway.
Last year when the school's future first came under threat, teachers reassured students they would get through their HSC and started planning to set up classrooms in their living rooms and garages.
Should the school's appeal fail, local schools such as Birrong Boys, Homebush Boys and Strathfield Girls and other institutions could have to absorb thousands of future students, placing further pressure on the stretched public system.
The school aged population is set to boom by 17 per cent in the Bankstown area over the next decade according to figures from the NSW Department of Planning.