ASN Austaiion \ Charilies ons Not-for-profits Commission Australian Government 22 January 2016 Ref: 389316 Mr Hafez Kassem President The Australian Federation of Islamic Councils, PO Box 7185 SSBH Alexandria NSW 2015 Dear Mr Kassem, RE: The Australian Federation of Islamic Councils Inc. (ABN 37 002 757 155) Notification of commencement of investigation and notice given under section 70-6 of the Australian Charities and Not-for-profits Commission Act 2012 to pro information | wish to advise you that the Australian Charities and Not-for-profits Commission (AGNC) is commencing an investigation into the Australian Federation of Islamic Councils Inc’s (AFIC) compliance with the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act) and the Australian Charities and Not-for-profits Commission Regulation 2013 (Regulation). The ACNC is the national charities regulator and has a range of functions, including monitoring registered charities’ compliance with the ACNC Act and the Regulation. The ACNC is also required to maintain an accurate public register of charities, As a registered charity, AFIC has obligations under the ACNC Act and Regulation to maintain its entitlement to registration. ACNC concerns The ACNC's current concerns covering the period 3 December 2012 to current, include the following: a) AFIC may not have complied with the following obligations under the ACNC Act: i. Division 68: Registered entities must keep records’: ‘The ACNC has concems that AFIC may not have accurate written records of its operations and finances, particularly in relation to its relationship with related entities, such as its schools, including the Islamic College of Brisbane, the Islamic College of Melbourne, Malek Fahd Islamic School, Langford Islamic School, the Islamic College of South Australia and the Islamic College of Canberra, a " Section §5-5(1) of the ACNC Act. ‘SENSITIVE (GPO ex: 5108 Mefbourne VC 3001 Tel lB ACNC Fx 1800 232 569 a eenegonayb) AFIC may not have complied with the following governance standards under the Regulation: | Governance Standard 1: Purpose and not-for-profit nature of a registered entity? The ACNC has concems that Responsible Persons of AFIC have inappropriately used AFIC funds for their own private benefits, incluging lawyers’ fees and overseas i, Governance Standard 2: Accountability and transparency to members*: The ACNC has concerns that by not answering questions relating to AFIC funds allegedly being used by Responsible Persons for their private benefit, there is a lack of accountability and transparency to members and the public. li, Governance Standard 5: Duties of Responsible Entities‘: The ACNC has concerns that AFIC has not taken reasonable steps to ensure that its Responsible Persons are subject to, and complying with the duties expected of them. These include Responsible Persons /) not acting in AFIC's best interests or to further its purposes; ii) not misusing their position; il) not accounting for / managing conflicts of interest with entities that AFIC has close relationships with; and iv) not managing AFIC’s financial affairs in a responsible manner. Notice requesting information to address our concerns To assist our investigation and to determine whether AFIC continues to meet its requirements for registration under the ACNC Act, we require information that addresses the above concems, We have enclosed a notice issued pursuant fo section 70-5 of the ACNC Act which requires you to produce information and documents to the ACNC in relation to AFIC. The information and supporting evidence are required by 19 February 2016 and may satisfy the Commissioner that you are complying with sections 25-5(3) of the ACNC Act. You cannot refuse to comply with this notice on the basis of seff-incrimination (see section 70-25 of the CNC Ac!). However, section 70:25 of the ACNC Act does not override legal professional privilege. If you think any of the information or documents requested fall into this category, please contact me as soon as possible. ‘The ACNC will handle all information collected in accordance with the Privacy Act 1988 and the secrecy provisions of the ACNC Act. In very limited circumstances, the information and documents you give us may be shared with other parties. Further details can be found in the ACNC’s Information Handling Policy and Privacy Policy, which are available on the ACNC website. ? Section 45.6(2) of the Regulation 3 Section 45.10(2) of the Regulation. “ Sections 48:26(2)(b), (c), (€) and (f) of the Regulation. acne govayYour response to the notice is due on 19 February 2016 and the means by which you can submit this are outlined in the notice. Conclusion The ACNC will review the information and documents provided and may contact you to arrange a meeting to discuss matters, Further information about the ACNC and the obligations of registered charities can be obtained from our website at www.acnc.gov.au. | also recommend you to read the ‘Governance for Good’ guide, which is available on our website, to help you understood AFIC’s obligations in greater detail If you have any questions about the notice, or what you are required to do, please contact ‘me on (03) 8601 9867 or compliance@.acnc.qov.au as soon as possible. Yours sincerely Iook-pap2 Meenal Kashyap Senior Compliance Officerms Aystatan a iTies ona ee 7 f Not-for-profits Australian Government | Xs 3° Commission TO: Mr Hafez Kassem President ‘The Australian Federation of Islamic Councils PO Box 7185 SSBH Alexandria NSW 2015 Notice pursuant to section 70-5 of the Australian Charities and Not-for-profits Commission Act 2012 Pursuant to sections 70-6(2)(a) and 70-5(2)(d) of the Australian Charities and Not-for- profits Commission Act 2012 (ACNC Act), | require you to produce the information and copies of documents described in the attached schedule: 1. For the purpose of determining whether: a. The Australian Federation of Islamic Councils Inc. (AFIC), ABN 37 002 757 155 has complied with, or is complying with, the following provision(s) subject to monitoring: i) a provision of the ACNC Act creating a condition that must be complied with in order to maintain a charity's registration (subsection 75-5()(i); and ii) a provision of the ACNC Act creating a condition that may lead to revocation of a charity's registration if it does not comply with the condition (subsection 75-5(0(i)) 2, ‘These documents are to be provided in writing, by any of the following methods: ‘a, Post: addressed to the Australian Charities and Not-for-profits Commission, GPO Box 5108 Melbourne VIC 3001, marked to the attention of Meenal Kashyap, or b. Email: compliance@acnc.gov.au, marked to the attention of Meenal Kashyap, or c. Fax: 1300 232 589 marked to the attention of Meenal Kashyap. 3. No later than 19 February 2016. In this Notice, ‘document! (and ‘documents’) has the same meaning as defined under section 2B of the Acts Interpretation Act 1901 (Cth): document means any record of information, and includes:[Notice pursuant to section 70-5 ofthe Australian Charlies and Not forrofits Commission Act 2012 (@) anything on which there is writing; and (b) anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them; and (©) anything from which sounds, images or writings can be reproduced with or without the aid of anything else; and (0) a map, plan, drawing or photograph. Authority to issue Notice The powers of the Commissioner of the Australian Charities and Not-for-profits Commission under section 70-5 of the ACNC Act have been delegated to me as Assistant Commissioner General Counsel pursuant to section 115-55 of the ACNC Act. The Assistant Commissioners have authorised officers to make decisions on their behalf. As Acting Director of Compliance, | am authorised to issue this Notice on behalf of the Assistant Commissioner General Counsel. Schedule The following information and documents for the period 3 December 2012 to current (Relevant Period) are required to be provided: Record keeping 1. Please provide the following documents: a. Minutes of all Annual General Meetings, special meetings, board meetings and any other relevant meetings held by AFIC including a) all minutes of meetings relating to decisions involving AFIC's six schools (such as deciding to provide guarantees of continuing financial support to them); and b) all other decisions (such as discussions about when to offer unsecured and interest free loans). b. Other than the running of its schools, documents pertaining to how AFIC operates its halal certification and all other activities. c. AFIC’s record-keeping policies and procedures. Private benefits 2. Please provide the following documents: a. All payment / reimbursement / expense vouchers or invoices that were issued to all Responsible Entities of AFIC, for official duties undertaken nationally and internationally, including detalls of the travel (destination, dates, airline travelled, purpose of the travel, details of meetings/conferences and the duration of events). 2 (6P0 Box S08 Mebovtne Vi 3001, Tel TSACNC Fox 800 232569Notice pursuant to section 70-6 of tha Australian Charities and Not-forprofits Commission Act 2012 Financial information 3. Please provide the following details for all of AFIC’s bank accounts including any credit card accounts: a. BSB number b. Account number c, Name of account holder d. Full name of all current and previous signatories to each account, including date of effect and date of cessation e. Full name of all current and previous card holders who operate the account * Transaction statements for all accounts identified above should also be supplied. 4, Please provide AFIC’s policies and procedures in relation to the management of its finances. Of particular concern: a, How are operational and financial management decisions made, and who is involved in these decisions? i. How are these decisions documented? Please provide evidence. b. What financial management practices and controls are in place to ensure that AFIC’s funds are used effectively, protected from misuse and applied solely for charitable purposes? c. What systems does AFIC have in place to ensure its financial records are kept and explained accurately? d. Details of who is authorised to directly withdraw funds from AFIC’s school accounts and who oversees this process? Related Party entities 6, Please provide the following information in relation to related parties: a. Related party transaction register. b. Where AFIC has agreed to pay sums for the building works of its schools and directors of the schools are related parties to the loan transaction, records to evidence a procurement process, market test or arrangements with AFIC. c. If schools buildings were gifts provided by AFIC, how were these documented and evidenced in its financial accounts and records? d. How is AFIC transparent / accountable to school boards on questions relating to schoo! funding? Conflicts of interest a 6. Please provide the following information in relation to conflicts of interest: a. Conflicts of interest register. 3 (6PO Box 508 Melbourne IC 3001 Te 1S ACNC Fax1900 292 569Notice pursuant to section 70-8 of the Australian Charlies and Not-or-profts Commission Act 2012 b. In relation to its schools, it appears that AFIC has influence and control over the appointment and termination of senior management, the composition of boards, amendments to constitutions and decisions on school expenditure. Please explain how conflicts of interest in relation to these and other issues are managed-by AFIC officials who are also school board members. Agreements 7, Please provide the following Agreements: a. Lease / rental agreements between AFIC and all its schools. b. All Accounting & Management Fee Agreements between AFIC and its - schools, and documentation to reflect that charges are at a reasonable market value. c. All Service Agreements between AFIC and its schools. d. Lease / rental agreements between AFIC and any other entities. Loans 8. Please provide the following information in relation to loans: a. Any unsecured and interest-free loans, b. A break-down of each related party loan owed to AFIC and what it relates to. c, How does AFIC ensure that the money lent to all related parties is on legitimate terms and in its best interest? Valuations 9. Please provide valuations of all the properties owned by AFIC. the 10. Please provide the following documents: a. AFIC’s accountabilty/transparency policies and procedures. b, AFIC’s Responsible Entities’ duties policies and procedures. Signed at Melbourne this 22nd day of January 2016 Annie Keely (Ag) Director Compliance: 4 (GPO Bax 5108 Melbourne IC 001 TANS ACNC Fax 1800282 569"Notice pursuant io section 70-5 of the Australien Charities and Not-for-profits Commission Act 2012 Penalties 1. Failure to comply with this Notice If you do not comply with the requirements in this Notice, within the specified timeframe, you willbe liable for an offence under subsection 70-5(4) of the ACNC Act. The penalty for this offence is: + a fine of $3,400 (as calculated under section 4AA of the Crimes Act 1974 (Cth)) 2. Providing false or misleading information If you provide false or misleading information, you will be liable for an offence under section 137.1 of the Criminal Code Act 1995 (Cth) (Criminal Code). The penalty for this offence is: * 12 months’ imprisonment 3. Providing false or misleading documents Ifyou provide false or misleading documents, you will be liable for an offence under section 137.2 of the Criminal Code. The penalty for this offence is: ‘+12 months’ imprisonment 5 (GPO Box 108 Melbourne ic 3001 TeIIGACHC Fax 1300732 569 ‘ene govau