Schools set up by the Exclusive Brethren sect have spent millions of dollars with businesses owned by church members on major building projects, including to a company majority-owned by the powerful Hales family, a Guardian Australia investigation has found.
The Brethren’s OneSchool Global schools are registered charities in Australia and exempt from income tax. The OSG schools also have building funds endorsed for deductible gift recipient status.
This means that anyone, including community members and businesses, can donate to the school charities and receive a tax deduction, with some of this money then flowing via lucrative contracts to private businesses owned by church members.
The Exclusive Brethren is now formally called the Plymouth Brethren Christian Church.
A spokesperson for the schools said they were fully compliant with the governance standards for charitable entities, and “meet the requirements of a raft of other legislation governing national and state entities”.
“Current practice is that members of our school community generally donate to a national building fund. A building team within OSG then allocates these funds based on need, rather than individual community members donating to an individual school or campus directly.”
Many other religious and private schools use similar arrangements to direct donations to school facilities, with a Productivity Commission report recommending tax-deductible status be removed from school building funds.
Business and donation ecosystem
A Brethren-owned Victorian business secured the contract for the new OSG Melton campus, which reportedly cost between $10m and $15m and opened in 2021.
The company, MKM Constructions, is jointly owned by its managing director, Marcus McMillan, a Brethren community member.
In 2021 McMillan was appointed as a director of the Melton school trust which is registered as Glenvale School Melton, a registered charity. He was not a director of the trust when the project started.
There is no suggestion of wrongdoing by McMillan, MKM, OSG or any other party in relation to this appointment, in the award of the contract or otherwise.
OSG schools also receive significant funds through donations as part of the Brethren’s ecosystem of businesses and charities coordinated by the Sydney-based consulting firm Universal Business Team.
All Brethren-owned businesses and community members support UBT through a combination of direct donations and the buying of goods and services through the network.
The Melton project, which covers more than 4,000 sq m, included a primary and secondary school with open learning centres, new woodwork and art rooms, and a “state-of-the-art” gymnasium.
According to a promotional video recorded by the school for MKM, the contract was awarded after a “very stringent appointment process to select the right construction company”.
In response to questions from Guardian Australia about the award of the contract and whether MKM had made any donations to the school, McMillan said the company was “a proud supporter of our community, and makes various donations to our local school and other charities”.
He added: “We source work from a variety of businesses and clients, through tenders, proactive pitching, marketing and all of the other normal business sourcing practices, but said the company did not “comment on details of contracts or the donations we make”.
He said MKM was “not privy to One School Globals procurement decisions” and that the company had been “successful in many but not every OSG tender we have responded to”.
“We always abide by procurement processes,” he said.
Donations support local community, businesses say
Work on another large school redevelopment in Launceston in Tasmania was awarded to a company called Bentley Workspaces, which is majority owned by one of the state’s most senior Brethren men, Graham Lewis.
Lewis was embroiled in political controversy following the 2006 Tasmanian state election after it was revealed the Brethren worked with the Liberal party to publish attack ads on the Greens for their support of transgender people. Lewis was one of the Brethren members who issued a public apology for the advertisements after a complaint was made to the state’s anti-discrimination tribunal.
The Launceston project, which converted a former call centre building at Technopark in Kings Meadows for the campus’s 70 students, included a new multipurpose gymnasium, a performing arts hall and a sports field.
Bentley Workspaces was the head contractor for the 2,800 sq m redevelopment, managing concept design, contracting, construction management and “bespoke joinery solutions”.
It is unclear what the value of the project was but reported financial information from OSG Tasmania’s two campuses shows it spent $5.6m on capital works from 2017 to 2019, when the project was completed.
Lewis told Guardian Australia the company “can’t speak for the procurement processes and procedures of organisations that engage our services” and he could not comment on individual contracts “due to commercial interests”.
The company had completed work “for a range of major Tasmanian organisations and businesses including OneSchool Global”, he said.
“All our work is sourced in accordance with the procurement processes of the organisation seeking our services … Bentley Workspaces complies with all relevant Australian business rules and regulations.”
Asked about donations, Lewis said: “As a local business we support the community through various charitable donations and endeavours. We don’t comment on the details of these out of respect for the recipients.”
There is no suggestion of wrongdoing by Lewis, Bentley, OSG or any other party in relation to the award of the contract or otherwise.
Another company, Aspen Commercial Interiors, is understood to have been a regular supplier of high-end furniture and interior finishings for the OSG campus in Sydney. One of the firm’s directors, David Heaney, has been a director of OSG since 2018, according to documents filed with the Australian Securities and Investments Commission. Paul Heaney is a director of Aspen Commercial Interiors and was also the campus administrator at the Sydney school campus in 2022.
Mark Heaney, another Aspen director, is also a director of the Kellyville Education Trust, one of the OSG group of charities, and was a director of OSG New South Wales. He has been the community principal of OSG Sydney for more than a decade.
In 2022 OSG NSW disclosed Aspen in its financial return as a related party, due to a director being on both boards.
It listed payments totalling $130,000 to Aspen from 2020 to 2022. Before 2020 the organisation did not report any related party transactions.
In response to questions from Guardian Australia, David Heaney said Aspen could not provide contract details as they were commercially sensitive.
“Obviously we are not involved in the reasons for any client’s decision to contract work from [Aspen],” he said.
“At all times we look to follow the legal requirements of an Australian business as well as the procurement requirements of those we contract for.
“Like all Australian businesses we are engaged in a number of ways, sometimes directly and sometimes after tender processes.”
It was “common practice around the world for people involved in business to also be involved in their local school, church and other community organisations”, he said.
“We proudly support our local school and other charities, and in doing so we always seek to comply with the rules. As a general rule we don’t comment on our donations to organisations.”
There is no suggestion of wrongdoing by anyone in the Heaney family, Aspen, OSG or any other party in the award of contracts or otherwise.
In the Illawarra, a construction company owned by the McKay family – Cyclo Group – secured a contract for the fit-out for an OSG primary school campus. It is understood the project was completed in 2023. Guardian Australia has confirmed that the McKay family are also senior members of the Brethren community in NSW.
The general manager of Cyclo Group, Carl McKay, said the “religion of some of the members of our company and the work of our company have absolutely nothing to do with each other”.
“Cyclo Group is fully compliant with Australian laws in the way we undertake our business and treat our staff and customers,” he said. “We can’t comment on commercial contracts which are confidential in nature.”
McKay could not say “with any certainty” whether it had been part of a competitive selection process to secure the contract with OneSchool Global, and said that was a question properly directed to OSG.
Asked whether members of the company had donated to the school either directly or indirectly, McKay said it would not comment “on which charities we support and why”.
“There are standard processes in Australia for managing declarations of interest which include people in defined circumstances not being present in discussions or decision-making. Cyclo Group adheres to Australian processes.”
There is no suggestion of wrongdoing by anyone in the McKay family, Cyclo Group, OSG or any other party in the award of contracts or otherwise.
Interior design projects
OneSchool Global also awarded design projects to the interior design firm Unispace between 2013 and 2020 when the global firm was majority-owned by Gareth and Charles Hales – the sons of the Brethren’s powerful church leader and “elect vessel”, Bruce Hales.
At the time, the schools were embarking on a project to build new “learning centres” at their global network of campuses.
At least six OSG projects were completed by Unispace in New Zealand and the UK before the firm was sold in 2021 to PAG Asia Capital for $300m.
A spokesperson for Unispace said that after the acquisition of Unispace, the new owners and a new executive leadership team “renewed its focus on its core business” – designing and installing office interiors and laboratory space for clients globally.
“Prior to the acquisition, the former Unispace designed and built spaces for a range of clients, which from time-to-time included education facilities, although even then the core focus was on corporate interiors (offices),” the spokesperson said.
“The OneSchool Global projects were delivered by Unispace while under the previous ownership and management. OneSchool Global is not a current client of Unispace, and has not been since PAG’s acquisition.”
The spokesperson referred questions regarding the procurement processes and their connections with the Exclusive Brethren to the school and the church.
In a statement to Guardian Australia, which he indicated was on behalf of both brothers, Charles Hales said he and Gareth had built Unispace “into a successful global company with hundreds of clients in multiple countries over 11 years”.
“We don’t own Unispace anymore, we don’t run OneSchool, when we did operate Unispace we didn’t have anything to do with procurement and contracts, and we don’t decide on how governments fund schools,” he said.
“As I recall a small number of our smaller projects were associated with OneSchool, these were subject to normal tender processes, they were decided at a school level, and we lost more of them than we won.”
He said he did not have any involvement in Oneschool Global “for the reasons you outlined” until two months after Unispace was sold when he began volunteering with the school.
There is no suggestion of wrongdoing by anyone in the Hales family, Unispace, OSG or any other party in the award of contracts mentioned above or otherwise.
Board members and potential conflicts of interest
An OSG spokesperson said that the boards and management of all OSG schools were “expected to act in full accordance with established governance and probity rules and [Australian Charities and Not for Profits Commission] standards”.
“This includes with respect to contracts and procurement, and the identification and management of conflicts of interest,” the spokesperson said.
“School Principals and Board members are required to declare potential conflicts of interest, and not participate in discussions or decision-making where those may exist. This is standard practice for any Board or executive member.
“To be clear, if a company which had a financial association with a Board member, put an application forward for work, then under the rules, that Board member would be required to recuse themselves from any discussions or decision-making.
“This is in line with normal business practice and prevents actual or perceived conflicts of interest.
“OSG does not direct our schools to use any provider for the contract work they undertake. And we do expect that schools will always seek to obtain the best value for money in any contracts.
“Within those bounds, and providing the law and our policies and procedures are met, there is an element of discretion allowed for local schools to select the best provider for the work required based on factors which may include a combination of price, timeline, availability, references and quality, previous experience with the school and other relevant factors.
“This discretion is not a governance question and is managed at an operational level locally.”
It said the organisation “recently updated its advice to schools to improve procurement and contracting processes. This added even more rigour and oversight.”
Analysis of the OneSchool Global group’s financial records lodged with the Australian Charities and Not for Profits Commission shows that the schools, which run 31 campuses, received about $40m in government revenue in 2022, with a further $80m received through donations, bequests, school fees and “other revenues”. A large proportion of these funds is understood to have come through UBT.
Nationally, the schools boast net assets of more than $200m, with combined surpluses in 2022 of about $26m according to the latest available financial statements lodged with the charity regulator. It has about $85m in “current assets”, which includes cash and other liquid assets.
According to the ranking of Australia’s schools based on per student recurrent income, OSG schools in NSW, Victoria, Queensland and Western Australia rank in the top 200 of the country’s almost 10,000 schools, placing them in the top 2% of schools nationally.
The church’s members – numbering about 15,000 in Australia and 50,000 globally – adhere to a strict doctrine of separation, which former members say restricts them from socialising with “worldly” non-believers, but they are permitted to conduct business with outsiders.
Do you know more? Email sarah.martin@theguardian.com
