The proprietors of Brindabella Christian College have racked up a $4.8 million debt to the Australian Tax Office, the Administrative Appeals Tribunal has been told.
A delegate for the federal Education Minister decided in May 2021 that Brindabella Christian Education Limited, the charity that operates the school, was not fit and proper to receive Commonwealth funding.
It imposed certain conditions on the charity, including that it have an independent professional examine its finances and that it review its governance structure.
The college has been appealing this decision, and on Monday morning a public hearing in the tribunal commenced.
James Emmett, who is representing the Education Minister, said in opening that issues of conflicts of interest and related party transactions would be examined in the hearing.
Mr Emmett said that in January 2022, Brindabella Christian Education Limited owed just over $3 million to the Australian Tax Office and was placed on a payment plan.
This payment plan was complied with up until May 2022.
In October 2022, the tax debt increased to $4.2 million and as of Friday, the debt appeared to be $4.8 million.
"The tribunal might be properly satisfied on that ground alone that the school is not fit and proper to receive further Commonwealth funding," Mr Emmett said.
In March 2022, KPMG was commissioned by the college's bank, NAB, to prepare a report to assess the extension of loans.
The loan facility was extended to January 31, 2023, but Mr Emmett said it was not known what had happened since then.
The school is significantly delayed in submitting its financial reports for 2020 and 2021.
The legal representative for the Education Minister said evidence would also include letters from former and current chief financial officers, an audit report from BellchambersBarrett and documents with recommendations from the college's auditors, Saward Dawson.
"We will explore history of financial decisions, the quality of oversight and who was responsible for what," Mr Emmett said.
Tom Brennan, who is representing Brindabella Christian Education Limited, said the school had been subject of "frivolous and vexatious allegations and a targeted attack" from former parents who had made complaints against the school.
He said the hearing will examine goods and services that were provided to the school by a company that was owned by board chair Greg Zwajgenberg and his wife.
"You'll be satisfied that substance of Mr Zwajgenberg's engagement in the school has been as a man of substantial means who has willingly contributed substantial sums to the school for its benefit," Mr Brennan said.
"There will be no serious question that he has ever done anything to take resources out of the school."
The hearing will examine other potential conflicts of interest involving the LifeUC Church in Charnwood and a technology company owned by the school's chief financial officer.
Mr Brennan said an audit report by BellchambersBarrett should be rejected as evidence.
He said the report, which was commissioned by the Education Department, was not independent and had been shared improperly with other bodies, including the ACT Human Rights Commission, the Australian Charities and Not-for-profits Commission and the ACT Block Grants Authority.
"You will be most uncomfortable as to what has gone on with this regulator and whether there has been a coordinated attempt to hide key steps leading to the making of the primary decision and if so why," he said.
The hearing is before Senior Member Damien O'Donovan and is expected to run until the end of this week.
Members of an association called Community for Constitutional Reform at Brindabella Christian College attended the hearing on Monday.
The group of former and current parents and staff of the school are lobbying the school and regulators to change the governance structure of the school with the support of Adero Law.
Adero Law principal Rory Markham said the association of like-minded individuals wanted to see transparency within the school.
"Clearly what we saw today in the tribunal was quite a long, lengthy investigation by the Commonwealth as to their financial dealings with the school, many unanswered questions," Mr Markham said.
"We're hoping over the next few days that that evidence will be tested, and that following that the school will be better informed and its community as to the dealings in what is taxpayer funds and what is religious, charitable work."
