Catholic school fight with nuns over multimillion-dollar loan
By Kate McClymont & Patrick Begley
October 7, 2018 — 8.43pm
A major scandal is looming within a Sydney Maronite Catholic school as government-appointed auditors probe decades of payments to nuns as well as a mysterious multimillion-dollar loan.
Part One of the Herald's investigation into the Maronite church on Saturday examined Sydney Bishop Antoine-Charbel Tarabay and his pursuit of political power and influence.
Part Two of the investigation reveals alleged financial irregularities at St Maroun's College at Dulwich Hill are fracturing relations within the school and the order of nuns that control it.
It also highlights concerns about a substantial Maronite community fundraising drive for a drug and alcohol rehabilitation centre which, years later, is yet to get off the ground.
St Maroun's, Dulwich Hill. Credit:Sardaka
Several sources associated with St Maroun's claim that school funds may have been improperly used to subsidise the attached convent and the living expenses of nuns.
These included the school allegedly paying for the nuns' full-time housekeeper and for repairs to their convent.
And a previous internal investigation by the school warned that hundreds of thousands of dollars international students paid in cash remained unaccounted for.
Auditors from Ernst & Young are seeking staff timesheets, salaries and utilities bills, as well as access to convent bank account records, as they try to unravel whether school money has been spent on other church expenses.
At the centre of the dispute within St Maroun's is a $3.4 million loan, which several senior figures connected to the school believe may not be genuine.
Former prime minister Malcolm Turnbull with Bishop Antoine-Charbel Tarabay and Sister Rose-Therese Tannous.
They say the school for years has been paying off a loan to the Maronite Sisters of the Holy Family without any documents to support how much money was lent in the first place.
Correspondence within the school shows a great deal of anxiety about the legality of the loan.
One 2017 document addressed to superiors in Lebanon asks: "Imagine where we would be if our school were audited by the government? What would happen to the reputation of our order? How would a negative audit impact Maronites throughout Australia?"
In other documents, the principal, Sister Josephine Wehbe, repeatedly raises her concerns about the loan with superiors in the order, including the nuns acting as trustees of the Maronite Sisters who are the proprietors of the school. She also wrote to the head of the order in Lebanon, Sister Marie-Antoinette Saade.
Sister Josephine wrote that the loan, which predated her appointment, was "a matter that simply cannot be overlooked" and "I have to abide by the law".
In December, four trustees replied to Sister Josephine telling her "the College must respect the agreed loan and respect also the terms of repayment".
When contacted, Sister Josephine replied by email to say audits were a normal process for all schools but declined to comment further, citing the confidentiality of the audit.
Sister Irene Boughosn, one of the current trustees, told the Herald by email that schools were chosen at random for auditing.
A former St Maroun's principal and current deputy at the Maronite College of the Holy Family at Parramatta, which has also been selected for audit, Sister Irene said her school had provided all necessary paperwork to the satisfaction of auditors.
Sister Irene declined to comment on the loan.
Under the Education Act, government-funded schools are not allowed to operate for profit and all funding they receive must be spent on the school and educational activities.
The Education Department wrote in June to both St Maroun's and the Maronite College of the Holy Family, to inform them Ernst & Young would be investigating whether they had abided by their not-for-profit requirements.
Ernst & Young has asked for a trove of information from St Maroun's, including records of religious allowances dating back to the 1990s.
Investigators have also requested clarification on the use of each building at 194 Wardell Road, Dulwich Hill, an address that houses both the school and the convent.
Also of interest are enrolment data for local and international students.
Correspondence seen by the Herald suggests hundreds of thousands of dollars in fees paid in cash by international students were not entered into official financial records.
A 2015 letter to school administrators suggested "potential misappropriation of international fees in previous years has financially impacted the college".
Another school document suggested $683,000 in international fees remained unaccounted for in the school's accounting software.
The Herald was told records were a "shambles" and some were kept by the nuns in notebooks rather than on computers.
Two sources spoke of cash belonging to the school being earmarked for the Maronite Sisters or other senior figures in the church in Australia and Lebanon.
"This is wrong," one insider recalled telling management about the payments. "Every cent that comes into this college is for the education of the children who attend here."
In response to questions to the school and the trustees of the Maronite Sisters of the Holy Family, a St Maroun's college spokeswoman said: "The College's accounts are independently audited annually and have always returned an unqualified opinion."
When asked about his response to the current audits, the church's Australian bishop Antoine-Charbel Tarabay said: "I have taken no steps as they are independent congregational schools run by their particular religious orders and do not require me to intervene in their affairs."
The spiritual recovery centre
One project with which the Bishop has been intimately involved is White Stone, a church charity set up to treat drug addiction and alcoholism.
By 2014, the Maronites had found a site on which to build their "spiritual recovery centre", where addicts could live while receiving specialised treatment.
"After extensive consultations and detailed explorations with all stakeholders, we have been blessed to arrive at this next major milestone in our mission — the purchase of an idyllic property," the White Stone website said.
The 100-hectare site at Bilpin, at the foot of the Blue Mountains, was purchased for $1.6 million with a blessing from Pope Francis himself.
Bishop Tarabay signed mortgage documents and provided a letter of guarantee for an $824,000 loan from the Bank of Beirut-owned Bank of Sydney.
The following year, the then prime minister Malcolm Turnbull thanked the bishop for his "tireless" efforts to establish the rehabilitation centre.
Those efforts continued in 2016, when state Opposition Leader Luke Foley joined more than 1000 people at a $200-per-head White Stone gala fundraiser.
But in 2018, the centre is yet to get off the ground and questions are being asked about what is happening with the donations.
The original vision shared by the Bishop had residents staying for up to a year, receiving "solace" from the "vast blue sky" as they wandered the wooded grounds, farmed, played basketball and baked their own bread.
However, now it is Airbnb guests receiving solace from the Bilpin sky, paying up to $1200 a week for "knockout district views" in a six-bedroom house.
"The vision is still there, it just depends on the funding," said Danny Nouh, a church subdeacon on the White Stone board.
Father Nouh said when he and other members of the current board took over, they realised the project would need up to $1 million a year to run and would not be viable without government funding.
When the Herald asked Bishop Tarabay about the progress of the project, he said the local council had thwarted their plans.
"The local government authority has refused development approval for a rehabilitation centre and the development of a rehabilitation centre will not go ahead at that location," he said.
Hawkesbury City Council said it did not appear to have received any development applications for the site in recent times.
Questions remain about the future of the Bilpin project, the status of development discussions and whether the church would sell the land.
White Stone has raised $1 million since 2013, according to reports to the charity watchdog, Father Nouh said.
He said the money had been put to "fantastic use", with one full-time counsellor and three other part-time counsellors helping more than 200 clients in the past two years.
White Stone has paid more than $100,000 in rent to the church, the owner of the Bilpin land, which the Bishop said had gone towards mortgage payments.
While the Bilpin dream to "open our doors and our hearts to the afflicted and the lost" has failed to materialise, a project back in the city is forging ahead.
In 2015, the church put in a last-minute $8.2 million bid to secure a Victorian-era residence in Ryde, complete with a tennis court, which will serve as a monastery and community centre.
Kate McClymont
Kate McClymont is an investigative journalist at The Sydney Morning Herald.
Patrick Begley
Patrick Begley is an investigative reporter for The Sydney Morning Herald.