Sect's tyre business treading a fine line on school funding rules

The Sydney Morning Herald, Australia/December 29, 2006
By Michael Bachelard

Schools run by the Exclusive Brethren sect have gone into the tyre business, setting up a chain of wholesale outlets, Sprinter Tyres, in four states.

The highly unusual set-up will challenge the Federal Government's rules, which stipulate that private schools must be non-profit entities to receive funding.

The sect's schools, which educated 1441 devotees last year, receive more than $6.6 million in recurrent funding. "This business was specifically set up to fund their schools," a former principal said. "They were quite open about it."

In Queensland and Western Australia, Sprinter's management company lists the address of a Brethren school as its principal place of business, and until last month, the Sprinter Tyres outlet in Ermington, was run by a Brethren NSW school entity, Eastern Education Management. Company documents reveal Sprinter Tyres is run by some of the sect's highest leaders, including school trustees.

Calls to the Melbourne outlet and Ermington reveal a wholesaler importing Maxxis brand tyres from Thailand and reselling them through apparently non-Brethren retail outlets.

The federal Education Minister, Julie Bishop, said yesterday that "to date all Brethren schools in receipt of Australian Government funding have met the conditions". These include requirements they be not-for-profit.

Education sources said if the profits of the tyre business are used for the school alone and the school itself remains not for profit, it is possible this system could still meet guidelines.

STI Tyres Australia Pty Ltd is the $2 management company that now runs both the Victorian and NSW Sprinter shops. It includes Victorian leader John Gadsden, and Sydney's Stephen Hales (the brother of the sect's world leader, Bruce Hales).

The shareholders are Mr Gadsden and Simon Salisbury, both trustees of the Victorian school, Glenvale, and the business address is the factory of Mr Gadsden's family business, water filter supplier Billi Systems.

The Queensland and WA Sprinter companies, like STI, were originally registered in Victoria, suggesting Mr Gadsden, a business whiz and the organiser of a recent set of Brethren "Business Seminars", is the brains behind the scheme. Mr Gadsden could not be contacted yesterday.

Although some of the tyre companies appear to have been trading since 2004 and 2005, no record of income from them appears in the most recent accounts of the M.E.T school in NSW, or the Glenvale school in Victoria, and there is no mention of business activities, Sprinter Tyres or STI Tyres.

In recent years, the audited accounts of the school entities have also not reflected any income from the millions of dollars of fund-raising the schools do, and nor do they appear to record the value of the school land and property, nor pay to their teachers.

The accountant Max Newnham, who was asked by The Age to scrutinise the accounts of the Sydney and Melbourne schools, described them as "incredibly secretive and not very illuminating".

"You can't even look at these statements and say how the money's been spent. It's hard to make any sense out of them," he said. "If I was the Government I would be looking at these statements to see if it's being spent properly … It's clear that things are being hidden here."