Banned care firm Adachi Disability Services won Department of Communities work despite NDIS probe

A now-banned WA disability care firm was granted State Government work with vulnerable children despite being under scrutiny for mismanaging client complaints and facing allegations of mishandling NDIS funding. In the Department of Communities’ annual report tabled only last month, the Auditor-General specifically raised concerns about its procurement controls, saying they were “inadequate” and increased the risk of ordering “inappropriate or unnecessary goods or services”. Adachi Disability Services Pty Ltd has been in the hands of liquidators at Pitcher Partners since May, with the firm’s initial investigations unveiling a complex network of related-party loans, offshore transfers and a total $6.4 million owed to creditors. Cannington-based Adachi — whose directors were Adrian Tafara Mtungwazi and Chiedza Mtungwazi — had branded itself as a “specialist healthcare staffing agency” for hospitals, private homes and nursing homes. According to the liquidator’s report, the firm at one stage had about 300 employees and 40 clients. Liquidators estimate about 46 employees are owed more than $51,414 in annual leave entitlements, with superannuation entitlements and charges standing at $444,336. The department did not directly answer why Adachi was accepted as an approved provider for a “high needs” placement program after NDIS watchdogs had started scrutinising Adachi’s handling of client complaints in late 2021. But a spokeswoman told The West Australian the department had begun implementing a program of reforms to improve its procurement controls. “These reforms continue to enhance the agency’s ability to monitor and report on procurement processes, which is underpinned by increased training and education for staff,” she said. “Communities’ progress in improving compliance and reducing non-compliance over the past financial year has significantly improved and was acknowledged in the OAG report.” The spokeswoman said “a small number” of children under Adachi’s care had to be put into alternate placements when the two-year banning order by the NDIS took effect on February 13, 2024. “An NDIS banning order was placed on Adachi in 2024. Communities immediately undertook the appropriate steps to transition a small number of individuals into alternate placements,” she said. “All actions were completed before the banning order came into effect. “The Department of Communities (Communities) is committed to providing a safe, supportive and stable environment for Western Australia’s most vulnerable children and young people.” The department did not confirm how much money Adachi had been paid by this time, but it’s been claimed in the liquidator’s report that losing the Government contract was the “main reason” the business failed. According to liquidators, the NDIS first made the allegation that Adachi had been “mishandling” funding in 2021. A Freedom of Information request lodged by Pitcher Partners with financial intelligence agency Austrac revealed $335,727.60 was sent from the company’s bank account to accounts in South Africa, the Philippines, the UK and others. Related-loan accounts showing “numerous vehicles and properties which were utilised by the company but also appear to include purchases by Adachi Assets of assets which were purely for the directors personal use, including a Ferrari motor vehicle” were also uncovered as part of Pitcher Partners investigations. A social media video appears to show Mr Mtungwazi showcasing luxury vehicles, including a Ferrari, at a garage matching that of an Applecross home he had once owned. Liquidators also suspected Mr Mtungwazi “may have been providing funds to a Zimbabwe-based football club named ‘Adachi FC”. Pitcher Partners’ Andrew Yeo said investigations were ongoing but he had not located “any direct transactions related to the football club”. Transactions in the order of $1.1 million believed by liquidators to be linked to a set of shops named “Morningside” as well as a $500,000 apartment in Zimbabwe in 2023, were also uncovered. The West reported last month that Mr Mtungwazi was being pursued by the Australian Taxation Office for $3m amid the liquidation process. Mr Yeo said the directors had been “very co-operative since the commencement of the liquidation.” According to the account of events provided by directors, it was after being scrutinised by the NDIS in 2021 that Adachi looked to secure work with the State Government. “In response to the (compliance) notice, the company transitioned some clients to new providers and reduced the number of complex clients they provided care for, so as to avoid further action from the NDIS,” the liquidator’s report states. “In addition, the company also entered into a new service agreement with the Department of Communities Western Australia (Communities) in 2021 to provide care to vulnerable children in need, in an effort to move away from the NDIS.” The NDIS can issue compliance notices that don’t always lead to a full ban. Adachi was made aware the NDIS was progressing towards a banning order in 2024 “due to the aforementioned compliance issues and information that was beginning to emerge on the expenditure habits of the directors,” the liquidator’s report said. A spokesperson for the NDIS Commission told The West it was “not afraid to take firm action against providers for serious breaches that infringe on the rights of people with disability and undermine the integrity and sustainability of the NDIS”. Liquidators have alleged the company could have been insolvent “from at least August 2022”.