UPDATE 3.30pm: THE South West Institute of TAFE board referred the allegations to police after a lengthy internal investigation.
Chief executive Mark Fidge said the institute took action after an audit in 2014 identified the issue.
“We have been working with the Department of Education and Training to comprehensively investigate these matters,” Mr Fidge said.
The board referred the allegations to police and other agencies on October 14.
Board chairman Mike Weise said evidence found during the institute and department-led investigations prompted the decision.
“As this matter has been referred to the police, I am unable to comment further at this time,” Mr Weise said.
Mr Fidge said the allegations related to historic practices uncovered during an audit in 2014 when he was working in the institute’s corporate division.
Due to the complexity of the allegations, it took many months to complete the investigation.
Mr Fidge said the allegations related to potential claims for training subsidies where appropriate levels of assessment had not been completed.
The course in question was to be delivered to 135 students on behalf of the TAFE.
Mr Fidge said certificates had been issued to six students but these were later rescinded by the Institute.
Mr Fidge said the alleged irregularities were disappointing and were at odds with the TAFE’s commitment to providing high-quality education and training to develop the skills needed by local communities.
“I know the overwhelming majority of our staff do the right thing and will be greatly upset to hear of these serious allegations,” he said.
Mr Fidge said he was confident the TAFE had systems in place to ensure it continued to deliver first-class programs.
“We continue to review internal processes to ensure we have systems in place to protect our students and to ensure we always provide quality training,” he said.
Mr Fidge said there was no evidence the students, who are based in Melbourne, did anything wrong.
EARLIER: Victoria Police is set to investigate an alleged fraud that may have ripped off dozens of students at a regional TAFE and potentially cost taxpayers millions of dollars in state subsidies.
In the latest scandal to hit the vocational education system, South West Institute of TAFE has asked police to examine a third-party contractor suspected of embarking on a shonky training operation designed to fleece large sums of government money.
The contractor ran an engineering course on the institute's behalf for about 140 people. But while the program attracted taxpayer-funded subsidies believed to be worth around $15,000 per student, it was later alleged to have failed to meet proper training standards in its course content.
Suspicions about the program emerged last year, when South West chief executive Mark Fidge, who was then working in the TAFE's corporate division, found a series of irregularities in the contract, prompting a number of broader investigations.
Mr Fidge said the matter was disappointing for the TAFE, which prided itself on providing quality programs, but added: "From an integrity point of view, we have demonstrated that we won't tolerate this sort of thing, and we're prepared to take this further if we need to."
However, the contractor at the centre of the alleged scam – who Fairfax Media has chosen not to name – claimed the course had been up to scratch and said she had no knowledge that the matter had been investigated by the TAFE, let alone referred to police.
"This is the first I've heard of it," she said. "Any training I did at South West passed audit – the institute advised us of that at the time."
South West TAFE has four main campuses spread across the coastal towns of Warrnambool, Hamilton and Portland.
News of the alleged rort comes only weeks after the government announced a $30 million crackdown on the vocational education and training system, which Skills Minister Steve Herbert said was designed to curb "the feeding frenzy of rogue operators taking advantage of government funding."
As part of the plan, the government has promised more on-site audits, closer scrutiny of qualifications, tougher contract conditions, and a ban on small operators from subcontracting training.
However, some remain unconvinced by the crackdown, with one victim of the latest alleged rort claiming that the education department had been sitting on the findings of the investigation for months.
The matter was referred to police only earlier this month, after Fairfax Media started to inquire about the case.
Mr Herbert declined to elaborate on the alleged fraud, other than to say: "The government takes this matter very seriously and we support South West TAFE's decision to refer the matter to Victoria Police. I understand the Department of Education and Training has been working with the institute to investigate this matter. As this is now a police investigation it would be inappropriate to comment further."
A department spokesman said the department had been supporting South West TAFE "to investigate a number of serious allegations that relate to historic practices uncovered during a regular audit in late 2014."