ICAC says universities should consider key initiatives to reduce corruption risks in international student industry

Thursday 16 April 2015

The NSW Independent Commission Against Corruption (ICAC) says that universities in NSW should consider a range of key initiatives including separating the academic compliance and incentive functions of their international student offices to reduce the risk of corruption.

In a paper released today, Learning the hard way: managing corruption risks associated with international students at universities in NSW, the Commission identifies several corruption risks created by universities' international student businesses, and puts forward 12 key corruption initiatives to help the universities manage them.

The Commission says that academics can feel pressure to forsake their role in enforcing compliance with academic standards for the financial good of the faculty in the competitive environment of the international student market. "But to intertwine compliance and profit rather than separating them, and to reward profit over compliance, can be conducive to questionable and corrupt behaviour," the paper says.

The Commission notes that the number of fee-paying international students at universities in NSW has increased 13-fold since 1988. With around 17% of university operating revenues coming from international student fees, profits from the international student industry have become central to broader funding of the universities' activities.

The Australian international student industry has had to compete increasingly with universities from around the world, while the growth in the global supply of university places is outstripping the growth in the number of students with suitable academic capabilities and adequate English-language proficiency.

In the search for international students, some universities in NSW are entering markets where document fraud and cheating on English-language proficiency tests are known to exist. Some universities are using up to 300 local intermediaries or agents to market to and recruit students, resulting in due diligence and control challenges.

This has resulted in a gap emerging in some courses between the capabilities of many students and academic demands. "Students may be struggling to pass, but universities cannot afford to fail them," the paper notes.

Other pressures include those on staff within universities in NSW to find ways to pass students in order to preserve budgets and those created by an increasingly competitive market that makes recruitment targets difficult to meet.

The ICAC paper says that these pressures are conducive to corruption. "The gap between student capabilities and academic demands increases the likelihood that students will offer inducements to academics in order to pass courses and, conversely, makes students more vulnerable to improper demands from academics," the paper states. "With universities in NSW financially dependent on the success of international students, academics may be encouraged to admit students they would otherwise reject, to turn a blind eye to cheating and to mark the work of poor-performing students favourably to enable them to pass."

The Commission notes that there are no simple solutions to the problems created by a university's reliance on revenues from international students who struggle to meet the academic standards of the universities that recruited them. There are, however, a number of initiatives that have been taken by various universities that can ameliorate pressures created by the student capability gap. Some of the 12 initiatives identified by the Commission that universities in NSW should consider adapting and adopting as appropriate to their organisations include:

• separating the compliance function from the business development function where feasible, which may include moving the admission functions out of international student offices that are responsible for marketing and recruitment and limiting the impact of international students numbers on faculty budgets
• restricting the freedom of academics to enter into binding agreements with overseas agents and partners on behalf of the university without considering the full cost and risk of such agreements
• considering the full costs associated with international students of different capabilities when making marketing decisions
• limiting the number of overseas agents with which the universities work, where possible
• increasing due diligence on and monitoring of agents and partners, particularly focusing on the use of fine-grained data analysis of student issues that can be linked to markets, agents and partners.

In the course of this research, the ICAC met with representatives from all publicly-funded universities in NSW as well as two interstate universities. More than 40 academics and administrators with significant experience in teaching and administrating international students were interviewed, along with university risk and audit staff, senior staff from international student offices, pro-vice chancellors with responsibility for international students and relevant Australian and NSW government agencies.

Learning the hard way: managing corruption risks associated with international students at universities in NSW

Media contact: ICAC Manager Communications & Media, Nicole Thomas, 02 8281 5799 / 0417 467 801