Lentil As Anything founder suspected of serious misconduct says leaked report

He’s the founder of the social enterprise that for two decades has fed the needy and pioneered a popular “pay-as-you-feel” restaurant model based on ethical principles.

But Shanaka Fernando, the founder of Lentil As Anything, is now suspected of serious misconduct and mismanagement after he allegedly used the charity for personal financial gain, misused government grants and hired a friend as a “ghost” employee.

Shanaka Fernando, founder of Lentil as Anything at the restaurant in Abbotsford.Credit:Angela Wylie

A confidential report into the charity by forensic accountants RSM, seen by The Age, alleges that $11,279 of the registered charity’s money might have been improperly used on a range of Mr Fernando’s private expenses including paying his electricity, water and gas bills, and travel.

Mr Fernando has denied all claims, saying in a written response: “After 21 years, I live with no assets or any savings. I find the tone of the accusations you have conveyed as hurtful and ultimately a vicious attack on a service that has provided for many in their time of need.”

However, the accountants found that the state of the accounts made it difficult to trace money flows. Lentil’s financial controller, Matt Pettit, was quoted in the report saying: “We were not able to quantify what he has exactly in dollar terms. How his benefits are specifically broken up, I don’t know.”

The report, commissioned by the restaurant’s former board, found that record-keeping was so poor that it was unable to determine conclusively “for or against improper or illegal conduct at Lentil”. “The existence of many irregularities suggests that further investigation is necessary”.

“I believe that society sometimes confuses governance with patriarchy.”

Whistleblowers referred to in the report have raised concerns that Mr Fernando supplemented his $80,000 a year salary package, paying rent and child support from the charity’s money. Mr Fernando insisted his pay was consistent with his agreed salary package which included benefits such as utilities and rent.

The report details further whistleblower allegations that personal expenses for trips by Mr Fernando to Finland and Sri Lanka were at least part paid for by Lentil as Anything. Mr Fernando denied this and provided a screenshot of a personal bank transfer of $7070 from 2019 that he said paid for those flights.

The RSM report also drew attention to a $26,000 state government grant for solar panels which was used as general revenue with the panels later funded through a chattel mortgage. Mr Fernando admitted the funds were “inadvertently” used to pay staff wages, but said the panels were later financed for the “exact cost.”

A friend of Mr Fernando was also listed in accounts as being engaged as a grade three cook and receiving $21,663 in wages. However, a whistleblower alleged the man did not work at Lentil as Anything. Mr Fernando denied this.

Lentil as Anything in Abbotsford.Credit:Rebecca Hallas

Mr Fernando also denied a claim by a whistleblower that fraudulent contracts were entered into with hire purchase companies, on top of previously reported unpaid superannuation and underpayment of staff wages.

The alleged conduct of Mr Fernando, a former bankrupt who was once threatened with jail over 52 unpaid traffic fines, has been reported to both the corporate and charities regulators. Both the Australian Securities and Investments Commission and the Australian Charities and Not-for-profits Commission said they were unable to comment on complaints or possible investigations.

The Age has interviewed nine current and former Lentil as Anything figures ranging from those with senior roles to volunteers. People who have worked closely with Mr Fernando describe a complex character.

“He’s an extraordinary man … a gentle, friendly man,” said one former friend who spoke on the condition of anonymity as he feared professional repercussions. But when he was challenged he became uncomfortable and could become a “bully”. Another volunteer said he had “delusions of grandeur”.

Lentil as Anything’s Abbotsford restaurant.Credit:Luis Enrique Ascui

Mr Fernando’s style is unusual, reflecting Lentil’s alternative, hippy, ethos. He lists himself as an “Elder” on emails and is listed as an “Ambassador” and “Aesthetics Consultant” on an unsigned employment contract. He operates, in effect, as a chief executive. High-profile lawyer Julian Burnside and other Greens Party-linked figures have been used in some of his internal battles at Lentil as Anything.

He has collected around him a band of devoted supporters, many of whom are vulnerable and have been helped by Mr Fernando. They are among his strongest supporters, prompting some to describe him as a “cult leader”.

One former board member received an email from a Mr Fernando supporter that read. “We have never met, But I would like to say that you have become like the CANCER that took my families lives.”

Even his critics acknowledge that Lentil has been a lifeline for many people who can’t afford to eat and has given work and succour to the disadvantaged. It has become a hugely popular series of restaurants among people who believe in its social purpose, and Mr Fernando, a migrant from Sri Lanka, has been central to it. It has become a sizeable enterprise, which turns over more than $3 million a year at its restaurants in Abbotsford, St Kilda, Thornbury and Newtown.

The forensic accountants’ report was commissioned by the former board, headed by Professor Paul Komesaroff, which quit in its entirety under pressure from Mr Fernando’s supporters last November after removing Mr Fernando as a director.

Professor Komesaroff declined to comment. Mr Fernando, who was removed from the board, has since rejoined and was appointed by new director and new chair, Megan Evans. The new board offered a statement strongly supporting Mr Fernando and saying he “receives a wage that in no way reflects his value to the company.”

Mr Fernando said the forensic report and the people who commissioned it appeared to be “prepared in an attempt to denigrate me and the work of Lentil rather than with the aim of supporting Lentil As Anything or the wider community.”

The Sunday Age reported last month that Lentil’s faced regulatory action from both the Fair Work Ombudsman following allegations of wage underpayment and the Australian Tax Office for a large, unpaid superannuation bill. It had also left a trail of unpaid taxes and creditors and was on the brink of insolvency before being bailed out by a large GoFundMe campaign.

The RSM report alleges that Lentil’s former accountant, Canterbury Wealth Management said Mr Fernando had been long aware of the underpaid superannuation but had kept the information from the board and deliberately left it unpaid.

“It was one of the key areas that allowed Lentil to keep operating because there was $100,000 that was unpaid (in super),” one senior Lentil employee told RSM.

Senior people interviewed by RSM described Mr Fernando as having an “anti-governance philosophy” and that “he didn’t believe in superannuation.”

Mr Fernando rejected this and blamed the former accountants. “I don’t have an anti-governance stance. I’m in fact passionate about governance. Governance that is inclusive, adaptable and harnesses the participation of all involved … I believe that society sometimes confuses governance with patriarchy.”

“He doesn’t believe in budgets, we shouldn’t do conventional stuff,” said one former senior Lentil figure of Mr Fernando’s views. “We should dance more (but) many people weren’t paid their super or wages.”

The latest blow-up is not the first at Lentil of Anything with a rapid turnover of board members over the last five years, according to ASIC records. Mr Fernando has been on and off the board several times.

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