Australian universities are paying more than an estimated $250 million each year to unregulated middlemen for the recruitment of international students, despite widespread acknowledgement that a number of these agents are corrupt and deal in fraudulent documents, according to a Four Corners investigation.

The commissions paid by universities, which in just the past four years may have totalled more than $1 billion of public funds, are often not disclosed.

The Four Corners investigation, to be aired Monday night, has unearthed evidence that some major education agents in China, representing many of Australia’s most prestigious universities (including Sydney, Melbourne and the Australian National University), are colluding in the submission of fraudulent student applications.

And the universities have long-known they are dealing in murky waters.

• How to counter Islamic State’s propaganda
• ‘We shouldn’t pay for other people’s childcare’: senator
• What we’re not eating is making us stupid

In just the past 12 months, for example, the University of Western Sydney (UWS) has had to terminate the services of no fewer than four overseas agents because they had funnelled fraudulent applicants into the country.

A university spokeswoman confirmed the problem, adding UWS “took action to terminate agency agreements in response to inadequate Genuine Temporary Entrant (GTE) screening of applicants”.

Canberra University also told Four Corners it had “terminated agreements [with agents] due to poor performance or unethical behaviour”.

The revelations surface as the New South Wales Independent Commission Against Corruption (ICAC) warns universities are creating conditions that are “conducive to corruption” and forcing down academic standards.

ICAC has released a report into practices around foreign students entitled ‘Learning the Hard Way’.

Last week ICAC released a report entitled Learning the Hard Way, which raised the alarm about the ‘soft marking’ of international full-fee-paying students.

The report said universities had prioritised revenue over the protection of the quality and reputation of their degrees, and that their offshore businesses were driving the downward trend.

“The director of the international student office at one university in New South Wales indicated they were actively pushing into markets in India where document fraud is a known and serious problem,” the report said.

“For almost 30 years, they have experienced problems such as fake qualifications, questionable agent behaviour, visa-driven enrolments, nepotism in offshore campuses, loss of intellectual property to partners, unwitting involvement in offshore bribery, cheating and plagiarism, academics exploiting students and students offering inducements to staff.”

Barmak Nassirian, a Washington DC-based former associate executive director of the American Association of Collegiate Registrars and Admissions Officers, said the reliance on commissioned agents was part of a foreign student “feeding frenzy” among Australian institutions.

“I can’t think of a better manifestation of that tendency than an institution handing its name, its logo, its imprimatur, to a third party who doesn’t eat unless they send warm bodies to that institution,” Mr Nassirian told Four Corners.

Many students are also victims of the unregulated practices of offshore agents.

Most prospective students are completely unaware that the Australian university to which they are shepherded will pay thousands of dollars in commissions to their agent in return.

The code of conduct for US colleges, produced by the National Association for College Admission Counselling, warns against the payment of such incentives: “Members [colleges] should not provide [best practice] incentive compensation based on the number of students enrolled internationally,” the code states.

Usually, these clients are already charged a fee by these agents.

In China, Australia’s biggest market for students, the fee can range between $2,000 and $10,000, Four Corners has been told.

In 2010, major US consulting firm Zinch, reported that 90 per cent of agency-assisted applications to US colleges from China contained fraudulent documents.

No authenticity checks for application documents

Sources in both international offices and Chinese agencies have told Four Corners that only a small fraction of the documentary applications sent to universities and their bridging colleges are vetted for authenticity.

One source at a major Sydney university said: “Agents have more power over universities than they should. As soon as a big agent says, ‘why are you checking the signatures of students?’, recruitment [staff] do come to the enrolment team and say ‘don’t check signatures’ … we’re being dictated terms by our agents.”

The University of Newcastle (UON) has paid undisclosed commissions totalling almost $24 million to agents since 2010.

In recent years, Deakin University has terminated its relationship with two Vietnamese agents.

Its spokeswoman said this was because “they were not representing the University adequately and were ineffective in their role”.

The University of Newcastle (UON), which has paid undisclosed commissions totalling almost $24 million to agents since 2010, told Four Corners that it had also run into trouble with its offshore partners.

“In January 2014 UON terminated a contract with an agent as a result of an investigation that confirmed fraudulent documentation had been submitted by the agent as part of two student applications,” a UON spokeswoman said.

The university has also recently splurged on hospitality for its agents. Last year, its budget for entertainment soared from $7,850 to more than $36,000. Its spokeswoman explained that, in 2014, “the university hosted a major summit in Australia for its offshore agents, as well as summits in regional hubs across Australia”.

ICAC’s corruption-prevention director, Robert Waldersee, told Four Corners that one university had discovered some of its own employees had “personal and financial relationships with the agents they were supposed to be overseeing”.

“The university now has to rotate its managers to stop that corruption developing,” Dr Waldersee said.

Universities not reporting agent commissions in financial statements

Only 12 universities of the 40 public institutions around the country report the total commissions they pay their agents among other operating expenses in their annual financial statement.

Several universities also broke down precisely how agents are paid. The average incentive paid to agents by the Queensland University of Technology, for example, is 15 per cent of first year tuition. Macquarie University pays a range between 10 and 15 per cent and many others refused to disclose these details, claiming they were too commercially sensitive to be public knowledge.

Among those universities who wish to keep private details of the hospitality they have extended, or the commissions they have paid to agents, are RMIT University, the Australian Catholic University and the University of Melbourne.

RMIT spokesman David Glanz said “Thanks for the offer, but RMIT has no comment.”

And David Stacey, of the University of Western Australia, said “The University of Western Australia would like to decline the offer to comment.”

To produce an estimate of the total amount paid in agent commissions, Four Corners was forced to rely on a sample of 14 institutions which published, or otherwise nominated, unambiguous figures.

These total commissions from 2013, which ranged from just over $1 million to $12 million, totalled more than $90 million.

The average of those 14 institutions was $6.4 million.

If that average is indicative of all publicly funded universities in Australia, this means a total of more than $257 million was funnelled to agents via commissions in the year 2013.

The information provided by universities also suggests commission payments are rising.

Reported by Linton Besser, Peter Cronau and Hagar Cohen

Four Corners: Degrees of Deception, Monday 8.30pm on ABC TV.