New South Wales' Independent Commission against Corruption is investigating an allegation by a lecturer that the University of Newcastle, near Sydney, covered up plagiarism among students based in Malaysia.
The move followed a warning from federal education minister Brendan Nelson that claims that universities favoured fee-paying foreign students could only harm Australia's A$5 billion-a-year (£2 billion) export education industry. Other academics have previously claimed that foreign students were being treated more leniently because they paid fees.
Dr Nelson called for a second investigation into the allegation by Ian Firns, a contract lecturer who taught an MBA subject at the university's partner institution in Malaysia, who gave zero marks to 15 students whose assignments had been plagiarised from the internet. He alleged that when he alerted the Graduate School of business, the essays were reassigned to another lecturer who awarded the students higher marks. Some were awarded distinctions.
One of the students involved has since graduated and the university says he cannot therefore be disciplined.
The university set up an inquiry into the incident after Mr Firns went public with his allegations. The inquiry was conducted by an academic at the University of Western Sydney, but it did not examine the plagiarism issue or recommend disciplinary action against staff. Mr Firns then referred his allegations to the commission.
Malaysian students undertaking courses with the university say they want the matter cleared up because Newcastle's reputation with local employers has been seriously affected.
Newcastle's Graduate Business School has allied with Institut Wira to offer its MBA and masters in marketing and human resource and industrial relations in Malaysia, drawing on local teaching staff supported by guest lectures by academic staff from the graduate school.
Newcastle vice-chancellor Roger Holmes initially rejected Dr Nelson's call, but last week his governing council indicated it was likely to order a follow-up inquiry into the affair. In an email to staff, Professor Holmes says he is committed to ensuring Newcastle's "excellent reputation both in Australia and overseas" is upheld.
Professor Holmes adds: "Plagiarism is something that all universities have to deal with, and let me assure you we will not tolerate it at any level."