More than $45 million has allegedly been stripped since 2000 from the nation's largest Islamic school by the peak body representing Australian Muslims in a brazen series of transactions chalked up as inflated rent charges, interest-free loans and payments for "past services", according to court documents.

In a rift that threatens to engulf senior members of Australia's Muslim community, Sydney's Malek Fahd Islamic School is taking legal action against the Australian Federation of Islamic Councils, demanding it repay tens of millions of dollars in "gratuitous" withdrawals made during the past two decades.

The school, which has about 2400 students and 300 staff, is battling desperately to keep $19m in annual federal funding that was cut when the school's strong financial links to AFIC were revealed. In documents tendered to the NSW Supreme Court and ­obtained by The Australian, the school alleges AFIC took $45.14m from its accounts over 15 years from 2000.

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