A CRIMINAL investigation is under way into allegations that staff at the Lebanese consul-general's office in Sydney have been paid wages in cash while illegally pocketing Centrelink payments.

The revelations come just days after the consul-general, Robert Naoum, returned to Sydney agreeing to pay off his unrelated debts in return for an arrest warrant being withdrawn. Now federal police have been called in to examine claims that his office has been defrauding the Commonwealth.

"Propaganda against us" ... the Lebanese consul-general, Robert Naoum, back in Australia. An arrest warrant has been withdrawn. Credit:Jon Reid

It is alleged some staff, among more than a dozen at the Edgecliff office, collected welfare and, in at least one case, a dole payment. At the same time, the consul-general's office had not been paying tax, superannuation or workers' compensation for its locally engaged staff.

Some staff allegedly made a profit by selling cigarettes and alcohol bought within the diplomatic tax-free quota. It is claimed large sums of cash were sent from Australia to banks in Lebanon to avoid the scrutiny of authorities. But Mr Naoum told The Sun-Herald yesterday the allegations were just "propaganda against us".