A controversial government payment system wrongly diverted $700,000 in welfare money from vulnerable Australians to energy company AGL and helped prop up a Christian rehabilitation centre using gay conversion practices and exorcisms, Guardian Australia can reveal.

An investigation into Centrepay, which allows businesses access to a person’s welfare payments before they are deposited into their bank accounts, has found disturbing examples of misuse of a system that consumer advocates claim has become “a vehicle for financial abuse” and one Labor senator describes as “rife with exploitation”.

At least four rent-to-buy appliance companies that have been investigated and penalised recently for questionable conduct have also been allowed to continue to use the system to access the welfare payments of customers, many of whom are Aboriginal people living in remote areas.

The Guardian can also reveal that the Centrepay system helped to prop up a disgraced Christian drug and alcohol rehabilitation centre run by the Esther Foundation in Western Australia.

A WA parliamentary inquiry previously heard that Esther House, which has since closed, engaged in severe emotional and psychological abuse, “coercive and extreme” religious practices and LGBTQ+ suppression.

In February it issued an interim stop order for Urban Rampage, a clothing and homeware company that has stores in 10 remote Aboriginal communities, over concerns about how the financial capacity of its customers was determined.

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