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Foreign Minister Bob Carr admitted Thursday Canberra knew an Australian had been detained by Tel Aviv in 2010 for national security offences, as media suggested he may have been held for treason.
Carr's revelation, following an earlier statement that he only became aware of the man's incarceration after his death, came after Israel confirmed it imprisoned a foreigner in solitary confinement on security grounds that year.
The man, identified by Australian media as Mossad agent Ben Zygier, committed suicide in a jail near Tel Aviv in a case the Israeli government went to extreme lengths to cover up, imposing media gagging orders.
Israel has not revealed the identity of the so-called "Prisoner X" nor the charges against him, but The Australian newspaper suggested he was detained for treason.
It cited Israeli Army Radio as saying: "Why was he interned? The suspicion is because of treason against Israel."
The newspaper's foreign editor, who interviewed Israeli Prime Minister Benjamin Netanyahu last year, said for a Mossad agent to end up in jail something serious must have happened.
"If a former Mossad agent has ended up in an Israeli prison, this can only indicate that something has gone terribly wrong," Greg Sheridan wrote in an opinion piece.
"Apart from the inherent sensitivity of any information involved in the case, the Israelis would hate to admit publicly a problem with one of their agents."
The Sydney Morning Herald, meanwhile, reported that Zygier was being investigated by Australia's overseas espionage agency ASIS, which suspected him of using his Australian passport to spy for Israel.
The Herald claimed he was one of at least three dual Australian-Israeli citizens who emigrated to Israel in the past decade and were being probed.
It said that in each case the men used the passports to travel to Iran, Syria and Lebanon -- countries that do not allow Israelis to enter.
When the newspaper confronted Zygier in early 2010, he angrily denied he worked for the Israeli security agency.
"I have never been to any of those countries that you say I have been to," he said at the time.
"I am not involved in any kind of spying."
Carr, who has ordered a review of the case, told a parliamentary committee the government was informed in February 2010 through intelligence channels that Israel had detained a dual Australian-Israeli citizen.
"And they provided the name of the citizen, in relation to serious offences under Israeli national security legislation," he said.
He added that Canberra sought assurances that his legal rights would be respected and that he was not being mistreated.
"At no stage during his detention did the Australian government receive any request from the individual or his family to extend consular support," he added.