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Australia on Wednesday admitted for the first time that a man found hanged in a Tel Aviv jail worked for the Israeli government, but stopped short of confirming he was a Mossad spy.
Dual Australian-Israeli citizen Ben Zygier, known as "Prisoner X", died in 2010 in an allegedly suicide-proof cell with Israel going to extreme lengths to cover it up, sparking claims by Australian media that he worked for Mossad.
In releasing a report into his department's handling of Zygier's imprisonment, Foreign Minister Bob Carr said it was a complicated case.
"Mr Zygier went off to live in another country, for 10 years, took out citizenship of that country, worked for its government," he said.
"And if reports are to be believed, he worked for one of its intelligence services. That's not something I can deny or confirm. You can draw your own conclusions."
That Zygier, held in a high security prison under continuous surveillance, managed to hang himself has fed conspiracy theories.
Last month, ABC television said Zygier, 34, was arrested after giving Australian intelligence officials a comprehensive account of a number of Mossad operations, which Israel denied.
Australian intelligence was first advised of Zygier's arrest in February 2010, around the time Dubai police accused Mossad agents of carrying out a hit on a top Hamas militant using western passports -- four of them Australian.
Carr said there was no evidence of a link between Zygier and the Dubai case.
"The advice that I got is that nothing in the Zygier file, nothing in the Zygier record, has him working in Dubai," Carr told journalists.
But he said he was awaiting the outcome of Israeli inquiries, saying they could shed light on the unanswered question of whether Australian passports were used by dual nationals in their work for foreign governments.
Reports have suggested that spy agencies favour recruits holding Australian passports because they arouse little suspicion.
"Certainly if Australian passports were misused here, that's something we are forced to take very seriously because no country can live with any erosion of the integrity of its passport system," Carr said.
"If the world thinks that Australian passports are routinely debauched by another country, then Australians presenting their passport somewhere in the world could well face their lives in danger. We can't live with that.
"If that's confirmed, we'll be registering the strongest protest."
In Australia's report into the Department of Foreign Affairs and Trade's (DFAT) handling of the case, Carr criticised a lack of clarity in government decision-making over consular responsibilities.
"As for our relations with Israel in this matter, Israel did provide the family access and visits by his legal representation. There were no complaints from his family or lawyer about access," he said.
"We did seek details about the charges against him but the Israeli government declined to provide this. It was covered by a gag order in Israel.
"We await the outcome of, apparently, several inquiries being carried out in Israel. We reserve our right to seek further information from Israel," Carr added.
Carr said Australia's prime minister at the time, Kevin Rudd, and then foreign minister Stephen Smith, were not briefed on Zygier's arrest, and DFAT failed to follow-up on the case.
The report recommended any Australian agency that becomes aware of the detention of an Australian citizen tell the relevant ambassador or high commissioner, unless the foreign minister grants an exemption.
Zygier, who also went by the names Ben Alon, Allen and Burrows, was raised in Melbourne but moved to Israel about a decade before his death.
After he died, his body was returned to Australia.