SYDNEY, March 6 (Reuters) - Australia had no evidence that a dual Australian-Israeli citizen and suspected Mossad spy, who died in jail in Israel in 2010, had been involved in the assassination of a Hamas arms procurer in Dubai, Foreign Minister Bob Carr said on Wednesday.
Carr also said Australia had found no evidence of the misuse of any of the Australian passports taken out by the man, Ben Zygier, who had changed his name several times and obtained new Australian passports each time.
However, Carr said the Zygier case raised unresolved questions about Australian passports held by dual citizens who work for a foreign government, and said Australia would lodge the strongest possible protest if it was found that Israel had used an Australian passport for spying.
"We have our own sources. None of them have information at this time that one of his passports was misused. But we are very alive to the possibility," Carr said as he released a Department of Foreign Affairs and Trade report into the case.
"Certainly we would regard it as intolerable that any government would make use of Australian passports for intelligence-gathering purposes," he told reporters in Sydney.
Zygier was arrested in February 2010. At the same time, Australia had complained to Israel after it emerged Australian passports had been used in a mission to assassinate a Hamas arms dealer in Dubai, which the Gulf emirate blamed on Israel.
On Feb. 19 this year, Israel confirmed for the first time the affair concerned Zygier, who had earlier been named in an Australian Broadcasting Corporation television report.
One of Zygier's lawyers later linked him to Mossad, the Israeli spy agency.
The Zygier case remains the subject of gag orders in Israel.
A judicial inquiry in Israel found Zygier, 34, hanged himself in December 2010 with a sheet tied to the bars over a window in the bathroom of his heavily guarded cell.
Carr ordered an investigation into the case last month, saying he would ask Israel's government for details of how Zygier, a father of two, died in a supposedly suicide-proof cell. His death fuelled conspiracy theories in both countries.
Carr said Israel had not responded to requests for information, nor explained the lack of a response. Australian officials and intelligence agencies still did not know why Zygier was jailed and what charges he faced, except that the charges carried a maximum penalty of up to 20 years' prison.
Israel has said he was detained under an alias to avoid serious harm to national interests.
Carr said Zygier had lived in Israel for 10 years and confirmed he worked for the Israeli government, although he did not say whether he worked in Israeli intelligence.
"There's a lot about this that is odd," Carr said.
Carr's inquiry found shortcomings in the handling of the case by Australian authorities but noted that Zygier had received 50 visits from his family and lawyer between the time of his arrest and death.
No requests for consular assistance had been received, the report found.
Carr had initially said the Australian government had not been informed of Zygier's incarceration. He later acknowledged Australia's chief intelligence agency had been informed about the issue as early as February 2010.
Australia's independent Inspector General of Intelligence and Security said on Wednesday there was no evidence the spy agency had done anything wrong and there would be no formal inquiry its role. (Writing by James Grubel; Editing by Paul Tait)