The Australian Administrative Appeals Tribunal is hearing an application by independent senator Rex Patrick, who is seeking the release of previously secret cabinet documents about Australia's dealings with Timor-Leste following its 1999 independence vote, The Guardian newspaper reports.
As part of the case, Philip Dorling, a then Foreign Affairs Department officer and adviser to shadow foreign affairs minister Laurie Brereton, has filed an affidavit recalling a private conversation he had with Downer on August 31, 2000, during an RAAF flight from Dili to Maroochydore.
Dorling recalls Downer speaking of the Second World War, describing Winston Churchill's mistakes and suggesting the war "could have been brought to a more rapid and victorious conclusion" if he had been in Churchill's position.
According to Dorling, Downer spoke of the importance of signals intelligence to the allied war effort and remarked that "clandestine intelligence gathering" remained vital for diplomacy.
He then recalls Downer saying: "You know. There's not much back there [in Dili] we don't know. We know what they're saying about Laurie. They're an open book to us."
Dorling, who went on to become a journalist and now works in Patrick's office, made a contemporaneous handwritten note about the conversation, which has also been filed to the tribunal.
He told the tribunal he had heard concerns from Timorese leaders José Ramos-Horta and Joao Carrascalao before his conversation with Downer. Dorling said they had expressed concerns that they were the subject of an extensive electronic surveillance campaign, mounted by Australia.
"I interpreted Mr Downer's remarks, in the context of a discussion of the value of signals intelligence to diplomatic operations, as a measure of confirmation of the concerns expressed by Mr Ramos-Horta and Mr Carrascalao," Dorling told the tribunal.
At the time, Timor-Leste was not yet formally an independent nation. It was being governed by the United Nations Transitional Administration in East Timor after a successful independence ballot in 1999.
Report by The Guardian.
Downer told Guardian Australia he had no recollection of any conversation with Dorling 22 years ago.
But he said it was "particularly thick" for people to think Australia would send thousands of peacekeeping troops to Timor-Leste without learning as much as possible about the environment into which they were being deployed.
"What I do recall is we had thousands of troops in East Timor at that time and obviously we did our best to understand the environment in that country," he said.
"Your questions are just extraordinary and there must be something in the water in Australia that makes it hard for some people to understand why, when you deploy thousands of troops to a neighbouring country, you need to have extensive information on that country."
Patrick is seeking two archived documents, dated August 29, 2000, and September 4, 2000, which were not released under the usual 20-year rule due to fears they would compromise relations with a current government.
He has already secured the release of parts of the documents which show the Australian cabinet in 2000 was preoccupied with the interests of big oil and gas corporations, fearing the independence of Timor-Leste could disrupt access to the vast underwater reserves in the Timor Sea.
During subsequent negotiations in 2004 over the Timor Sea maritime boundary, Australia infamously bugged the government offices of Timor-Leste to gain an upper hand. Witness K and his lawyer Bernard Collaery were charged in 2018 for their alleged role in making the operation public.
Collaery is still awaiting trial.
Patrick said the evidence suggested Australia had been spying on Timor-Leste "from the moment they became independent".
He said Timor was a "young, fragile, inexperienced country that was desperate for oil and gas revenues" to lift itself out of poverty.
"They needed a friend to help them build their new nation," he said. "And what did we do? We spied on them to gain an advantage for oil and gas companies, to steal their resources.
"I'm a former submariner. I know the intelligence game. I've never come across intelligence being collected and used for commercial purposes. I've never seen an intelligence product being used to defraud a friend."
Xanana Gusmão, a former president of Timor-Leste, has also given evidence in support of Patrick's attempts to secure the cabinet records.
Gusmão said the release of the documents would "be a positive outcome" for relations between Australia and Timor-Leste.
"Any continued secrecy relating to those events only serves to create a further sense of suspicion and impropriety between neighbours," he said.
He said evidence showing the spy mission took place was already on the public record and Timor-Leste generally believed the claims to be true. Gusmão recalled a UN diplomat Sergio Di Mello telling him in 1999 or 2000: "Whisper what you have to say, otherwise Australia will hear our conversation."
The case continues before the Australian Administrative Appeals Tribunal.
The revelations came on the same day that Timor-Leste's parliament passed a resolution calling for Australia to drop the prosecution of Collaery and quash the conviction of Witness K, according to local media.
Alliance Against Political Prosecutions co-convenor Kathryn Kelly said the resolution was a "significant event".
"It is clearly not in the national interest for the prosecution to continue if this is the Timor-Leste government's view," she said.
Collaery's case was also back in the Australian Capital Territory supreme court on February 9, where the government was seeking to convince a judge to let it file super-secret evidence, which Collaery would not be able to see, as part of its argument that the open hearing of the trial posed a national security risk.