Dili – Australian soldiers marred East Timor's independence day by stealing flags from outside a Dili hotel, an Australian businessman claimed.

Hotel Dili manager Gino Favaro also accused the six soldiers of threatening a local security guard with a rifle butt.

Favaro wrote a letter of complaint to the Australian military today over the alleged incident at Hotel Dili at 11.45pm yesterday, East Timor's independence day.

Favaro, who donated a giant East Timorese flag that was the centrepiece of independence celebrations on Sunday night, said the security guard told him Australian soldiers pulled up in a vehicle and stole East Timorese, Australian, Northern Territory and Italian flags from the hotel's front fence.

The guard reported that a soldier raised the butt of a rifle to his stomach when he tried to stop them.

"These people remember the Indonesian time and when a soldier raises a rifle, they get scared," Favaro said. "These flags were put there for the benefit of the East Timorese and what happened is ungrateful behaviour on a very special occasion."

Favaro said he wanted the four flags returned. The allegations were being investigated, Australian defence officials said.