Rowan Callick – Indonesian Embassy in Canberra is investigating claims by the Institute of Public Affairs that "taxpayer-funded Australian non-government organisations are supporting independence movements".

Don DCruz, IPA research fellow and editor of the Melbourne-based think-tank's NGO Watch Digest, writes in the latest edition of the IPA Review: "It is not surprising that pro-independence advocacy by Australian NGOs is viewed with suspicion in Indonesia, and may be hindering the further normalisation of relations between Australia and Indonesia."

He cited, in particular, Australian People for Health, Education and Development Abroad. The management committee of APHEDA includes Labor MP Laurie Ferguson, ALP president Greg Sword, and Sharan Burrows, president of the Australian Council for Trade Unions. Mr DCruz said that most of APHEDA's $5 million annual budget came from the government, and that in its annual report it talks about its "campaigns in support of independence in West Papua, Palestine and Western Sahara".

He said: "APHEDA and its Indonesian partners also led a strike against the Shangri-La hotel chain at the end of 2000 which resulted in civil disturbance with riot police called in."

A spokeswoman for the Indonesian embassy in Canberra said the issue was of concern. The embassy already had begun investigating activities of Australian NGOs in Indonesia, and would follow up the new claims from the IPA. "If they support independence for a part of Indonesia, that is their own opinion. But if they also operate in Indonesia and carry out activities that are against the law, that is something else, and we would express our concern, and ban those activities."

Bruce Davis, the director general of AusAID, said that funding to all Australian NGOs represented just over 6 per cent of total official aid. "All developmental NGOs that receive Australian Government funding must undergo a rigorous accreditation process, overseen by AusAID, which will only fund development activities and will not fund welfare, evangelical or political activities. AusAID's funding agreements require that NGOs strictly observe the laws in host countries where they work."

Mr DCruz cited Kirsty Sword, now wife of East Timor President Xanana Gusmao, as an example of "how committed activists can pursue their passions with little regard to the integrity of the aid agencies for which they work". Employed as a teacher by the NGO, Australian Volunteers International, she revealed on ABC TV's Australian Story that she had engaged in covert activities during Indonesian rule in East Timor.

Mr DCruz said this might lead some "to the conclusion that amateur espionage is an acceptable part of Australian aid work abroad". Mr Davis said that AusAID had "raised serious concerns about the conduct of Ms Sword, and sought formal confirmation from the chief executive officers of both AVI and the Australia Council for Overseas Aid that their agencies know nothing about the undercover activities of Ms Sword in Indonesia".

AusAID had reiterated to all accredited NGOs that "their contracts with the Australian Government preclude them from engaging in political activities in recipient countries".