Greg Ansley – Balibo sits astride a road weaving through the mountains of the far west of Timor-Leste (East Timor). To the north is an ancient Portuguese fort, its ramparts placed high on a peak as protection against attack.

On October 16, 1975, the invaders came, swarming past the fort from the west and into the village that has since become infamous as the launching pad for the Indonesian annexation of the tiny former colony – and for the execution of two television teams sent to cover the impending invasion. A sixth newsman was later shot in Dili.

The deaths of the Balibo journalists – two Australians, two Britons and a New Zealander – continue to be a diplomatic thorn in relations between Australia and Indonesia: more so since a Sydney inquest found conclusive evidence of deliberate murder and lies by Jakarta, and complicit silence by Canberra.

Documents retrieved in New Zealand under the Official Secrets Act and published in a book by activist Maire Leadbeater show similar complicity in Wellington, following a policy on both sides of the Tasman to support Indonesian annexation of a newly independent former Portuguese possession and to knowingly accept lies.

The evidence given to the inquest has been sensational and potentially damaging to the shaky relations between Jakarta and Canberra, raising the prospect of war crimes charges against two former military officers. One serious diplomatic incident has already occurred through attempts to force visiting Jakarta Governor and former special forces General Sutiyoso to appear before the inquest.

Indonesia has indicated it will take no notice of any finding or charges laid as a result of the coronial investigation, following the issuing of a warrant in March for senior politician Yunis Yosfiah, another former special forces commander allegedly involved in the murders.

Foreign Minister Hassan Wirajuda further said the Australian Government had guaranteed that Jakarta had no cause for concern over the inquest.

Australian counterpart Alexander Downer responded on ABC radio: "Well, I wouldn't put it in those terms. We've had a very brief discussion about this quite some time ago, not that it wasn't anything to worry about, but this was an investigation into events that occurred over 30 years ago and obviously we will just take it as it comes."

But Australia's role in the independence of East Timor remains a sensitive and painful issue in Jakarta, where many influential Indonesians continue to regard the severing of the province as an Australian assault on its territorial integrity. The provision of temporary visas for West Papuans seeking political asylum is further fuel, and any Australian move to try Indonesians for war crimes would inflame passions.

This was emphasised after the botched attempt to have the visiting Sutiyoso appear before the inquiry, in which police used a master key to gain access to the Sydney hotel room of a man who has ambitions to succeed President Susilo Bambang Yudhoyono in two years' time. Demonstrators attacked the Australian Embassy in Jakarta.

The significance of the execution of the newsmen, now known as the Balibo Five, extends beyond their brutal murders.

The deaths were an inevitable consequence of Australian and New Zealand policies supporting the annexation, and the associated diplomatic necessity of accepting Indonesian lies.

Mark Tedeschi, special counsel assisting Coroner Dorelle Pinch, described the chain of events as a successful Indonesian plan to compromise Canberra's reaction to the invasion – "a masterful power play worthy of an international chess grandmaster, using Australian leaders and departmental officers as their pawns".

Leadbeater's research, published in Negligent Neighbour: New Zealand's Complicity in the Invasion and Occupation of Timor-Leste, shows Wellington was trapped as firmly as Canberra by Indonesian manipulation.

The official version of the deaths of the Balibo Five – upheld by five Australian inquiries under both Labor and Conservative Governments and repeated this year by Jakarta – is that they were killed in crossfire between Timorese and Indonesian forces in the town square.

For years Australia and New Zealand also claimed to have not known in advance of the details of the expected Indonesian invasion, to have not known that the news teams were in Balibo and to have not heard of their deaths for some time afterwards.

Those killed were Channel 7 reporter Greg Shackleton, 27; New Zealand cameraman Gary Cunningham, 26; sound recordist Tony Stewart, 21; Channel 9 reporter Malcolm Rennie, 28; and cameraman Brian Peters, 29.

On December 7, 1975, the day after the final invasion, Indonesian soldiers shot Australian reporter Roger East in Dili, the Timorese capital. East had written a story describing the execution of the Balibo Five from eyewitness accounts, and was executed on the waterfront. His death has never risen above the diplomatic horizon, nor been pursued by Canberra.

The real facts surrounding the Balibo Five and Australian and New Zealand complicity in the annexation of Timor have been slow surfacing. But they have been dramatically confirmed in the Sydney inquest, convened after New South Wales officials finally accepted that British-born Peters was a legal resident of Sydney at the time of his death.

The witnesses included former members of the Indonesian military; former Labor Prime Minister Gough Whitlam; his Defence Minister of the day, Bill Morrison; members of a royal commission into Australian intelligence services who saw intercepts of Indonesian communications confirming the killings; and other former senior intelligence and foreign affairs officers.

Their evidence made it clear Australia had advance warning of the invasion, that Canberra knew the newsmen intended to travel to Balibo - Whitlam described them as "culpable" for failing to heed his warnings against travelling there – and that despite denials, knew of their deaths within hours.

Senior intelligence and foreign affairs officials confirmed that electronic intercepts by the Defence Signals Directorate had recorded Indonesian messages reporting that the journalists had been "completed", that this news had been passed immediately to senior Defence and Government officers – including Whitlam's office – and that the most senior officers had no doubt the newsmen had been executed on high-level orders from Jakarta to prevent coverage of the invasion.

Tedeschi told the inquiry Jakarta had deliberately squeezed Canberra into a corner: "The Indonesians gave the Australian Government advanced warning – through absolutely specific, detailed advanced warnings – of what they were intending to do in Balibo and [the nearby town of] Maliana. "The plan depended on the Indonesian Government and the Indonesian military being able to maintain the facade in public, particularly for the benefit of the Australian public, that these troops were not involved in the deaths of the journalists.

"The whole gambit, however, depended upon no reliable news getting into the public arena about an Indonesian involvement in the attacks on Balibo, and in particular no film footage."

The eyewitness accounts of the newsmen's deaths are harrowing. Timorese forces had withdrawn from Balibo, and the Five had surrendered to approaching Indonesian troops.

One was attacked and fell down in the town square; three were shot on the orders of then-Captain Junus Yosfiah – who joined in the slaughter – after being herded back to a building known as the "Chinese house"; the fourth hid in a bathroom and, after emerging on the threat of a grenade attack, was stabbed to death.

The bodies were dressed in Portuguese uniforms and photographed with weapons to maintain a fiction of resistance, before being burned repeatedly over several days. Their remains were buried in a single grave in Jakarta at a funeral attended only by Australian diplomats.

New Zealand's response to the annexation and the execution of the Balibo Five mirrored the Australian facade of ignorance and denial.

Leadbeater's research shows Indonesia regarded New Zealand as a trusted friend in its plans to annex East Timor. In 2002, then-Foreign Minister Phil Goff admitted: "Australia, the United States and New Zealand to varying degrees explicitly indicated to Indonesia acceptance of its intention to invade."

New Zealand was privy to detailed military intelligence of these intentions – much of it given to Canberra by Jakarta – and shared Canberra's concern at the emergence of a potentially unviable and unstable independent East Timor.

Despite compelling evidence of overwhelming Timorese opposition to incorporation into Indonesia, Wellington supported the move conditional on popular acceptance.

Throughout, Wellington knew that annexation was to be by military invasion rather than invitation, despite demonstrated control by the independence movement Fretilin after Portugal's withdrawal.

Specific details of the military build-up on the border – including the identification and positioning of brigades, artillery and armour amassed for amphibious assault, and the infiltration of special forces in civilian clothes – was passed to Wellington by its defence attache in Jakarta ahead of the attack on Balibo.

Brian Lynch, the head of Foreign Affairs' Asian section at the time of the invasion, told Leadbeater Wellington's Jakarta mission had welcomed the intended annexation but advised New Zealand to be more circumspect than Australia: "New Zealand had a reputation to uphold as a country that had strongly supported self-determination for Pacific Island states."

On October 17, Canberra advised Wellington Jakarta had given notice of a full-scale invasion of East Timor, initially by 800 troops through Balibo, Maliana and Atasabe. Covert infiltration of border areas had already begun.

When news of the deaths of the Balibo Five emerged, Wellington ducked for cover. Despite the execution of a New Zealander, briefing notes for then-Prime Minister Bill Rowling included Cunningham as an afterthought, advising Rowling, if asked, to say only that he had made inquiries of Canberra and Jakarta.

Leadbeater reports that when Australia was coming under pressure from its journalists, New Zealand foreign affairs officials advised their Minister to lay low.

Their advice was "there would seem to be no clear-cut case against Indonesia for any specific violation of international law" and therefore no need for New Zealand to take action. To do so, they argued, would harm relations with Indonesia.

They also said Cunningham was an Australian resident employed by an Australian organisation, and a member of the Australian Journalists Association.

Although he was a New Zealand citizen, his close family were resident in Australia: therefore the conclusion was reached that there would be "no necessity for New Zealand to become involved in the dispute".

Now the past is catching up.

[Negligent Neighbour: New Zealand's Complicity in the Invasion and Occupation of Timor-Leste, by Maire Leadbeater (Craig Potton Publishing, RRP $34.99).]