Paul Toohey – A large amount of cash was allegedly found on the body of rebel soldier Alfredo Reinado after he was shot dead in President Jose Ramos Horta's compound in East Timor last month.

"It was not $29,000. It was not $31,000. It was exactly $30,000, in $US100 notes," said a senior East Timorese government source.

The apparent discovery of the new bank notes by a guard searching the dead rebel has renewed speculation that Reinado had powerful backers, although his lawyer, Benny Benevides, does not believe it.

"After he was shot, I am suspicious someone put money in his pocket," Mr Benevides said. "It is so easy to blame him that he was an actor on behalf of masterminds. He had no money at all – for two years he had no money. I was told the maximum he had in his pocket that day was between $20 and $50."

Reinado was close to Angelita Pires, a joint Australian-East Timorese citizen who was with him until 11 o'clock the night before his deadly dawn visit to Mr Ramos Horta's compound. She denied giving Reinado money.

Yesterday, she would only repeat what she has already told an investigating judge. While she had gone to see Reinado the night before, she said, it was to give him a mobile phone as a "Valentine's Day gift".

Ms Pires said the investigation into events of February 11 were moving fast and would see her fully exonerated, but she was forbidden from discussing the case.

Reinado, who led a band of fugitive former soldiers called "petitioners", was shot dead during an assault on Mr Ramos Horta's villa outside the East Timor capital, Dili. The President was shot several times and continues to recover in Darwin hospital.

Ms Pires spent most of her life in Australia and had in recent months acted as a representative of Reinado. The Australian-led International Stabilisation Force said in a statement it had met her "in a public place in Dili" in January as a conflict-avoidance measure. The ISF said it had used her contact with Reinado to ensure his men and the ISF knew each other's general movements, and added that she was "not a paid informant of the ISF and no money or gratuities were ever passed to Ms Pires".

Prime Minister Xanana Gusmao and Mr Ramos Horta hold Ms Pires responsible for mucking up negotiations in early December last year, which could have seen Reinado surrender.

In that planned meeting, military heads and Mr Gusmao had arranged for Reinado to come to Dili at 8am. Mr Ramos Horta was on standby to attend and ratify documents as the meeting concluded. They waited until midday for Reinado.

"Then Angelita Pires called and said, 'He's not coming'," said the source. "The Prime Minister was very upset and very disturbed that a third party was throwing stones into this. "Alfredo never called us to explain. She called. She was saying the real plan was to arrest Reinado and then shoot him dead in front of the Prime Minister. It was ridiculous."

The source said it was likely that Reinado had received the cash late on Sunday. "Why did he have $30,000 in his pocket? Because he had only received it a few hours before. He did not have time to put the money anywhere safe. He could not leave it behind – he had to take it with him.

"Who gave him the money? What were his instructions? I don't know. My strong information is that he had been told he had an invitation to go to the President's house that morning. He had no such invitation."

Ms Pires was one of the first people pulled in by police after the shooting. Initially, it was said she would be charged with conspiracy to murder and crimes against the state. She was released after a night in a Dili police cell pending further investigation. She is not allowed to leave Dili.

Prosecutor-General Longuinhos Monteiro has told The Australian: "From sources we have, indications are she was a financial backer (of Reinado)." Ms Pires said she had no money to give Reinado and says the truth about the events of February 11 will soon be known.