The Australia–East Timor spying scandal began in 2012 when the Australian Secret Intelligence Service (ASIS) was revealed to have planted covert listening devices in the cabinet office of East Timor in 2004, with the purpose of gathering top secret information related to bilateral negotiations over the Greater Sunrise oil and gas fields in the oil rich Timor Gap.Witness K, a former senior ASIS intelligence officer who was in charge of the bugging, provided information in 2012 which publicly revealed that the Australian Government had gained the top secret knowledge and used it during negotiations over the Treaty on Certain Maritime Arrangements in the Timor Sea (CMats). This treaty put a 50-year hold on East Timor's pursuit of expanded underwater territory, an area that has an estimated $US40 billion in oil and gas reserves. East Timor now disputes the validity of the treaty.
In March 2014, the International Court of Justice (ICJ) ordered Australia to stop spying on East Timor. The Permanent Court of Arbitration in the Hague is presently considering East Timor's claims over the territory.
The identity of Witness K must be kept secret under the provisions of the Intelligence Services Act and any person in breach of this could face prosecution.
In 2002, the Australian Government "withdrew" from the United Nations Convention on the Law of the Sea (UNCLOS) clauses which could bind Australia to a decision of the Permanent Court of Arbitration in the Hague on matters of territorial disputes. Two month later, East Timor officially gained its independence from Indonesia. In 2004, East Timor began negotiating territorial borders with Australia. In response to this, ASIS used an Australian aid project to infiltrate the Palace of Government in Dili and install listening devices in the walls of the cabinet room. This enabled ASIS to obtain top secret information from East Timor's treaty negotiators, who were led by then Prime Minister Mari Alkatiri, which was in turn provided to Australia's negotiating team. This provided the Australian Government with "an advantage during treaty talks". The installation of listening devices occurred 18 months after the 2002 Bali bombings, during a time of heightened ASIS activity in the Southeast Asia region. In 2006, Australia and East Timor signed the second CMats treaty.