Mamdouh Habib, the Australian detained at Guantanamo Bay, went to Afghanistan to work as a mercenary for al-Qaeda, a parliamentary inquiry has heard.
Mr Habib has denied any links with terrorism
Australian police and security chiefs said Mr Habib claimed he was taken to Afghanistan and tortured there to cover up his true intentions.
In an interview broadcast on Sunday, Mr Habib refused to confirm whether or not he had ever been in Afghanistan.
The Australian national was freed from Guantanamo last month without charge.
Mr Habib was arrested in Pakistan in 2001, where he says he was looking for schools for his children.
But Australian police chief Mick Keelty said Mr Habib was actually being financed and trained in the country by militant group Lashkar-e-Toiba.
Mr Keelty said the former taxi driver and businessman later crossed into Afghanistan, where he was "offering his services to al-Qaeda for which he was going to be paid a sum of money".
Born in Egypt, but has lived in Australia since 1980
Arrested in Pakistan after 11 September attacks
Flown to Egypt, where his lawyer says he was tortured
Transferred to Guantanamo Bay in May 2002
Released January 2005
"Basically, I guess, in layman's terms, almost as a mercenary," Mr Keelty said.
Mr Keelty said Mr Habib suspected he had been traced to Afghanistan so he fabricated a story about being kidnapped and taken there.
"It was about people in a yellow uniform kidnapping and torturing him which we saw as an alibi for his presence in Afghanistan," Mr Keelty told the inquiry.
Dennis Richardson, head of the Australian Security Intelligence Organisation (ASIO), said Mr Habib was in Afghanistan on 11 September 2001, and that his claims to have been abducted and tortured were not worth investigating.
"We considered they were humbug and we believe they are humbug today," Mr Richardson said.
"He was actually with people in Afghanistan who have a history of murdering innocent civilians rather than actually being kidnapped by anyone."
Although Mr Habib has been released from US custody in Cuba without charge, he remains of "interest" to Australian security officials, Mr Richardson said.
He has had his passport taken away on the basis of an adverse security assessment by ASIO, and is undertaking legal proceedings against the Australian authorities to get it back.
Mr Habib told an interview broadcast at the weekend with Australia's Nine Network that for this reason, he cannot currently answer questions about whether or not he visited Afghanistan.
His lawyer, Stephen Hopper, said that doing so would give away key defence arguments to the Australian authorities before his court case began.
Since returning home last month, Mr Habib has strongly denied any links to terrorism, and has alleged he was repeatedly tortured and abused during his three years in detention.
Some of the abuse, he has said, was carried out in Egypt. His supporters have said the US had him transferred there because the country has a record of using torture to extract confessions.
Mr Richardson said ASIO had established that Mr Habib was definitely in Egypt in February 2002, although Egypt has never acknowledged this.
But Mr Keelty said Australian investigators saw no evidence of torture when they visited Mr Habib in Guantanamo Bay in 15 May 2002.
Mr Hopper said he could not believe this statement.
He said he had seen "shocking photos" of his client looking "bloated and very unwell" earlier that month.