Arsalan Tariq Khawaja was granted bail in Sydney's Parramatta Local Court on Tuesday afternoon on charges of attempting to pervert the course of justice and forgery. He was arrested in western Sydney earlier as part of a New South Wales Joint Counter Terrorism Team investigation.
Police allege 39-year-old Arsalan Khawaja created a fake document "containing plans that purported to facilitate terrorism attacks". The document led them to arrest and imprison 25-year-old Mohamed Kamer Nizamdeen in August.
Nizamdeen was released in October after it was shown his handwriting did not match that in the document, which domestic media reported included threats against then prime minister Malcolm Turnbull and others.
"We regret what happened to Mr Nizamdeen. But, really, the person who is responsible for what occurred to him is the person we're alleging manufactured this document," Assistant Police Commissioner Mick Willing told reporters in Sydney.
"We will be alleging that he was set up in a planned and calculated manner," he said.
Willing said police believed the plot was motivated by a grievance over a woman who was courted by both men.
Police said there was no actual threat related to the document they allege Khawaja fabricated.
The arrest came just two days before his brother, Usman, is expected to play for Australia in the first test match of a four-game series against India in Adelaide.
"This is a matter for the police to deal with," Usman Khawaja said a statement he read out in Adelaide on Tuesday.
"Out of respect for the process it'd be inappropriate for me to be making any further comment. I just ask for you to please respect my privacy and my family's privacy during this time," he said.
(Reporting by Colin Packham; Editing by John Mair and Paul Tait)
