Police have charged Arsalan Khawaja over an allegedly forged terror hit list found at the University of NSW.
The brother of Australian cricket star Usman Khawaja has been granted bail amid accusations he framed a colleague with a fake terror hit list targeting senior politicians.
Arsalan Tariq Khawaja was arrested in Sydney's west on Tuesday morning following an investigation into the document which was allegedly found at the University of NSW in August.
The 39-year-old, who's charged with attempting to pervert justice and making a false document, was granted bail during an appearance at Parramatta Local Court on Tuesday afternoon.
Each charge can result in a 10-year jail sentence.
His arrest follows an investigation into an allegedly fake list of terror targets found in a notebook that was used as evidence to charge Sri Lankan-born PhD student Mohamed Kamer Nizamdeen with a terror offence.
Mr Nizamdeen was charged with a terror offence in August and spent four weeks behind bars before charges were dropped against him due to a lack of evidence connecting him to the notebook.
Assistant Commissioner Mick Willing said police will be alleging "he [Mohamed Kamer Nizamdeen] was set up in planned and calculated manner, motivated by a personal grievance."
The 25-year-old is now seeking costs and compensation after he spent four weeks behind bars.
Assistant Commissioner Willing said police regret and felt "very sorry" about the time Mr Nizamdeen spent in custody, but stopped short of apologising to him.
"We regret the circumstances which led to him being charged and the time he subsequently spent in custody. We feel very sorry for him and what has happened to him."
He said acting early to prevent a potential terrorist threat was critical.
"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," he said.
Sri Lankan publication, Daily News, reported that Arsalan Khawaja was one of Kamer's supervisors at the University of NSW.
The seized notebook allegedly contained a list of potential terror targets including the Sydney Opera House, police and railway stations.
Former prime minister Malcolm Turnbull, ex-foreign minister Julie Bishop and their Liberal Party colleague Bronwyn Bishop were also listed as potential targets.
Usman Khawaja issued a statement, saying he would not be commenting on a matter before the courts.
He urged media to respect his privacy.
"This is a matter for the police to deal with," he told reporters.
"Out of respect for the process, it would be inappropriate for me to make further comment. I just ask that you please respect my privacy, and my family's privacy."