DAMNING evidence from an Egyptian intelligence officer that names an Australian official who witnessed the torture of Sydney man Mamdouh Habib in Guantanamo Bay has been revealed as the trigger for a hushed-up government payout to Mr Habib and a high-level investigation.

The explosive 840-word statement, released exclusively to The Sun-Herald, was shown to government solicitors three days before they suddenly paid Mr Habib an undisclosed amount to drop his lawsuit claiming Australia was complicit in his CIA-engineered kidnap in 2001, transfer to Egypt and subsequent torture.

Mamdouh Habib in his "ASIO traded me" T-shirt. Credit:Janie Barrett

In his statement, which is yet to be tested in court, the intelligence officer says Egyptian guards routinely filmed terrorism suspects in their jails. He says there is footage and photographs of Mr Habib and an Arabic-speaking Australian called George who witnessed his degradation.

''He has rounded face aged 35-40 and bald (no hair) his height is about 170 fat without moustache with beard, hazel eyes big nose, fat neck. George was present during the medical check on Habib who was handcuffed and tied feet. His eyes were closed and he was unable to see.