Knowing ASIO (Australia's external intelligence agency) it most likely they only knew about it because Mossad told them so they wouldn't blunder in and screw up the deal. Like MI6, ASIO's highest allegiance is to America and Israel. It wouldn't have stopped him abusing his Australian passport to spy on Syria and Iran for Israel, it would have helped him, and hoped Mossad would have tossed it a few scraps of intelligence.
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Preliminary report: Shooting attack in East Jerusalem's Damascus Gate (Haaretz)
from the article: The Prisoner X affair is a classic story of Israeli failure