229 Commonwealth Government to Lord Cranborne, U.K. Secretary of State for Dominion Affairs
Cablegram 836 CANBERRA, 27 December 1941
MOST IMMEDIATE MOST SECRET
My telegram 831.  We have received urgent advice via Koepang that entire Portuguese administration and military forces numbering about 500 have retired to the hills and that Japanese Captain of vessel NANYEI MARU is also in the hills in possession of vessel's wireless transmitting equipment. It is quite clear that the position continues to deteriorate and that this is due largely to suggestions of early withdrawal by Dutch forces because of Portugal's protest.
We feel that grave risk is involved in the fact that substantial number of Japanese are at large in the colony in possession of equipment useful for a Japanese air attack or landing. Moreover withdrawal of administration from Dilli creates a position in which de facto civil administration of colony may have to be taken over by occupying forces.
Commonwealth Government suggests that Portuguese Government should be informed:
(1) Allied Governments' position is endangered and threatened by continued free presence in Portuguese Timor of Japanese, including Consul  and Captain of NANYEI MARU, who are believed to have acquired possession of equipment suitable for warlike purposes.
(2) Allied Governments wish to assist Portuguese Government but must urge that internment or removal of all Japanese from Timor is matter of military necessity.
(3) It was no part of intention of Allied Governments to assume responsibility for administration of Timor, but only to ensure its defence. Therefore Portuguese Government is requested to instruct Governor  to return his administration Dilli forthwith, and to cooperate with Commander of occupying forces. 
Failing early action on above lines, our Chiefs of Staff consider that orders should be given to take military action to meet the present dangerous position.