Judges say political leaders illegally bypassed the courts with the release, highlighting the continuing challenge to establish an independent and viable judiciary after the tiny state broke from hundreds of years of colonialism in 2002.
Formal charges have not been filed, but prosecutors are investigating the possible involvement of several members of Prime Minister Xanana Gusmao's government, two court officials with first-hand knowledge of the case told The Associated Press in interviews this week. They spoke on condition of anonymity because they are not authorized to talk to the media.
Indonesian national Maternus Bere was detained Aug. 8 to face allegations of crimes against humanity, including the 1999 Suai church massacre that left dozens dead, among them women, children and three priests. Bere was set free on Aug. 30 before be could be put on trial.
The killings were part of a wider campaign of persecution and murder by pro-Indonesian forces against the Timorese population that year. The violence, prompted by a vote to split from Jakarta after a brutal 24-year occupation, left at least 1,000 people dead.
The United Nations has expressed concern over Bere's release and called for Timor's leaders to abide by international law. Arrest warrants issued by a U.N.-backed serious crimes unit are outstanding for nearly 400 suspects, but East Timor has favored reconciliation with neighboring Indonesia over prosecution.
President Jose Ramos-Horta argues that reopening old wounds will not help the impoverished country build a stable democracy.
"The vast majority of the people here don't care about what happened to the guy (Bere)," Ramos-Horta told The Associated Press. "The enemies of yesterday must apologize and forgive each other. The U.N. human rights bureaucracy is the one out of touch with the reality."
Indonesia's Foreign Ministry says it negotiated Bere's release by phone with Ramos-Horta, Gusmao, Foreign Minister Zacharia da Costa and other officials on Aug. 30.
Indonesian officials waited for confirmation of the release before attending East Timor's celebrations marking the 10th anniversary of the independence vote, Indonesian Foreign Ministry spokesman Teuku Faizasyah said.
Indonesian officials say that Bere, who was reportedly in East Timor for a family wedding, remains at the Indonesian Embassy in Dili awaiting deportation to Indonesia.
Supreme Court chief Judge Claudio Ximenes told reporters last week that Bere's handover was "an illegal decision made be someone who has no right to do so."
"Only a judge can order the freeing of a suspect from a detention center or prison," he said.
The Dili-based La'o Hamutuk research institute, a respected group that studies efforts by foreign institutions to rebuild East Timor, also said the handover violated the constitution.
Gusmao's office said he is ready to accept any legal consequences of freeing Bere, but that he has received no notice of an investigation.
"The Gusmao Government has always been open, transparent and readily willing to participate in any investigations," government spokesman Agio Pereira said in a statement to the AP.
The dispute comes amid relative stability in East Timor, a predominantly Catholic state of 1.1 million people that descended into chaos in early 2006 when fighting between rival security forces killed dozens. President Ramos-Horta was seriously wounded in an assassination attempt in February last year.
Bere's case exposes a lack of separation between political powers and the courts, Charles Scheiner of La'o Hamutuk said in an e-mail to the AP.
"It has serious implications for the future of rule of law and justice," Scheiner said. "The investigation by the judicial system is one piece; whether the prosecutor will be brave enough to bring the case to court is yet to be seen."
The opposition Fretilin party is pushing a censure motion in parliament over the Bere release, which could force early elections.
"The government of Xanana will be brought down and the president will have to call early elections," Fretilin's Deputy House Speaker Vicente Gueterres told the AP Wednesday.
Fretilin is the largest party in parliament, but it is unclear if a majority of lawmakers are willing to risk another political crisis.
Roughly a third of East Timor's population was wiped out during the Indonesian occupation, but those crimes go unpunished.
AP writer Anthony Deutsch contributed to this article from Jakarta.