CANBERRA, June 10 -- Australian customs officials paid people smugglers to turn asylum seeker boats back to Indonesia, a police chief has told the Australian media.

A boat carrying 71 people from Bangladesh, Myanmar and Sri Lanka en route to New Zealand was intercepted by the Australian Navy and Customs officers last month and was returned to the island of Rote in the East Nusa Tenggara province.

The police chief of Rote, Hidayat, said the six crew members told him they were handed 5,000 U.S. dollars each by Australian officials to turn back the vessel, according to a Fairfax Media report on Wednesday.

The crew was arrested upon arrival to Rote for suspicion of people-smuggling, but Hidayat said he allowed the money to be returned to the villages of those arrested.

Hidayat said the crew had 30,000 U.S. dollars in total, wrapped in six black plastic bags which they said was handed to them by an Australian customs officer named Agus, who spoke fluent Indonesian.

When asked on Tuesday about the allegations, Immigration Minister Peter Dutton denied it occurred and refused to answer questions on the matter.

An Immigration Department spokesperson told Fairfax the government "does not comment on or disclose operational details where this would prejudice the outcome of current or future operations."

A letter to the New Zealand government signed by all 65 asylum seekers on board corroborated the Indonesian police chief's claims that large sums of money were exchanged.

"Then they take away our better boat and give two small boats that had just a little dry foods like biscuits and chocolates, and they also give very little fuel, just 200 liters for four to five hour journey," the letter said.

One asylum seeker, Nazmul Hassan from Bangladesh, said the crew initially refused to return to Indonesia, knowing they would be arrested for people-smuggling.

Hassan said that changed after a private meeting with Australia officials.

"After they finished the meeting, everyone looked happy and they agreed to the proposal," Hassan said. "We didn't say anything because they didn't give us time to talk."

Former Immigration Department Executive Peter Hughes told Fairfax if the payment was true it would be unprecedented.

"I have never heard of that happening before," he said.

The asylum seekers are currently detained in a hostel in Kupang, the capital of East Nusa Tenggara.