The Australian Weightlifting Federation has confirmed that a Melbourne athlete demanded money from team officials before competing in last week's Oceania Weighlifting Championships in Samoa.
The Federation's chief executive, Michael Keelan, has told AM he was "sickened" by the behaviour of Daniel Koum, who is originally from Cameroon but became an Australian citizen in 2008.
Keelan said Koum was threatening to sabotage the Australian team's chance of qualifying for London if he was not paid $5000.
However Koum's sponsor has rejected the claims as "rubbish" and said they need to be investigated.
The alleged incident happened at the championships, which double as an Olympic qualifying competition.
Australia needed a high finish as a team in the event to win a quota spot for one weightlifter to compete in London.
"We were a little bit bothered about one of the attitudes of one of the athletes who, we felt, wasn't going to reach his potential within the total and so in order to give him a little bit of an incentive, I personally offered him an amount of money," Keelan said.
"In fact the amount was $1,000, to make sure he did a total that would place him as high as possible in the event so that we could score the maximum points in order to make sure that our team did exactly what we set out to do, which was to qualify one athlete in the male section."
Keelan said he was flabbergasted by Koum's behaviour.
"You think that everyone who's representing Australia does so with pride and with commitment and, unfortunately, we heard that that wasn't the case with Daniel Koum," he said.
"So I personally thought, well, the best way to negate any negatives out of all this would be to, by offering, sort of, some money, whereby he could actually compete and have some incentive to do the total that we asked of him which was 250 kilograms."
Keelan said that Koum originally agreed to the $1000 payment, shaking hands with the chief executive in front of witnesses.
"But then later on, it changed from an agreement to actual demand and he said that he wouldn't lift unless he got $5000 and that $5000, he wanted it before he started the warm up for his own event," Keelan said.
"And then it was pretty frantic ... we had to find that money."
"And we had sources where we could get that money from. And say, within about 30 minutes we handed over the $5,000."
Australian Weightlifting Federation president Professor Robert Mitchell says he was stunned by the behaviour.
"This was a serious - I thought - demand for money for performance basically. And I have not experienced that ever in any sporting arena before, let alone weightlifting," he said.
He says he first heard that Daniel Koum was after money from officials from anther team at the event in Samoa.
"Initially we were informed by a weightlifting official from another country that the athlete had spoken to him and had indicated to him that he was willing to cause a problem for the weightlifting team by bombing, so to speak - not registering a total - and that the AWF basically owed him and that he wanted money to lift and if we wanted him to lift we'd have to pay that money."
But Koum's sponsor and owner of the gym that he trains at, Craig Robinson, said the claims need to be properly investigated.
"I just reckon they're rubbish," Robinson said.
"This is a bloke that cleans the toilets, washes the yard, mows the lawns, cleans out the gym, trains kids, puts his free time in plus works at other crappy jobs to make ends meet. I just don't believe it."
Fellow Australian weightlifter Simplice Ribouem agrees the allegations are untrue.
"Daniel didn't approach anyone. They approached him - approached Daniel and they are proposing money. Well Daniel found that very wrong; he said, what are they proposing me money; what for?" he said.
"Daniel didn't come to Samoa for money. He come for lifting weights for his country."
Keelan says the whole situation has left him feeling "sick in the guts".
He says it is still possible Koum will compete in London, but the Weightlifting Federation is meeting on Sunday to discuss the incident.
"I was under duress. We had to make a call very, very quickly. And, you know, the call was that we would submit to his demand," Keelan said.
The ABC is seeking comment from Daniel Koum.
The Australian Olympic Committee released a statement on Wednesday afternoon saying it was working with the AWF to investigate the matter.
The AWF Board is expected to consider the incident and report back to the AOC's Director of Sport, Fiona de Jong, by Friday.
The AOC said in the statement that its investigation will be ongoing.