Haaretz reports: Israel recently signed an agreement to pay several million shekels in compensation to the family of Ben Zygier − “Prisoner X” who committed suicide in Ayalon Prison in December 2010 − a source familiar with the affair said Thursday. It also emerged on Thursday that Zygier was negotiating a plea bargain before he died in jail.

The source said the compensation agreement was signed about six weeks ago at the end of an inquiry into the cause of the prisoner’s death.

After Zygier was found dead in his isolated, maximum-security cell in the prison, Rishon Letzion Magistrate’s Court President Daphna Blatman Kedrai held an inquiry into the circumstances of his death. The inquiry, held behind closed doors, continued for more than a year and a half.

At the end of the inquiry the judge ruled Zygier killed himself, but did not refer to the possibility of negligence on the prison wardens’ part, and passed the matter to the State Prosecutor’s Office.

Attorneys Roy Blecher, Moshe Mazor and Boaz Benzur, who represented Zygier and his family from the moment he was arrested in February 2010, filed for compensation during the inquiry. The negotiations continued for more than a year and ended after it was concluded Zygier had committed suicide.

Two days before his death, Zygier met attorney Avigdor Feldman in prison, Feldman said on Thursday. Feldman wasn’t part of Zygier’s defense team, but said he was hired by Zygier’s family to advise him about a plea bargain the State Prosecutor had formulated.

Feldman told Army Radio that Ben Zygier appeared “rational, focused and to the point” when he met him, two days before his death.

Zygier was inclined to reject the plea deal and go to trial to prove his innocence, Feldman said.

He said Zygier was under heavy pressure and threats from his interrogators.

“He was told he was likely to be sentenced to an extremely long prison term and would be shunned by his family and the Jewish community. That affects a person’s soul,” he said.

However, Feldman said he did not sense Zygier was in a suicidal mood. “He sounded rational and focused and spoke to the point. He did not display any special feeling of self-pity,” he said.

Zygier appeared anxious about the trial, Feldman said. “Don’t get the impression this was a relaxed cafe conversation,” he said. “Clearly he was under pressure; clearly he was very concerned about the trial.”

Two days after the meeting a security services liaison called to tell him of his client’s suicide, he said.

Feldman told Army Radio he was aware Zygier was being held under a false name. “I saw this as something inappropriate but I did not take legal measures, assuming he was in the good hands of his lawyers,” he said.

Feldman criticized the security services’ failure to protect his client. “Those responsible for him should have taken better steps to watch over him, especially because he was far from the public eye. The end of the affair is something that needs to be investigated,” he said.

According to Australian media reports, Zygier was apparently not a spy or a traitor, but a young man who lacked discretion, was boastful and talked too much. It also appears from those reports that Zygier did not give information to an enemy state, nor did he intentionally breach state security.

This seems to be corroborated by the plea bargain the state offered him, instead of insisting he go to trial where he could get a harsher verdict.

However, due to Zygier’s problematic conduct, both journalists and one friendly state intelligence agency − the Australian Security Service − discovered his real name and the nature of his activity.

The result, according to the Australian media, was the exposure of part of the Mossad’s secret activity against Iran.

Haaretz has learned that Zygier told at least two of his friends in Australia that he had been recruited by the Mossad.

An Israeli official familiar with the affair said Zygier had boasted on several occasions to friends and strangers about working for the Mossad. One of those occasions was when Zygier visited Australia in 2009. “He talked too much,” the source said.

The things Zygier said were apparently picked up not only by Australian journalists but by the Australian Security Service.

Reports in the Australian media Thursday increased the suspicion that Zygier had collaborated with the Australian security service, possibly as a result of extortion.

The Australian media group Fairfax Media on Thursday cited Australian security officials as saying Zygier was in touch with the Australian security service before his arrest at the end of February 2010.

They said Zygier was about to give information to Australian intelligence or to journalists about the Mossad’s activities in the country, including the use it made with Australian passports.