Terry Collins, the deputy commissioner of New South Wales state police, said the arrested captain had worked closely with munitions and had been "a mastermind and a key player" in the theft and sales.
The arrests bring to four the number of people accused over the weapons theft.
|The M72 rocket launcher is mainly used |
by the military as an anti-tank weapon
Abdul Rahman was arrested at his Sydney home late last year and charged with 17 offenses over the stolen M-72 shoulder-fired weapons.
Police allege Rahman, 28, had supplied five of the weapons to one of nine men arrested in late 2005 in a series of counterterrorism raids in Sydney and the southern city of Melbourne.
The nine men, all Muslims, face life sentences in prison if convicted of conspiring to carry out a terrorist attack in Australia.
Police have not revealed any details of a plot.
Collins would not comment on news reports that some of the weapons had been sold to a member of Australia's biggest outlaw motorcycle gang, the Rebels.