Australia's Immigration Minister Peter Dutton says claims of waterboarding at the Nauru detention centre are unsubstantiated.
An unnamed Australian guard at the centre who works for Wilson Security made the torture allegations in a submission to a parliamentary inquiry examining abuse at the centre.
He also gave a detailed explanation of a technique called "zipping" which involved tying an asylum seeker to a metal bed which is thrown into the air then allowed to crash down causing injury to the occupant.
A spokesman for the minister said no claims of water-boarding had been made to the Government or brought to its attention.
Wilson Security, which is a contractor at the centre, says the submission is inflammatory, incorrect and misleading.
It urged the parliamentary committee not to make the submission public, saying it could cause significant distress and agitation at the centre and compromise safety.
"There is not, and has never been, any suggestion that this has ever occurred - apart from this unparticularised and generalised claim," the company said.
The submission alleges guards regularly goaded asylum seekers into reacting and then bashed them, but the company denied there was a "random cycle of abuse".
The guard accused his employer of regularly shredding incriminating documents, a claim the security firm also denied.
He said Wilson Security staff bashed a male refugee senseless following an incident at the Jules night-club in Nauru and the refugee was later thrown from the club's balcony.
The refugee had allegedly touched a female aid worker inappropriately, he said.
The company's version of events is that the intoxicated refugee was removed from the venue after sexually assaulting the female worker, who did not wish to press charges.
The refugee returned later with two companions and confronted staff who had removed him.
"They defended themselves and there was a resulting altercation," the company said, adding there were no serious injuries and the police were not called.
The guard claims Wilson Security staff are heavily comprised, including former Australian and New Zealand soldiers who harbour ill will towards people from countries where they served in war.
"Many Wilson Security staff fought against the asylum seekers they are now guarding," he said.
The company said it employs a diverse workforce and provides continuing cultural awareness training.
The guard also said staff were given no training on how to deal with detainees' mental health issues.
"Rather, asylum seekers were simply cast as criminals from the start," he said.
The company insisted its training is up to scratch and staff are required to treat asylum seekers with respect and dignity based on a code of conduct.