Bare-chested and clapping sticks, Galarrwuy Yunupingu, the most powerful Aboriginal leader in the Northern Territory, led a dance in front of the Prime Minister, Kevin Rudd. Only the most trusted of Mr Yunupingu's Gumatj warriors were chosen to perform the dance, which few white people have seen.

But within hours of the event in north-east Arnhem Land last Wednesday, one of the performers, a nephew of Mr Yunupingu, whom he regarded as his "son", was dead.

Mr Yunupingu's nephew, a 26-year-old didgeridoo-playing member of Yothu Yindi, Australia's best-known indigenous band, had got into a fight with a 23-year-old woman, a friend. He stabbed her 14 times. Apparently believing her to be dead, he then committed suicide. His wife found him hanging.

Police are investigating a tragic chain of events before the death of Mr Yunupingu's nephew, who danced shoulder-to-shoulder with his famous uncle in front of the Prime Minister and cabinet on a oval in the tiny community of Yirrkala.

By the time Mr Rudd was having dinner at his Darwin hotel on July 23, celebrations were well under way back in Arnhem Land. Galarrwuy Yunupingu, the former Australian of the Year, put money on the bar of the Gove Yacht Club at the end of one of the most significant days of his life. He had presented a bark petition to Mr Rudd calling for indigenous rights to be acknowledged in the constitution. The Prime Minister, in his response, reiterated his support for the idea.

Galarrwuy Yunupingu was also chuffed to learn that day that the mining giant Rio Tinto had agreed to negotiate a new deal for the bauxite mined on his clan's land. The news was potentially worth millions of dollars for his people.

The drinks flowed freely at the yacht club, witnesses said. Some indigenous people were escorted from the building.

Galarrwuy Yunupingu said his nephew was "subject to a life ban at the yacht club and I am not certain whether he was with the other Yolngu men at the club".

"I am told by my wife that after the performance for the Prime Minister he had argued with his wife at Yirrkala and that my wife had picked him up walking alone on the road."

Some time later, drinking apparently moved from the club to Ski Beach, a short drive away. There, Mr Yunupingu's nephew apparently got into a fight with the 23-year-old woman.

Yesterday the injured woman was in a stable condition in Gove District Hospital.

An NT police spokeswoman confirmed that "police are investigating a serious assault which occurred on July 23 in which a 23-year-old woman received multiple stab wounds and a 26-year-old man, believed to be the offender, was later found deceased.

"Due to the obvious sensitivity around this matter police can only provide very limited detail."

Mr Yunupingu told the Herald yesterday he was at his outstation in Arnhem Land mourning his nephew's death.

He said he was called by police at 3am on July 24 to identify his nephew's body. "I did so with his father," he said.

"This is an intensely private matter and I am deeply distressed at the media intrusion.

"It is a terrible breach of the family's privacy and will simply worsen our pain and our grief."

Mr Yunupingu said a coronial inquiry would test "the usual rumour and innuendo that circulates in Nhulunbuy after a death".

He said he did not authorise any drinking at Ski Beach and did not buy any takeaway alcohol.

Mr Yunupingu said that since the death he had asked health services to develop a plan to deal with the "increasing prevalence of self-harm among young people in Arnhem Land".

A spokesman for the Prime Minister said last night: "This is a deeply sad and tragic event for all the families and community of Yirrkala and we pass on our deep condolences to the families and community."

A ceremonial funeral is being planned for Mr Yunupingu's nephew.

Friends said he had used songs and storytelling to encourage vulnerable Aboriginal children to go to school and to stay healthy.