For a supposed terrorist, Ayman Abu Aita is remarkably easy to find. It takes one phone call to set up a meeting with the man described in the hit movie Brüno as a "terrorist group leader".

He sits alone at a long, white table in the gardens of the Everest hotel and restaurant in Beit Jala, a mountain village near Bethlehem. This, he says, is the "secret location" where he met Brüno, played by British comedian Sacha Baron Cohen.

Popular with tourists, the restaurant sits next to an Israeli military compound, not far from the all-seeing watchtowers of the winding separation wall.

"How could he say this about me?" asks Abu Aita. "He lied from the beginning and he is still lying now."

Abu Aita, 44, from Beit Sahour, near Bethlehem, is described in the film Brüno as a member of al-Aqsa Martyrs Brigade, the armed wing of the Fatah movement. Now Abu Aita plans to sue for defamation, while Baron Cohen has reportedly received threats from the brigade.

Baron Cohen's film protagonist Brüno is a gay fashion-obsessed Austrian TV host who, in a short clip featuring Abu Aita, asks to be kidnapped in a bid to get famous. He thinks that Palestinian terrorists are the "best guys" for the job, because "al-Qaida are so 2001".

Promoting the film recently on the David Letterman talkshow in the US, Baron Cohen explained that finding a "terrorist" to interview for the movie took several months and some help from a CIA contact. He described the secular Martyrs Brigades, most of whom signed an amnesty deal with Israel in 2007, as "the number one suicide bombers out there".

Abu Aita said: "My file is clear with the Americans. I was in the states twice and I travel all the time." He is a Christian Fatah representative – of the movement's political wing, he stresses – for Bethlehem district. He is also a member of the board of the Holy Land trust, a non-profit organisation that works on Palestinian community-building. "I am a non-violent activist and I am not ashamed of that," he says.

The interview with Baron Cohen was set up via Awni Jubran, a journalist for the Palestinian news agency, PNN, who received a call from the film's producer. "My friend Awni told me they wanted a Palestinian campaigner to talk about the situation for a documentary, to show young people what life is like in the Palestinian territories," says Abu Aita.

He met Baron Cohen one week later, accompanied by Jubran and Sami Awad, founder of the Holy Land trust – although Baron Cohen described the two to Letterman as bodyguards for "the terrorist". Abu Aita says that Brüno's crew chose the location, which is under total Israeli control – and which appears in the film as Ein el-Hilweh refugee camp, in Lebanon.

"We trust people and we never refuse an opportunity to discuss the Palestinian cause," he says.

"We went upstairs to one of the hotel rooms and talked about the Palestinian situation for over two hours," says Abu Aita, adding that Brüno seemed serious – although his knowledge was limited.

At the very end of the discussion, Baron Cohen asked a couple of questions about al-Qaida and Osama bin Laden, which Abu Aita considered oddly out of place and which he asked the translator to repeat.

Then, when Brüno asked to be kidnapped, Abu Aita says that his actual reply was edited out. "I was angered by the question," says Abu Aita. "I said, first of all I'm not a terrorist. Second, you are a guest here, so I must take care of you until you leave my country."

Abu Aita forgot all about the interview until the the film came out and he started to receive countless calls from outraged Palestinians.

"They ask how I could allow myself to be laughed at in this way, how I could agree to it," he says. "They are angry that I have embarrassed the Palestinian people, because we are being presented in this false, disgusting way."

Abu Aita is standing in the Palestinian parliamentary elections slated for January 2010, and opposition candidates are already using this incident to discredit him. He says it is also damaging for him to appear in a gay film, which features nudity and graphic sex scenes. "With our culture and our heritage we refuse such things," says Abu Aita.

He is well known in the area and several people testify to his good character and good sense of humour. "Brüno can make jokes about anything he wants, but this is not a joke," says Abu Aita. "Calling me a terrorist is not funny – it is lying."

Discussing his plans to sue, the Fatah official says he did not sign release forms for the footage of him which appeared in the film. His lawyer, a Palestinian-Israeli from Nazareth, says that such cases can result in million dollar compensation payouts in the US.

A spokesman for Baron Cohen declined to comment.