The 27-year-old was in trouble at the end of his sixth professional fight in Brisbane against 44-year-old Francois Botha, and jeers rang out from the crowd when he was announced winner after 10 rounds.
Williams said both boxers knew it would be a 10-round fight in a post on his Twitter account on Saturday, and Botha's promoter told local media he had reluctantly agreed to the change shortly before the fight.
But the news seemed to have escaped an incensed Botha, who described the result as "match-fixing", along with enraged fans and bookmakers.
An Australian boxing official told local pay TV channel Fox Sports on Saturday that both camps had agreed to shorten the bout from 12 rounds to 10.
The fight's status as a purported World Boxing Association heavyweight title bout was plunged into doubt, however, with confirmation that no WBA official was present.
"Whether the fight was formally sanctioned by the WBA, you'd have to ask the WBA or the promoter. We don't get involved in the sanctioning," John Hogg, a committee member of the Australian National Boxing Federation, told Fox Sports.
Hogg's comments contrasted with the confusion expressed by ANBF vice-president Alan Moore, a ring-side judge for the bout, who told The Australian newspaper that he had "no idea" the bout would be shortened.
"When the ring announcer said over the loud speaker that it was the last round, that was the first we (judges) knew of any change," Moore was quoted as saying.
The controversy has come at a sensitive time for sports in Australia, with local police investigating at least one potential case of match-fixing, and an explosive report warning that local competitions were at a high risk of manipulation by organised crime.
The abbreviated fight was slammed by bookmaker TAB New Zealand, who refunded "pick the round" bets on the fight.
"We went to great pains to double check and triple check that it was 12 rounds because (in) a Sonny Bill fight this has happened before," TAB New Zealand bookmaker Mark Stafford, whose agency refunded 'pick-the-round' bets, told New Zealand radio on Saturday.
"So we're pretty annoyed about it."
Stafford said his agency had taken bets on three of Williams's six professional fights, with two of them shortened without anybody knowing. He added that they were doubtful about opening another book with the rugby player.
Australian bookmaker Sportingbet Australia said it would refund all bets laid on Botha in a post on their Twitter account on Saturday.
Disgruntled fans took to social media pages to slam the bout as a sham, and demanded broadcasters refund the pay-per-view fees for the fight.
"If you work an 8 hour day tomorrow, work just six. If the boss asks you why, say its the #SBW clause," one Twitter user said in a post.
Botha's promoter Tinus Strydom said he would lodge a protest with the WBA.
Williams's manager Khoder Nasser said the South African camp's complaints were sour grapes.
"They're going to look for any excuse because they lost," Australian state broadcaster ABC quoted him as saying on its website (abc.net.au/)
"If there's a misunderstanding, there's a misunderstanding and I'm sure we'll deal with that with the WBA."
Williams, set to re-start his rugby league career in Australia after several years of playing rugby union that included a World Cup win with the All Blacks in 2011, had a clause in his New Zealand Rugby Union contract allowing him a set number of fights to pursue his boxing career.
But his six professional victories, coming against a string of ageing or unfit journeymen, have been slammed by established fighters and pundits as commercial ventures lacking credibility.
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