The left-arm spinner's omission came two months after he was sanctioned for a drunken incident at a Sydney function in April, his second alcohol-fuelled breach in 12 months, and he was also excluded from the list of nationally contracted players.
Smith said O'Keefe was overlooked for purely cricket reasons with selectors keen to give 23-year-old left-armer Ashton Agar another chance with a view to returning to India in four years' time.
Smith said Agar would get the chance to impress in Bangladesh. "Now is probably a chance to move on to someone else and Ashton Agar's going to get his opportunity," Smith told Cricket Australia's website (cricket.com.au).
"(Agar) has been around for a while now and it's another chance for him to have a crack in spin-friendly conditions and hopefully he can go really well for us.
"I have (spoken to O'Keefe) and he was disappointed, which is fair enough. He understands where we're heading.
"He's getting a bit older now and our next tour back to India is in four years' time and we've got to find the right group of guys that are going to be there for that series."
With Sri Lankan left-arm spinner Rangana Herath still going strong at the age of 39 and New Zealand offspinner Jeetan Patel only recently retiring from international cricket at 37, O'Keefe might have some reason to feel aggrieved.
Having averaged 27.30 from his eight tests, O'Keefe also boasts a superior first class record to Agar, averaging 23.77 compared to the two-test spinner's 40.24.
Uncapped 23-year-old legspinner Mitchell Swepson, who has averaged 32.82 in just 14 first class matches, is the other specialist slow bowler picked for Bangladesh with regular spinner Lyon.
"SOK (O'Keefe) bowled really well in India and he's done well in Shield cricket for a long time now, so I was actually very surprised to see him not get the nod again," Queenslander Swepson told the website.
"But that's obviously all up to the selectors."
First Published: August 8, 2017, 11:13 AM IST