(Transcript from World News Australia Radio)
The man, with 17 years' experience in the Sri Lankan navy, is accused of playing a key role in the island nation's largest and most profitable people-smuggling ring.
Australian authorities deny he's undermined efforts to crack down on asylum-seekers fleeing Sri Lanka.
Thea Cowie reports.
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Sri Lankan Navy Lieutenant-Commander Sanjeewa Annatugoda was taken into custody following the discovery of 73 would-be asylum-seekers in a trawler off Sri Lanka's coast six weeks ago.
Since the Commander's arrest, and that of 30 other alleged smugglers, Sri Lankan police say the number of boats leaving the island nation has dropped 90 per cent.
But reports have emerged that Australia and Sri Lanka trained, paid, and consulted Commander Annatugoda on how to stop the boats.
In November last year the decorated naval officer reportedly briefed Australia's Border Protection Command head, Rear-Admiral David Johnston, on the Sri Lankan navy's efforts to stop people-smuggling.
Immigration Minister Scott Morrison says authorities would not have revealed any sensitive information to the commander.
"If they had attended a briefing that occurred in Australia at that time then I am advised that there was no information provided at that briefing that might have assisted him with his alleged criminal activities."
Sri Lankan police allege the people-smuggling ring Commander Annatugoda belonged to was responsible for sending about 1,000 people towards Australia, not including those on boats which went undetected or sank en route.
The commander is the highest ranking of a number of Sri Lankan navy personnel recently arrested in relation to people-smuggling operations.
Foreign Minister Julie Bishop denies the arrest undermines cooperation with Sri Lanka on people-smuggling.
Bishop: "The Sri Lankan government is showing by evidence of this arrest that they are serious about cracking down on corruption in the people-smuggling trade and the impact that it might be having on officials."
Reporter: "He was advising the Australian government and all the time sending people to Australia. Doesn't that undermine our relationship with Sri Lanka?"
Bishop: "But isn't it good that it's now come to light and that the Sri Lankan government has acted? And we welcome that."
National security expert Professor Michael Wesley agrees the arrests are a good sign Sri Lankan authorities are not afraid of taking on senior figures.
The Australian National University Professor says if the commander was involved in people-smuggling, he would have been trying to use his role to extract information from Australian authorities.
"By providing erroneous information, providing erroneous contacts, shielding his particular operations from the gaze of the law enforcement and intelligence community. There would be a range of ways but I'm sure there would be a range of risk management strategies for dealing with those obvious incentives."
Since mid-July, when Australia announced no asylum-seekers arriving by boat would be settled on the mainlaind, Sri Lankan police have intercepted three boats and detained 300 Sri Lankans, including women and children.
Both the Coalition and Labor say conditions in Sri Lanka have drastically improved since the end of the nation's civil war in 2009 and describe asylum-seekers from the country as "economic migrants".
But Emily Howie, from the Melbourne-based Human Rights Law Centre, says by some measures human rights abuses in Sri Lanka have actually worsened and people are unlikely to stop fleeing any time soon.
She says for Sri Lankans, people-smugglers often provide the only ticket out of oppression and persecution.
"Sri Lankans have very limited options. They are not able to access the UNHCR inside Sri Lanka and for many people if the government and the authorities are the people that they're fleeing and being persecuted by they'll be unable to get travel documents. So those people accessing boats through people smugglers may be the only choice that they have to leave the country."
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