But the Australian government has refused to comment on what information it might have shared with Lieutenant-Commander Sanjeewa Annatugoda.

The revelation comes as:

An investigation by Fairfax Media has found asylum seekers on Christmas Island, Nauru and Manus Island are being subjected to a regime of coercion and intimidation in a deliberate attempt to force them to go home.

Immigration Minister Scott Morrison has refused to tell Parliament whether any boats have been turned back to Indonesia, prompting ridicule from Labor.

Prime Minister Tony Abbott arrives in Colombo on Friday, and will meet the head of Sri Lanka's armed forces, President Mahinda Rajapakse.

In police custody, Commander Annatugoda denied this week the people-smuggling charges against him and said he had been framed. However, he said others in the navy were guilty of people smuggling. In an interview in police cells in Thiyagoda, he said: "I am not the man who did this thing. Others did."

But police allege Commander Annatugoda had a big role in Sri Lanka's largest, most profitable, people-smuggling ring. If the charges against him are proven, he faces up to five years in jail, and thousands of dollars in fines.

But it will also be a big embarrassment for both governments, considering they had trained, paid, and consulted him on how to stop the boats.

In November last year, Commander Annatugoda met Australia's Border Protection Command head Rear-Admiral David Johnston and high commissioner Robyn Mudie on the Sri Lankan navy's efforts to stop people smuggling.

"When it was the official visit, I met with the senior officials and the high commissioner and I explained about the Sri Lankan navy's plan for patrolling the sea, the system we have for stopping smuggling

"I met with them, and talked with them," he said.

Since his arrest in September, and the arrests of 30 other alleged smugglers, the number of boats leaving Sri Lankan shores has dropped 90 per cent, Inspector of Police P.S.C. Sanjeewa said.

The gang made tens of thousands of dollars charging passengers between 300,000 rupees ($2450) and 800,000 rupees for a single place on a boat to Australia. It has been reported the ring was responsible for sending up to 6000 people in boats to Australia.

Inspector Sanjeewa said the known figure was closer to 1000, but this did not include boats that were never detected leaving, or admitted to by those arrested, or boats that left Sri Lanka and sank on the way to Australia.

Almost all the passengers were Tamils, mostly young men.

Police believe Commander Annatugoda was deeply involved in the racket, taking kickbacks for using his influence in the navy, and his control over patrolling boats, to help smugglers' vessels out of the country.

Police discovered Commander Annatugoda's alleged role after arresting a man named Anton Gowrithasan, who was found to have an unexplained 13 kilograms of gold in various bank accounts, as well as hundreds of thousands of rupees in cash.

Commander Annatugoda, married and with three young children, was a decorated officer who served 17 years in the Sri Lankan navy. He was wounded during the country's civil war, and awarded medals for gallantry. "I have sacrificed a lot for the motherland," he said, barefoot and dressed in civilian clothes in the police cell.

"I am a naval officer, and I am the one who stopped people who were trying to go to Australia. Over 1½ years, I stopped many boats."

He said the charges against him had been framed because of a personal vendetta, and that the money put into his account was a series of loans being repaid.

Fairfax Media sought comment from many government officials, including Mr Morrison and Ms Mudie. All declined to comment.