Retired Admiral Wasantha Karannagoda rejected UN experts' claims that a secret prison hidden inside the main naval base in the island's northeast was used to torture minority Tamil prisoners, under his command.
Karannagoda said the "prison" hidden inside the base in the port city of Trincomalee was actually a British World War II air raid shelter used to house breakaway Tamil rebels collaborating with the military.
"The navy had no option but to accommodate them in previously unused buildings. We used British-time air raid shelters," he was quoted by the local English-language Island daily as saying.
The main Tamil National Alliance opposition demanded in parliament today that Karannagoda be arrested for his alleged involvement, demanding an investigation.
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"Today, he is walking free," legislator M A Sumanthiran said. "How is it possible. He should be arrested and questioned."
Sri Lanka's former regime consistently denied the existence of secret jails, but the new administration which came to power in January, has agreed to investigate.
A court heard last month that at least 11 Tamil students had been held in the facility illegally between 2008 and 2009 and subsequently killed.
However, it was the UN panel which for the first time characterised it as a "secret illegal prison", saying it toured the 12-cell underground jail hidden inside the sprawling naval base in Trincomalee.
The main suspect in that case is a close aide of Karannagoda who was made ambassador to Japan by the former regime, but recalled to Sri Lanka by the new government earlier this year.
President Maithripala Sirisena's government has promised to punish war criminals and set up a truth commission to help heal the wounds of the conflict that ended in 2009, when the military crushed Tamil rebels.