VICTORY 1744 PROJECT FACES JUDICIAL REVIEW

1305 views

The controversial project to salvage the wreck of HMS Victory 1744 in the English Channel may be moving towards its end game as the British government faces a Judicial Review of the decision to allow Odyssey Marine Exploration and the Maritime Heritage Foundation to recover “at risk” cannon and other items under a commercial salvage contract.  thePipeLine analyses the latest moves.

thePipeLine can reveal that the British Government is facing a possible Judicial Review over the controversial decision to allow the Maritime Heritage Foundation and its commercial salvage contractor Odyssey Marine Exploration, to recover “at risk” items from the lost Royal Navy flagship, sunk in October 1744 with her entire crew of 1100 officers and men including Admiral Sir John Balchen.   The confirmation of the legal moves came when a spokesperson for the MoD told thePipeLine that it would not be appropriate to comment on certain aspects of the HMS Victory 1744 controversy because  “Lawyers representing Her Majesty’s Government are awaiting service of proceedings from an individual who is seeking a Judicial Review of the Secretary of State’s decision.” The news that a Judicial Review is being sought comes as Shadow Defence Minister Kevan Jones has succeeded in obtaining an Adjournment Debate on the subject of HMS Victory 1744 in the House of Commons on Thursday 29 January.  The UK Marine Management Organisation, which regulates the offshore industry and seabed works including intrusive  maritime archaeology, has also confirmed that the Maritime Heritage Foundation submitted a licence application for the HMS Victory wreck site on 19 December and that the MMO is currently verifying the application prior to launching the statutory public consultation regarding the application.

 

It is not known who has sought permission to seek a Judicial Review, which could lead to the overturning of the Government’s permission for the Maritime Heritage Foundation to work on the site.  However, legal experts consulted by thePipeLine suggest that the Odyssey/MHF Project may be vulnerable in a number of areas related to compliance with the Annex to the UNESCO Convention on the Protection of the Underwater Cultural Heritage which forms the UK Government’s policy in the area of historic shipwrecks.  In particular it is suggested that the decision to allow the project go ahead is premature because the published project design submitted by the Maritime Heritage Foundation/Odyssey does not undertake to keep the entire HMS Victory archaeological archive together as a single entity,  neither does it name a designated museum to house the entire HMS Victory 1744 archive. Indeed, neither the Ministry of Defence , nor the Maritime Heritage Foundation have contradicted claims made in the United States and verified as credible by UK based experts in Maritime Law, that the terms of the MOD permission, backed up by the wording of recent written parliamentary answers, makes it possible for Odyssey to claim salvaged items which did not belong to the Crown, such as the personal possessions of the 1100 lost crewmen and dispose of them as it wishes, including by commercial sale or auction to fund the company’s work and to reward its staff and shareholders.   Actions which are strictly forbidden under the terms of UNESCO Convention and the UK Museums Association Code of Ethics which are supposed to bind the project.

 

“It is also pointed out that in 2013-2014 the MHF spent just £495 on its charitable activities.   However, in spite of this Lord Lingfield’s charity has been given the go ahead to undertake the work on the HMS Victory wreck site thus committing it to a spend of many millions of pounds.”

 

Most importantly, it is also suggested that the project is not properly funded to completion, as the UNESCO Convention Annex demands, because the Maritime Heritage Foundation’s latest accounts show that at the close of the most recent accounting period, 31 March 2014, the charity had just £69,617 in the bank, all from “donations” from unspecified sources.  This is scarcely enough cash for two days of work on the site by Odyssey’s research vessel RS Odyssey Explorer.  Observers also regard it as highly significant that in the two years since the gifting of the ship to the MHF, the MHF appears to have made no attempt to raise the kind of money required for such a high profile and expensive maritime archaeology project from traditional and accountable public sources such as the Heritage Lottery Fund.  It is also pointed out that in 2013-2014 the MHF spent just £495 on its charitable activities.   However, in spite of this Lord Lingfield’s charity has been given the go ahead to undertake the work on the HMS Victory wreck site thus committing it to a spend of many millions of pounds.  The estimated cost of even the simplest recovery of surface material, such as the cannon, is £1 million (with the actual cost likely to be far higher) and those of exhibition and conservation in all likelihood at least as much again.  Estimates for the likely full cost of the project to the MHF range between £5-£10 million.

 

On the face of it much of this money is going to Odyssey.  According to the published terms of the commercial salvage agreement between MHF and Odyssey, announced in 2012, MHF will not only be liable for Odyssey’s costs, but will also be required to pay Odyssey 50% of the value of the bronze cannons and other Crown Property at the Wreck, which may amount to as much as £3 million. MHF would also have to pay Odyssey 80% of the value of any gold coins or other bullion, and any artifacts recovered from the wreck which cannot be shown to be Crown Property under the Deed of Gift.  Marine salvage experts suggest that such an agreement where a contracted salvor is effectively paid twice, is unusual in the marine salvage industry.  Perhaps no wonder then that in a public statement on 10 November 2014, Odyssey CEO Mr Mark Gordon said that the company expects to make a “significant return on [its] investment’ in the project.” However, independent analysts question how this can be possible when according to a written answer to the UK Parliament it is also Odyssey, not the Maritime Heritage Foundation, which has placed a completion bond of an unspecified amount with the UK Government.  This has led to accusations that the entire HMS Victory project is in fact Odyssey’s from start to finish and that the involvement of the Maritime Heritage Foundation is little more than a vehicle to enable Odyssey to access the wreck.

 

“Analysts also question where the money for the completion bond has come from when Odyssey’s cash burn is around $2.2 million per month”

Analysts also question where the money for the completion bond has come from when Odyssey’s cash burn is around $2.2 million per month and the most recent Quarterly return to the US Securities and Investment Commission suggested that the company had less than $10 million available at 30  September 2014 and would face a liquidity crisis by mid February 2015, unless a significant new income stream was found, or a major refinancing package was negotiated with the company’s creditors.

 

What is certain is  that, even though Odyssey would not be part of the Judicial Review, merely an interested party, Odyssey’s shareholders will view the prospect of legal action in the UK with great concern, fearing a repeat of the financial and reputational debacle of the “Black Swan” case in the USA.  In 2007 Odyssey was taken to Court in Florida by the Government of Spain over its recovery of seventeen and a half tons of silver bullion from the wreck of the Spanish warship Nuestra Senora de las Mercedes, sunk by the Royal Navy in 1804 and which Odyssey insisted on giving the codename “Black Swan” although the identity of the ship was known beyond doubt, not least by Odyssey and its expert historians and archaeologists and was shown to be so in the Florida Court to the satisfaction of the Judge.   The US Courts found for the Government of Spain at every stage of the process up to and including the US Supreme Court.  The salvage company also suffered huge reputational damage as Judge Stephen D Merryday castigated Odyssey finding that ” Odyssey’s persistent denial and feigned uncertainty about the existence and identity of the wrecked vessel was a demonstrably purposeful and bad faith litigation posture effected from the beginning of this action to deflect, delay, and if possible, defeat (or, at least, compromise) Spain’s rightful claim.” In a damning summary Judge Merryday added

 

” Odyssey went where it went because it knew full well where to go;  Odyssey found what it found because it knew full well what it was looking for; Odyssey withheld and deceived and deflected with respect to what it found because Odyssey knew full well why Spain was asking and knew full well the adverse consequence to Odyssey’s financial aspirations if Spain discovered the answer. To come to court and deny the truth of these facts is, as stated earlier, an unacceptable enormity propounded and maintained in bad faith and for an improper purpose.”  

 

As a result Judge Merryday ordered Odyssey pay Spain costs of $1,072,979 million and to return the bullion and all other finds taken from the ship “contrary to Law” to Spain.

 

“After a careful review of this evidence, I am satisfied that there is sufficient evidence to provide a realistic prospect of conviction for the offences listed above and the facts of this case have now been considered and recorded.”

 

Odyssey shareholders will also be concerned that the application for a Marine Management Organisation Licence will not be straight forward because of Odyssey’s previous conduct on the HMS Victory 1744 site.  On November 7 2014 the Marine Management Organisation sent Odyssey an official written warning letter concluding an investigation into allegations of unauthorised seabed works on the HMS Victory site in 2012.  It was alleged that, in spite of Odyssey Marine Exploration/Maritime Heritage Foundation consultant Dr Sean Kingsley of Wreck Watch International and the Chair of the MHF Lord Lingfield both being told by English Heritage in a minuted meeting of the HMS Victory Advisory Group in February 2012 that a licence was required to work on the HMS Victory site, no licence was applied for.  In spite of this, as Lord Lingfield admitted  in an e-mail to the Ministry of Defence seen by thePipeLine, that the Scientific Committee of the Maritime Heritage Foundation had authorised intrusive seabed works including the preparation of cannon for lifting in the Summer of 2012.  An MMO investigation has now concluded that such works did take place and that they were not licensed although they should have been, resulting in four separate breaches of the Marine and Coastal Access Act 2009.

 

The Marine Management Organisation letter explicitly states that had the case gone to Court the MMO was confident of securing a criminal conviction

 

“After a careful review of this evidence, I am satisfied that there is sufficient evidence to provide a realistic prospect of conviction for the offences listed above and the facts of this case have now been considered and recorded. In this instance, however, it has been decided not to prosecute you for the offences and instead to mark these offences with an Official Written Warning for the offences, in accordance with the MMO’s compliance and enforcement strategy.”

 

Such a decision to waive the right to prosecute on a first offence is in keeping with current UK judicial policy designed to cut down on demands on Court time and costs.  However, as a mark of the gravity of the offences Odyssey were also warned as to their future conduct.

 

“You should be aware that, whilst an Official Written Warning is a final disposal and no further action will be taken in respect of these offences, should you commit any further offences in the future then this may be taken into account when deciding whether or not you should be prosecuted for those new offences. Additionally, should we decide to prosecute you for a further offence then the court may be told about this warning in deciding what sentence you should receive.”

 

In effect it is an official caution of the kind given by the Police to a person who is arrested in the street for being drunk and disorderly.

 

 

“The MMO letter referenced is not an adjudication nor acknowledgement of guilt and there is no further action being taken by Odyssey or by the MMO on the matter”

 

Asked for its reaction to the MMO’s warning letter and why  Odyssey’s senior management and its consultant had knowingly permitted the unauthorised activity and had not quoted the warning letter as a risk factor for shareholders a spokesperson for Odyssey issued the following statement

 

We are pleased that the MOD, DCMS, MMO and MHF all recognize the tremendous historical and archaeological significance of HMS Victory (1744) shipwreck and support the recovery, conservation and documentation of artifacts at risk. The MMO letter referenced is not an adjudication nor acknowledgement of guilt and there is no further action being taken by Odyssey or by the MMO on the matter.  The Maritime Heritage Foundation and Odyssey are working cooperatively with the MMO on permits for the Victory project in accordance with a request from the MOD.”

 

However, a  spokesperson for the MMO confirmed to thePipeLine that  “the licence application process could and would take into account the history of the applicant’s compliance and any enforcement action that may have been taken. This is provided within Section 69 of the Marine and Coastal Access Act 2009 (MACAA).”  Thus, Odyssey’s previous conduct on the site and the resulting warning letter, which amounts to an enforcement action, are a factor in the current application.

 

 

“A controversy of this kind, particularly when it involves a close associate of the main Party of Government allegedly seeking permissions which will allow for the commercial exploitation of the grave and memorial to 1100 lost Royal Navy mariners and even the sale for profit of their personal effects by a foreign based company, will not  be welcomed barely a hundred days from what will be a bitter and closely fought, General Election.”

 

Overall, there is much at stake for all concerned in the HMS Victory 1744 controversy in the coming weeks.  The Parliamentary debate, which will take place under conditions of Parliamentary Privilege enabling observations to be made and information to be placed on the record which might otherwise be constrained by outside parties, will be the first time that the Ministers responsible for the HMS Victory decision, Secretary of State at the Department of Culture Media and Sport [DCMS] Sajid Javid and Minister of State Ed Vaizey and their counterparts at the Ministry of Defence, Secretary of State Michael Fallon and Minister of State Anna Soubry, will have been held to account in a open Parliamentary debate.  It is also certain that, should the Judicial Review proceed, the process of disclosure will lead to further background material relating to the decision making process over HMS Victory 1744 being made public.

 

Neither the debate nor the Judicial Review process is likely to be welcomed by the two Government departments concerned, let alone by Lord Lingfield and his advisers and Odyssey Marine Exploration in Florida.  However, if the bid for a judicial review fails at any point and the HMS Victory 1744 project goes ahead under the current commercial terms, the mainstream archaeological community, including English Heritage and the Chartered Institute for Archaeologists will fear that the sector has been shown to be toothless in the face of a threat to its most fundamental ethical underpinning and that the UK will become a pariah in World Archaeology having knowingly set a dangerous precedent which undermines a UNESCO Convention which has been signed by over forty nations including Spain and France.  In effect the regulation of archaeology in the UK will have stepped back two hundred years into the days when glittering stuff belonging to other people filled the collections of rich unaccountable Antiquarians and collectors.

 

There is another factor in play if the HMS Victory 1744 controversy looks as if it might begin to drag in Government Ministers and even the Prime Minister.  Many senior Conservatives know and have worked with Lord Lingfield both in his professional role as an Educationalist and in his role as a senior Conservative Party Official.  A controversy of this kind, particularly when it involves a close associate of the main Party of Government allegedly seeking the permissions which will allow for the commercial exploitation of the grave and memorial to 1100 lost Royal Navy mariners and even the sale for profit of their personal effects by a foreign based company, will not  be welcomed barely a hundred days from what will be a bitter and closely fought, General Election.

 

Of course events could equally see Odyssey filing for Bankruptcy thus saving everyone a lot of trouble.