Wreck of HMS Victory 1744

– in the House of Commons at 4:59 pm on 29 January 2015.

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Motion made, and Question proposed, That this House do now adjourn.—(Gavin Barwell.)

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence) 5:00, 29 January 2015

On the afternoon of 4 October 1744, HMS Victory was struck by a storm and sank without a trace, along with its crew of 1,100. It was discovered in 1995, but nothing happened until 2008, when Odyssey Marine Exploration, a treasure hunting company based in Tampa, Florida and listed on the NASDAQ index, told the Ministry of Defence that it had located the site of the wrecked vessel.

In early 2009, Odyssey announced at a press conference in London that it had found the ship. Odyssey let it be known that it believed that HMS Victory had been a treasure ship, and it allowed the press to speculate about the value of its cargo. As a Royal Navy warship lost on active duty, HMS Victory was protected under international law by the concept of sovereign immunity. No one, including Odyssey, could interfere with the wreck site unless the Government gave their permission. That did not stop Odyssey claiming to be salvors in possession of the wreck, which was simply not true. One can speculate that that was a ruse designed to give the impression to its investors that it had some legal control over the wreck, when clearly it did not.

In 2010, my right hon. Friend Margaret Hodge and I—she in her capacity as a Minister at the Department for Culture, Media and Sport and I in my capacity as a Defence Minister—launched a consultation on the management of the HMS Victory wreck site, laying out various options and seeking expert opinions on the best way forward. However, when the consultation reported back in July 2011, it recommended that the Government set up an independent charitable trust to manage the site. It recommended the Sir John Balchin Maritime Heritage Foundation, a charity that had only recently been established by Lord Lingfield, formerly Sir Robert Balchin, who had just been ennobled as a Conservative peer by the Prime Minister.

Sir Robert was introduced by Odyssey as a direct descendant of Admiral Balchen of the Victory, and he described the admiral in a TV interview as his forebear. It has since been demonstrated that Sir Robert Balchin, spelled B-A-L-C-H-I-N, is not a direct descendant of Admiral Balchen, spelled B-A-L-C-H-E-N. Odyssey deliberately changed the spelling of Admiral Balchen’s name to match that of Sir Robert Balchin for reasons we can only speculate about. When it was pointed out that Odyssey and Sir Robert had changed the spelling of Balchen to Balchin, Sir John’s name was quickly dropped from the name of the charity. At about the same time as HMS Victory was found and Odyssey became involved with Sir Robert Balchin, the spelling of the admiral’s name on the Balchin Family Society website was changed to match that of Sir Robert.

Balchen’s true descendants, the Temple West family, contacted Odyssey’s chief executive officer, Greg Stemm, to protest and raise their understandable concerns about the fraudulent nature of Lingfield’s claims. Stemm responded by rubbishing their concerns:

“Sir Robert has always been insistent with us that he was not a direct descendant, just that he was part of the same family. While that has possibly been changed to ‘descendant’ in some instances by the media, I trust that you are as cynical about the media’s ability to get everything right as I am.”

It is therefore remarkable that Odyssey commissioned a set of portrait photographs by Emma Duggan of Lord Lingfield standing in front of a portrait of Sir John Balchen to use as evidence that he was connected to the admiral’s family.

If Lord Lingfield was actually a direct descendent of Sir John Balchen and wanted the best for HMS Victory, he could have chosen to work with English Heritage and with many highly respected archaeologists in the UK to protect and study the ship, which is one of our most important Royal Navy wrecks. Instead, he chose to work with Odyssey, a secretive American commercial salvage company with a labyrinth of subsidiaries and linked companies and massive accumulated debts. I will discuss Odyssey’s scandalous track record in a minute.

After the 2010 general election, with the consultation on HMS Victory already under way, Lingfield began conducting a lobbying operation, using his connections to senior members of the Conservative party, on behalf of Odyssey and its business model. He set up a meeting with the current Secretary of State for Health, then the Secretary of State for Culture, Media and Sport, which took place in early July 2010. The meeting was first explained by the Department of Culture, Media and Sport as a constituency meeting, and was then described in more detail in a written answer by John Penrose, then a Minister in DCMS, in July 2012. He stated:

“The Secretary of State for Culture, Olympics, Media and Sport met with Lord Lingfield in July 2010 in his constituency surgery in his capacity as MP for South West Surrey. The HMS Victory 1744 was discussed; no commitments, formal or informal, were made.”—[Hansard, 3 September 2012; Vol. 549, c. 218W.]

In fact, the current Health Secretary is not Lord Lingfield’s local Member of Parliament—that distinction goes to Mr Gyimah.

The Department has therefore admitted that HMS Victory was discussed at the meeting. If that is the case, it is difficult to see how the topic of the meeting was not Government business directly related to the then Secretary of State for Culture, Olympics, Media and Sport’s role. Yet no officials were present, and it seems that no notes were taken of what was said or suggested. There are clearly serious questions for the right hon. Gentleman to answer.

The meeting took place shortly after the consultation on HMS Victory closed. If the then Secretary of State for Culture, Olympics, Media and Sport wanted to avoid any accusation of improper ministerial conduct, holding a meeting with Lord Lingfield about HMS Victory without any civil servants present may not have been the best way to go about it given Lord Lingfield’s role with the Maritime Heritage Foundation and Odyssey. I will write today to the Cabinet Secretary to ask him to investigate what I would say is a clear breach of the ministerial code by the current Health Secretary.

The mishandling of the case of HMS Victory does not end there. The important point is to look at Odyssey itself and explain what type of outfit it its. From the moment when Odyssey became involved with the Ministry of Defence over a previous case in the late 1990s, the heritage community has rightly been concerned about that organisation. Ministers from the current Government have ignored advice that they have received from English

Heritage about the Maritime Heritage Foundation and Odyssey Marine Exploration, which are clearly not to be trusted.

Odyssey has a proven track record of playing fast and loose with historic facts and archaeological ethics. This is a company whose chief executive officer, Greg Stemm, told shareholders last September that it did not have enough cash to see it through the winter. There is plenty of evidence to suggest that if Odyssey were forced to raise equity, it would have to file for bankruptcy. Its shares are worth absolutely nothing.

Odyssey also has a proven track record of ignoring the law, manipulating historical data and making exaggerated and unproven claims to would-be investors of the value of its projects. For example, there is no evidence whatever that there was, to quote Greg Stemm,

“more than a billion dollars of gold” on board HMS Victory, yet that was claimed by Odyssey’s share pumpers and never denied by the company. That lack of evidence has been verified by a Wessex Archaeology report, the only proper, independent investigation into the HMS Victory site. However, Odyssey communicated the claim to its investors via a third party, presumably with the sole intention of raising its share price and attracting new investors for its stock.

The company is well versed in that practice, having inflated the value of wreck sites in the past, leading to newspaper articles in The Daily Telegraph, The New York Times and The Sunday Times. Those newspapers have unwittingly been used by Odyssey to add credence to its claims about the values of those sites, which are then used as part of its campaigns to attract new investors for the company.

If deep-sea exploration and treasure hunting were such profitable and economically attractive ventures, surely other deep-sea offshore oil and gas exploration companies worldwide would be actively searching for shipwrecks and exploiting their cargoes? Of the 17 projects Odyssey has pursued, it has excavated and generated material revenue from only two. In fact, on the rare occasions that Odyssey does carry out deep-sea exploration and salvage work, it charters ships from others and hires temporary staff to perform the work.

Odyssey has also repeatedly pumped non-existent “secret” treasure cargoes, including on the SS Gairsoppa, which Odyssey won the contract for from the Department for Transport in 2010. Odyssey changed the terms of that contract with the Government after it was signed to the company’s advantage, meaning that Odyssey withheld $4.9 million from the Government to cover its salvage costs, which it had no entitlement to retain. I will write to the Permanent Secretary at the Department for Transport to investigate why the company kept what should be taxpayers’ money, and will also ask the National Audit Office to look at that.

In the case of the sovereign Spanish ship, the Mercedes, Odyssey took 17 tonnes of silver coins from the wreck without any permission, only to be subsequently forced by US courts to return the treasure to the Spanish Government. The only compensation Odyssey’s lawyers succeeded in getting was a payment of $20 per bucket for the 551 containers the coins were returned in.

Odyssey is a scam, which operates by encouraging mainly small investors to invest in its outrageous claims of future returns from the salvage of wrecks. The company has lost $185 million since its inception, and is backed by what can only be described as a web of secret offshore companies. They have little or no real value but are highlighted by Odyssey to give the impression that it has major investments in a number of companies, including those that practise underwater mineral extraction. A close look at the companies shows that the valuations are false, and that many of the individuals involved in Odyssey also sit as directors of the other companies. Odyssey strangely seems to pay those companies for “work” at exorbitant rates. Some of the directors are also highly dubious—some of the directors of a Panama-based subsidiary have been investigated for money laundering.

The only people who appear to have made money out of Odyssey and this lucrative scam are Greg Stemm, who is a former PR man for the comedian Bob Hope, John Morris, and the other members of Odyssey’s senior management team. As Odyssey is an American company listed on the NASDAQ, I believe that the Securities and Exchange Commission in the United States should investigate its practices. Later today I will pass on the information that I have collected on the company. It is not the first time that Greg Stemm and John Morris have been investigated by SEC—they were debarred from holding office in a previous company.

One very simple question needs to be answered. Why have the Government entered into a contract to hand over one of the nation’s most historic wrecks to a company such as Odyssey with such a shabby record? It appears that no due diligence has been carried out by the Government into this company. The facts are not difficult to establish, as most of the information that I have found is in the public domain.

In order for Odyssey to gain access to the wrecks, to inflate its share price and sell new stock, it has used Lord Lingfield to create what I would describe as a front organisation—the Maritime Heritage Foundation. MHF is not independent of Odyssey. They share a PR company, Brunswick, and a maritime consultant, Dr Sean Kingsley. MHF entered into a multimillion pound commercial contract with Odyssey, yet it has no money apart from £65,000 in the bank, having spent just £495 on charitable activities in 2013-14. A simple question is: how exactly is it going to fund this multimillion pound contract? It would also be interesting to know where the £65,000 came from. Did it actually come from Odyssey in the first place?

Serious questions can also be raised about the individuals involved in MHF: Sir Robert Balchin, eminent plastic surgeon Professor Alan Roberts, and Mr Nigel Branson, a member of the corporation of the City of London. None of those individuals has any background or expertise whatever in marine archaeology or in managing archaeological projects. I will be writing to the Charity Commission and asking it to investigate this charity.

There are also serious questions about the procedures that led to the Ministry of Defence gifting the wreck of HMS Victory to MHF in January 2012. It was to this almost non-existent charity, with no expertise and non-existent funds, that the Ministry of Defence gifted HMS Victory in 2012. The threshold for gifting currently stands at £300,000, meaning that a departmental minute is laid before Parliament when items valued over this figure are gifted by the Government. This arrangement provides transparency to allow Parliament to raise concerns about such gifts. The maritime archaeological community agrees that the guns alone on the wreck are worth several million pounds. Why did the Ministry of Defence not place a departmental minute before the House so that the gift could be properly scrutinised? I have raised this matter with the Chair of the Public Accounts Committee who has herself raised the matter with the National Audit Office. I have also written separately to the permanent secretary at the Ministry of Defence to ask him to investigate why Ministers agreed to this.

Why was Lord Lingfield, a man with no expertise in maritime archaeology, given such a prominent role in the preservation of HMS Victory? We need to be clear about what motivates him. He could just be an innocent Walter Mitty character claiming to have ancestral links to boost his standing in the society in which he moves, or he could have direct or indirect financial links or association with Odyssey, either through direct payments, shares or an involvement in hedge funds trading in Odyssey’s shares. If that is the case, it would be very serious. It would clearly be a matter not only for the House authorities, but the police. I am at a loss to know what his motivations are, but we need a clear explanation from him, including how he became to be associated with Greg Stemm and John Morris of Odyssey.

I am also at a loss as to why the Government should hand over this wreck to an individual like Lord Lingfield, who has no experience in this field. They might as well have handed this to the first member of the public who strolled past the MOD main building that day. The only difference is that we know Lord Lingfield is very well connected within the higher echelons of the Conservative party. The Government should immediately cancel this arrangement with Odyssey and the Marine Heritage Foundation.

Our nation rightly honours citizens who die in the active service of our country. I am a commissioner of the Commonwealth War Graves Commission and I am truly privileged to serve on it. Just like the true descendants of Sir Robert Balchen, the British public will be outraged and scandalised by the sleazy way the Government have treated the last resting place of HMS Victory and her crew.

Photo of Ed Vaizey Ed Vaizey Minister of State for Culture and the Digital Economy (Jointly with Department for Business, Innovation and Skills), Minister of State for Culture and the Digital Economy (Jointly with Department for Culture Media and Sport) 5:19, 29 January 2015

I am grateful for the chance to respond to the debate called by Mr Jones, whom I congratulate on securing it. He is a distinguished former Minister at the Ministry of Defence, and, as he said, he was responsible for beginning the consultation on the future of the wreck of HMS Victory.

I begin by making it clear that the MOD’s decision to allow the Maritime Heritage Foundation to recover at-risk surface artefacts from the wreck is currently subject to a judicial review action.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

We had a Defence Minister here earlier, but he has obviously left the Chamber—oh, he is now returning. Why is a Minister from the Department for Culture, Media and Sport replying to the debate, rather than an MOD Minister?

Photo of Ed Vaizey Ed Vaizey Minister of State for Culture and the Digital Economy (Jointly with Department for Business, Innovation and Skills), Minister of State for Culture and the Digital Economy (Jointly with Department for Culture Media and Sport)

As I think became partly clear in the hon. Gentleman’s speech, different Departments are involved in the wreck’s future. DCMS, being responsible for the Government’s relationship with the UNESCO convention and English Heritage and for the protection of marine archaeology, has an important role in ensuring that the wreck site is treated appropriately. However, I must put on the record my thanks to the Under-Secretary of State for Defence, my hon. Friend Mr Brazier, for being on the Bench with me this evening. He is here, also, to listen to the hon. Gentleman’s points, which, I might add, he put extremely forcefully.

As I said before the hon. Gentleman’s intervention, the decision to allow the Maritime Heritage Foundation to recover at-risk surface artefacts from the wreck of HMS Victory is subject to judicial review. With the greatest respect, therefore, it would be unwise for me to go into the subject, given that court action might be imminent.

I would like to put the debate into context. As the hon. Gentleman indicated, it is unusual to find the remains of a British first-rate warship from this period, and the wreck is not just the predecessor of the Royal Navy’s most famous ship, the HMS Victory we know so well as Nelson’s flagship; Balchen’s Victory has historic resonance of its own. In its day, it was the pinnacle of naval technology. For example, it was fitted with a complete arsenal of bronze cannon, which is extremely rare. The wreck is located in the English channel, but outside British territorial waters, meaning it is not subject to the Protection of Wrecks Act 1973. Normally, a wreck within our territorial waters would be designated under the Act and therefore protected.

Neither is the wreck like the Mary Rose. It is not a single large piece remaining to be excavated. Its remains are scattered over a wide area, which is an important point, because it means that the wreck is highly at risk from environmental factors—shifting sands and bottom currents—

Photo of Ed Vaizey Ed Vaizey Minister of State for Culture and the Digital Economy (Jointly with Department for Business, Innovation and Skills), Minister of State for Culture and the Digital Economy (Jointly with Department for Culture Media and Sport)

I will lay out why I think it is at risk, and then the hon. Gentleman can tell me why it is not at risk.

First, there are the environmental factors; secondly, the wreck is at risk from trawler fishing—I gather there are scratches on some of the cannon and that some have been dragged up to 300 metres away from the wreck; and thirdly, of course, it is at risk from illegal salvage. Indeed, one cannon, I gather, was removed illegally from the site by a Dutch salvor, but recovered by MOD police.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

The only independent report into the wreck, the Wessex report, found no evidence it would deteriorate. That was the excuse pushed forward by Lord Lingfield and Odyssey for why they had to start work on the wreck.

Photo of Ed Vaizey Ed Vaizey Minister of State for Culture and the Digital Economy (Jointly with Department for Business, Innovation and Skills), Minister of State for Culture and the Digital Economy (Jointly with Department for Culture Media and Sport)

As I said, as far as I am aware, there has been at least one illegal salvage from the wreck, and it is obviously in a busy part of the world. It is not in a remote location that requires an expensive operation to take artefacts from it. It is in the English channel and therefore potentially subject to illegal salvage by amateurs looking to make a quick buck. It is important, I think, to recognise that. The hon. Gentleman mentioned the Wessex archaeology report. That shows that the Government have been very careful to commission reports and get advice on how the wreck should be treated. In our opinion, it is important to recover some of the artefacts to help our understanding of Britain’s great naval heritage before it is lost for ever.

The hon. Gentleman referred to the gifting of HMS Victory. It is true that a deed of gift was signed in January 2012, transferring to the Maritime Heritage Foundation the ownership of the wreck of HMS Victory and all associated with her in the vicinity of where she is lying, except for personal property not belonging to the Crown.

The Maritime Heritage Foundation is a registered charity, and its chairman is indeed Lord Lingfield—and the hon. Gentleman has expressed his opinions on him. MHF was established especially to recover, preserve and display in public museums artefacts from HMS Victory and to promote knowledge and understanding of our maritime heritage, particularly through educational projects. The nature of this work lends itself to being completed by a charity, as charities have access to funding streams that the Government do not, and it is Government policy to give voluntary bodies the chance to use their enthusiasm and expertise to deliver functions that hitherto have been the prerogative of the state.

All artefacts recovered will be declared to the receiver of wreck in accordance with existing legislation to determine ownership. As specified in the Victory project design’s key management principles, artefacts transferred under the deed of gift that are recovered and accessioned from the wreck and the associated archive, including site plans, drawings and photographs, will form the “Victory 1744 Collection”, which will be managed and curated in line with the Museums Association’s code of ethics for museums.

MHF and Her Majesty’s Government are committed to making the artefacts accessible to the public through a mixture of exhibitions and virtual tours. MHF will publish more information about this on the website, but discussions have taken place with the National Museum of the Royal Navy, which already has two cannons from the ship. Since the beginning of last year much progress has been made. There have been constructive discussions between the Government, MHF and the advisory group, which were required for the project to move forward.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

Considering that the organisation has no expertise on its board and has no money, which is the more important thing, how is it going to achieve this? How does this square with information from the United States about Odyssey, saying that it will get its money back by selling artefacts from the ship?

Photo of Ed Vaizey Ed Vaizey Minister of State for Culture and the Digital Economy (Jointly with Department for Business, Innovation and Skills), Minister of State for Culture and the Digital Economy (Jointly with Department for Culture Media and Sport)

It is important that the hon. Gentleman has referred to the trustees of the charity, but the charity has been set up expressly to recover artefacts from HMS Victory. It is important to stress that we set up a management advisory group, which includes the National Museum of the Royal Navy, English Heritage, the receiver of wrecks, the Marine Management Organisation and officials from my Department and from the Ministry of Defence. I can tell the hon. Gentleman, who knows me well enough, that as the Minister with responsibility for this work, I have at no point allowed MHF to proceed with any actions when this advisory group said that it should not do so.

Photo of Kevan Jones Kevan Jones Shadow Minister (Defence)

I agree, and I commend the Minister for that. Let me ask him, then, to stop the consultants and advisers to MHF and the consultants who work for Odyssey from attending those meetings?

Photo of Ed Vaizey Ed Vaizey Minister of State for Culture and the Digital Economy (Jointly with Department for Business, Innovation and Skills), Minister of State for Culture and the Digital Economy (Jointly with Department for Culture Media and Sport)

Perhaps it reflects my style of ministerial management, but it is important to me that where my advisers and indeed external experts are raising concerns, those concerns should be heard at first hand by those who might ultimately be responsible for collecting and recovering artefacts from the site so that the concerns can be taken seriously and acted on.

The hon. Gentleman puts his points forcefully and he is going to take a number of actions. The Under-Secretary of State for Defence, my hon. Friend the Member for Canterbury will write to him to explain the role of the Ministry of Defence, and I certainly pledge now in the House that I will take the hon. Gentleman’s points very seriously indeed, go back and consult my officials and write to him subsequently.

Question put and agreed to.

House adjourned.