Piracy on the high seas: UK government loses £120 million

A tale of gross ineptitude, myopic lack of foresight, and sheer negligence.

BBC News UK has reported (26 September 2011) that a shipwreck containing 200 tonnes of silver worth about £150 million has been found in the Atlantic – the largest haul of precious metal ever discovered at sea.The SS Gairsoppa, a UK cargo ship sunk by a German U-boat in 1941, was found by US exploration firm Odyssey Marine.

The SS Gairsoppa was on its way back to Britain from India when it ran low on fuel in stormy weather and tried to divert to Ireland. It was sunk by a German submarine. Of the 32 crew members who boarded lifeboats after the attack, all perished except for one: Second Officer Richard Ayres reached shore 13 days after the sinking. He was made an MBE for trying to save his fellow sailors and lived until 1992.

The shipwreck was found nearly 4,700m below the North Atlantic, 300 miles off the Irish coast, but it was only confirmed as SS Gairsoppa last week. It had settled upright on the seabed with its cargo holds open, which means that remote-controlled robot submarines should be able to retrieve the bullion.

First used in 1919 by the British India Steam Navigation Company, the ship was commandeered by the Ministry of War Transport in January 1941 to bring nearly 7,000 tonnes of cargo – including pig iron, silver, and tea – from Calcutta, India, to England. On 17 February 1941, U-boat 101 torpedoed the Gairsoppa causing her to sink.

The seven million ounces of silver on the ship are reportedly a mix of privately owned bullion insured by the UK government and state-owned coins and ingots. Piratically, Odyssey Marine will retain a whopping 80% of the cargo’s value under the terms of a contract with the UK’s Department for Transport. Incredibly, a UK Ministry has signed away the chance of keeping £120 million that could have been used to finance essential services in the country.

Let’s take just one example: the Great Ormond Street Hospital for Sick Children. This world-renowned institution urgently needs funds. From its Annual Report and Accounts 2010/11 here is how the charity dedicated its money to helping cure children:

“We were able to commit £18 million to fund a wide range of medical research projects at the hospital and Institute, including research into chronic kidney disease in children, cystic fibrosis, gut disorders, palliative care and the next stage of bone marrow transplantation… During the year, the charity committed £11 million for the purchase of new medical equipment and other capital schemes. This included new beds for the Paediatric Intensive Care Unit, a new radiography system and new incubators for the Children’s Acute Transport Service. Additionally, the charity awarded funds to allow the hospital to purchase new up-to-date surgical equipment for operating theatres… It is incredibly important for parents to be able to stay near their child in the hospital. Some are able to sleep on the wards; others stay in accommodation nearby which is funded by the charity. For this reason, the charity spent £3.9 million on accommodation and welfare last year.”

That’s just part of its desperately needed operational costs. In addition, the Hospital is currently seeking £75 million to complete Phase 2 of its redevelopment programme and a further £5 million for research every year. Obtaining medical equipment suitable for young people, children, and babies, is particularly expensive. Three key pieces of equipment are Angio bi plane machines for heart patients ($3 million each); mobile ultrasound machines ($50,000 each); and incubators for tiny babies ($20,000 each).

Ignorant of any rules and regulations that determine the ownership of bullion lost at sea, I can only lambast the ineptitude and lack of foresight that has led to the squandering of this and similar opportunities to use windfall money for good causes such as the Great Ormond Street Hospital for Sick Children. The greed of Odyssey Marine, which will reap millions in profit, is unjustifiable. The negligence of the UK government, which has lost millions, is reprehensible.

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