Bloomberg Businessweek (November 20, 2023)

Год выпуска: November 20, 2023

Автор: Bloomberg Businessweek

Жанр: Бизнес

Издательство: «Bloomberg Businessweek»

Формат: PDF (журнал на английском языке)

Качество: OCR

Количество страниц: 68

Lord of the deep

For years the world’s greatest deep-sea shipwreck hunter has battled governments and rivals over the ocean floor’s riches. He’s kept his identity a secret, until now

Officers from the Icelandic coast guard watched the ship on the control room monitors—a solitary dot on the blue expanse of the nautical map. The dot had been circling 120 miles offshore for several days in April 2017, in weather no sane sailor would loiter in. Near-gale-force winds howled across mountainous seas; rain mixed with sleet.
By the look of the ship, it wasn’t there to catch fish. Taking on supplies in Reykjavik a few days earlier, the Seabed Constructor’s unusual appearance had attracted local news crews and a visit from a coast guard commodore. Its sleek orange hull supported a space-age communications array and a helipad. A gigantic crane shaped like a scorpion’s tail arched from its stern. Now, as the Constructor bobbed in the storm, the coast guard radioed the vessel’s bridge to ask its business. The response—“research”—was so infuriatingly vague that officers dispatched a helicopter to investigate. The pilot buzzed overhead and reported seeing equipment being winched in and out of the waves.
The Constructor was outside Iceland’s territorial waters but inside its zone of economic influence, just a few miles from an undersea internet cable. Senior coast guard personnel debated what to do, then sent an armed patrol boat to escort the Constructor to port.
When the ship got back to Reykjavik, the captain and two operations managers were taken to a police station to be interviewed by Icelandic detectives. All three were cooperative but cagey. They were contractors working for a London client whom they couldn’t, or wouldn’t, identify. They said they’d been hired to search for valuables on the SS Minden, a German cargo ship sunk during World War II that lay broken some 2,240 meters (7,350 feet) below the surface.
The Minden was in Brazil when war broke out in 1939. Historical records don’t show what the vessel was carrying back to Nazi Germany, but they indicate that a handful of German businessmen were on board, including two bankers. Whatever the cargo, it was valuable enough that, when the Minden was spotted by the British navy, the captain scuttled the ship rather than let it fall into enemy hands.
At first the Icelandic coast guard was reluctant to allow the operation to continue, but it relented a couple of weeks on after receiving a letter from the Constructor’s lawyers threatening to sue. To recover whatever the Minden contained, all the salvors needed to do was return with an environmental permit. The application set out a plan to use battery-powered, remotely operated subs to cut open the hull, bend back a sheet of metal and retrieve a wooden box from the mailroom. “Our client expects that the operation will take approximately 24 to 48 hours if weather conditions are favourable,” the document said.
At no point did the Icelandic authorities learn the identity of this mysterious client, the backer of the Minden expedition. They couldn’t have known that the German ship was one of dozens he’s pursued over the years. Media reports about wrecks this man has found or recovered have described him variously as an anonymous London financier, “the unknown salvor” and “the Originator.”
He’s marshaled a high-tech operation to recover the lost treasures of history, spanning centuries and entire civilizations and covering most of the blue portion of the planet. And he’s managed to keep this remarkable enterprise secret—until now.
To piece it all together, Bloomberg Businessweek investigated the financier’s operations across 11 months, interviewing more than 40 current and former employees of his companies, as well as contractors, archaeologists, government officials, law enforcement officers and attorneys. Many of them requested anonymity, concerned about possible legal consequences from discussing what the financier considers his private business. The research also drew on corporate and legal filings, government records and satellite ship location data to confirm previously unreported expeditions.
The glitter of deep-sea treasure has lured adventurers since time immemorial, and most have ended up poorer instead of richer. There are about 3 million wrecks in the ocean, an unharvested bounty worth untold billions of dollars, but getting to them can be dangerous, difficult and ruinously expensive. Recently, though, advances in underwater technology have opened up swaths of the ocean floor to exploration. Beyond gems and cultural treasures are rare minerals, oil, gas, battery metals and creatures unknown to science—all outside the reach of any state regulator that might constrain an eager entrepreneur. In the deep-sea gold rush that’s resulted, what matters most is getting there first.
Right now, the only ones with the resources to join in are corporate interests and wealthy individuals whose goals may or may not be aligned with the rest of humanity. The Originator is the most prolific of them all—the most successful shipwreck hunter in modern times, perhaps in all of history. His name is Anthony Clake, and he’s a 43-year-old hedge fund executive who rarely leaves dry land.
CLAKE’S PURSUIT CAN BE TRACED back to another quest popular with the super rich: the hunt for lower taxes. At the turn of the century, enterprising accountants and bankers in the City of London were creating ever more ingenious shelters for their clients’ money—investing in Harry Potter film distribution, say, or arranging for bonuses to be paid in fine wine.
The contribution London investment firm Robert Fraser Asset Management made to the genre was tax-efficient shipwreck hunting. The idea was to mitigate the high risk of losing millions of dollars on a fruitless search by claiming a juicy tax break in the event of failure. To do this, Robert Fraser created companies tailored to individual wreck operations, then used leverage and other accounting tricks to supercharge investors’ tax relief.
A Robert Fraser brochure touting its approach hails a new era of wreck recovery, aided by million-dollar marine robots and side-scan sonar that creates accurate 3D seafloor maps. Among the firm’s first investors were celebrities and tech entrepreneurs, as well as executives at the London hedge fund Marshall Wace. Founded in 1997 by Paul Marshall and Ian Wace, it grew to become one of the top hedge funds in London, then the planet. Today it has $62 billion under management and a reputation for making money in good times and in bad. Both of the founders put money into Robert Fraser’s marine ventures, and so did Clake, a talented young Marshall Wace executive.
The Financial Times reported in a story about the hedge fund that, in 2002, fresh from his studies at the University of Oxford, Clake developed a successful portfolio system that reviewed stock recommendations from 1,000 or so analysts to generate trading ideas. Those who’ve worked with him say his passion lay there—with technology and data. But he took a particular interest in shipwrecks, according to several people interviewed for this article who asked not to be identified, citing nondisclosure agreements. (A Marshall Wace spokesman says the investments were made in a personal capacity, unconnected to the hedge fund’s business.)
By 2015, Robert Fraser had formed a partnership with a leading deep-sea recovery company, Odyssey Marine Exploration Inc. The financial firm’s marine unit had attracted about 100 individual investors, sponsoring expeditions around the world, each with its own code name and off-the-shelf company. One of the most ambitious, the “Enigma” project, sought an historic wreck called the Napried, known to be stuffed with priceless relics when it sank somewhere off the coast of Lebanon in 1872.
The vessel was carrying cargo for Luigi Palma di Cesnola, an American consul in Cyprus who had a taste for Mediterranean antiquities. Back then he was considered a collector, though today what he did would likely make him a plunderer. Cesnola shipped some 30,000 pieces of sculpture, weaponry and pre-Biblical kitchenware to the US, where they can still be seen in a New York Metropolitan Museum of Art exhibition bearing his name. He lost about 5,000 more pieces on the Napried.
Marshall, Wace and Clake all invested in the Enigma project, and Clake was enthusiastically involved in details such as the potential location of the wreck, says Colin Emson, Robert Fraser’s executive chairman at the time. The expedition didn’t find the Napried, but it did stumble across several trading ships dating to the last days of the Ottoman Empire, one so large that archaeologists christened it “the Colossus.” Inside were turquoise-glazed jars full of peppercorns, Ming dynasty Chinese pottery and Turkish tobacco pipes.
The Enigma team sent a tethered remotely operated underwater vehicle (ROV) to reach the Colossus. Using suction cups mounted on robotic arms, the ROV painstakingly removed several hundred items. The whole operation cost hundreds of thousands of dollars, at a minimum. Although the value of the cargo was mainly historical, the intention, for Robert Fraser and its clients at least, was always to sell some of it to private collectors and make a profit. “You don’t need too many Ming vases to make that worthwhile,” Emson says.
They never got the chance, because when the expedition ship went to Cyprus to refuel in December 2015, the authorities detained it and seized all the Colossus relics. The Cypriot government is sensitive about cultural heritage, a legacy of Cesnola’s activities. The authorities released the ship but kept the cargo on the island, where it’s remained under lock and key ever since.
At Robert Fraser, Emson liked to say there were three key questions about any given shipwreck: Can you find it? Can you fund it? Can you keep it? The last of those often poses the biggest challenge. It’s not just Cypriot officials who are hostile to treasure hunters. Seventy-three countries have ratified the United Nations’ 2001 Convention on the Protection of the Underwater Cultural Heritage, which states that signatories will take “all appropriate measures” to prevent the commercial exploitation of shipwrecks. And academics feel so strongly about the sanctity of sunken ships that they argue divers and their machines shouldn’t even touch a wreck site. “You don’t go to the Louvre and stick your finger on the Mona Lisa,” Robert Ballard, the marine geologist who discovered the Titanic, said after trophy hunters ransacked the world’s most famous ship.
On the other side are pro-salvage archaeologists who argue that historical material left in the deep is of no use to anyone. Better to haul it up and put at least a portion on display. One member of this faction, who asked not to be named discussing sensitive matters, says those in the “don’t touch” school are akin to religious fanatics, calling them “the Archaeo-Taliban.”
Technically there’s nothing to stop salvage crews from recovering anything they want from the seafloor. But even sunken treasure once belonged to someone, and salvors are effectively obligated to at least try to find the legal owners. That can lead to competing claims and years of litigation. The Colossus was carrying vases made in China 500 years ago, which had been acquired by Turkish traders for the palace of a long-dead sultan somewhere in the Ottoman Empire. Who might own that cargo today? Enigma tried hiring lawyers in Cyprus, who argued that the ship had been found in international waters, where the country had no jurisdiction, but the effort got jammed up in the island’s judicial bureaucracy. (A spokesman for Enigma says that the Colossus excavation was a “purely scientific venture” with new funders and that Clake is no longer involved. Clake’s spokesman says his stake by the latter stages of the project was less than 5%.)
Before the matter could be resolved, the Robert Fraser era of wreck exploration ended. British tax inspectors cracking down on aggressive tax-avoidance schemes began reviewing and rejecting the deductions claimed by the firm’s investors. Without the tax breaks, treasure hunting lost a key part of its appeal. Emson says the deals were “totally lawful, totally legal and commercial”; the British tax agency declined to comment.
By that point the Marshall Wace executives, and Clake in particular, were already frustrated with Robert Fraser, according to several people familiar with the situation. In meetings, Clake sometimes gave the impression he thought he could get better results without them. Behind the scenes, he was already trying.
ABOUT A DECADE AGO, SEVERAL companies with vaguely nautical names were registered in the UK. Their ownership wasn’t always evident. Advanced Marine Services Ltd. listed its main shareholder as an Isle of Man trust. Other entities recorded Clake or Marshall as investors, or they employed directors with close business ties to Marshall Wace. The companies were created specifically to recover and sell valuable cargo from shipwrecks. Clake was the driving force behind them, according to numerous sources interviewed by Businessweek.
In 2015-16 he ordered a half-dozen autonomous underwater vehicles (AUVs) from a Norwegian manufacturer. These free-swimming robots resemble bright orange torpedoes and can descend as far as 6,000 meters, without the risk of a disaster like the one that befell the Titan submersible, which imploded while diving to view the Titanic, killing all five passengers. Each would normally cost several million dollars, but Clake got a bargain because the offshore energy industry was in a slump and wasn’t buying as many as usual, according to two people familiar with the deals.
Clake’s innovation was to put all the AUVs on one ship and deploy them in formation like a bomber squadron, carpeting vast areas of seabed with sonar. Multiple AUVs could search more ground and get better-quality scans while reducing time spent at sea and the costs of fuel and labor. Clake and the other investors in his companies also acquired businesses in Louisiana and Texas whose employees had experience operating the robots for the oil and gas industry.
His employees and contractors describe him as a demanding boss who seemed to have access to almost unlimited funds. Marshall Wace had in 2015 sold a 25% stake in the business to Kohlberg Kravis Roberts & Co., the Wall Street private equity titan, for about $150 million in shares and an undisclosed amount of cash. (Clake netted under $50 million.) Clake’s earnings aren’t disclosed publicly, but Bloomberg News reported in 2018 that he’d been Marshall Wace’s top earner in the year through that February, receiving compensation of about £61 million ($75 million). Given that Clake and his partners clearly didn’t need the extra income from treasure hunting, they seemed to be in it primarily for the challenge. He never showed an interest in going to sea.
In deciding where to start searching, Clake drew in part on records from Lloyd’s of London, the shipping world’s economic engine since the 18th century. His researchers discovered the insurance market was digitizing its records, including manifests, ship designs, letters and safety certificates—a compelling dataset, from a hedge fund analyst’s perspective.
It wasn’t long before his AUV squadron started finding targets, or “hard returns” in radar operator’s jargon. In 2016 they dove to the site of the SS Coloradan, an American steamer that was sunk by a German U-boat 250 miles off Cape Town during World War II, killing six crewmen. The wreck contained drums of gold precipitate that a Clake expedition later recovered. (His spokesman says Clake wasn’t a shareholder in the company that claimed the gold cargo. His boss Paul Marshall was, however, along with another Marshall Wace executive and several of Clake’s regular collaborators, company records show.)
That same year, off the coast of West Africa, according to two sources familiar with the operation, Clake found the SS Benmohr, a Scottish-owned cargo ship that held 50 tons of silver coins from the Bombay Mint. It took 12 hours to lower containers 4,500 meters, have robots load them with silver and winch them back up. The coins were later melted down and sold. Neither discovery was made public, and everyone involved had to sign an NDA pledging secrecy. (Clake’s spokesman says he had a 25% stake in the proceeds from the Benmohr salvage.)
Turning treasure into money—the “can you keep it?” part of Emson’s equation—remained a challenge. But Clake and his partners found a way to streamline that process, too. Anything they found was reported to the UK Receiver of Wreck, an obscure British government post created to find the true owners of lost cargo from around the world and ensure salvors were rewarded fairly. If the owners emerged, Clake-affiliated companies could claim compensation of as much as 80% of the cargo’s value. If no one came forward after a year, they could legally keep anything found outside British territory.
To make matters more confusing for anyone trying to keep track, Clake’s crews sometimes moved material from a wreck to another location on the seafloor for later collection, a practice called “wet storage.” Such methods helped Clake keep his prospecting private from governments that might’ve seized the treasure, and from rivals who might’ve been tracking his ships via satellite. But the tactics weren’t without risk. On one occasion a salvage expert who felt he’d been unfairly treated returned to a wet storage site without Clake’s knowledge and helped himself to several tons of silver coins, according to several sources with firsthand knowledge of the incident. Clake’s team was told the salvor had taken them to South Africa and smelted them into cups to disguise their origin.
Clake himself wasn’t above some sleight of hand in pursuit of shiny objects. In 2017, after negotiating a salvage contract with the UK, his former partners at Odyssey Marine Exploration sent subs 2,500 meters into the North Atlantic darkness to recover 526 bars of silver from the SS Mantola, a World War I cargo carrier it had discovered previously. The subs reached the wreck to find the silver...gone. In between discovery and recovery, someone else had gotten there, and Odyssey’s lawyers thought they knew who. They filed a lawsuit in New York claiming possession of the wreck and asked the judge to order a deposition from the person they held responsible: “Odyssey has credible information that Mr. Clake was the individual who directed the removal of the silver bars from the Mantola.” The lawsuit didn’t go anywhere, in part because the Receiver of Wreck refused to release information to Odyssey’s lawyers.
Documents obtained by Businessweek through a freedom of information request show Odyssey’s suspicions were right, though. Clake’s contractors had taken the silver and claimed an award through the Receiver of Wreck: all perfectly legal and handled without publicity.

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скачать журнал: Bloomberg Businessweek (November 20, 2023)