By NEIL HARTNELL and YOURI KEMP

Tribune Business Reporters

A multi-million underwater explorer yesterday said it will cease treasure salvaging in Bahamian waters immediately if the Government's plans to take a "majority" share of the financial rewards prove unworkable.

David Concannon, Allen Exploration Group's spokesperson, told Tribune Business via email that its principal, Carl Allen, owner of Walker's Cay in the north Abacos, was "not in the business of turning money into heat by lighting dollar bills on fire".

He was speaking after Ryan Pinder, the attorney general, told the Senate during his contribution to the Budget debate that planned legal reforms will "reverse" the present formula whereby the proceeds from underwater treasure salvaging in Bahamian waters are split 75/25 between the explorer and the Government.

The explorer presently receives the majority three-quarters share, but the Davis administration intends to alter the Antiquities, Monuments and Museums Act and its accompanying regulations to "rebalance" this in favour of the Government.

Mr Pinder said: “The Government is seeking to update The Bahamas' legislation relative to underwater cultural heritage by amending the Antiquities, Monuments and Museums Act (AMMA) along with amendments to the associated regulations. The proposed amendments specifically relate to licensing requirements, costs, timeframes, geographical areas, and the current government licensing revenue split with respect to salvage licensees.

"Right now, the Government gets 25 percent of the assets that people dive for and dig up. We will reverse that. We will get the majority interest in cultural assets underwater in this country." Mr Pinder's remarks could have been interpreted as suggesting that the present 75/25 developer weighted formula will be reversed so that the Government now receives three-quarters of any financial proceeds.

However, the Attorney General subsequently clarified to Tribune Business that the revised split has yet to be determined by the Davis Cabinet. "Cabinet would decide what the actual split will be, but we anticipate that it will be the majority position," Mr Pinder told this newspaper. "It will be rebalanced in favour of the Government. That goes before the Cabinet. The Cabinet will decide the actual split."

Tribune Business sources, speaking on condition of anonymity, had told this newspaper within the past week that the Davis administration was seeking to reverse or flip the present formula such that the Government (Public Treasury) would receive 75 percent of all underwater exploration proceeds.

However, it was unable to confirm this until Mr Pinder's Senate address yesterday, and it would appear that the new formula is not yet set in stone. The Attorney General's presentation also sheds new light on why Wayne Munroe, minister of national security, would describe existing underwater exploration licence arrangements as "unsatisfactory".

“It’s always unsatisfactory when somebody comes and says this is yours, without any sort of way to audit, confirm or evaluate whether what they’re giving you is what you’re truly entitled to," Mr Munroe said last week. His comments indicate that the issue has already been discussed at the highest levels of government, either at the full Cabinet or a Cabinet committee or sub-committee.

Many Bahamians will likely applaud retaining the bulk of revenues/profits generated from underwater exploration for the public's benefit, given that recovered assets represent this nation's cultural and historical patrimony. The Government, too, is probably also viewing it as an enhanced source of revenue for the Public Treasury at a time of economic and fiscal crisis.

However, the Government taking the majority share of any proceeds raises questions about whether underwater treasure exploration in Bahamian waters will remain commercially viable based on figures and percentages released by Allen Exploration earlier this week. For it would mean that the explorer is taking 100 percent of the risk, and is fully responsible for all investment, but only receives a minority share for all its efforts.

"Artifacts are divided only after an inventory is provided and agreed upon, and independent appraisal is performed. The Bahamas receives 25 percent of the gross value of all of the agreed upon artifacts," Allen Exploration said then. “The remainder goes to the licence holder, who is responsible for paying 100 percent of the costs incurred to search for, recover, conserve, store, secure and curate the artifacts.

“The license holder’s final share of 75 percent of the gross value quickly becomes five or 10 percent after these expenses are applied and deducted. Despite what some people may wish to believe, finding artifacts underwater is not a lucrative business. It is more like owning a boat, which has been accurately described as 'a hole in the water that you throw money into'.” If the Government takes the majority gross value share, that 5-10 percent will likely be eliminated.

Allen Exploration's Mr Concannon, responding to concerns that the Government may alter the formula so it receives the 75 percent share, told Tribune Business: “Anybody suggesting that the Government should take a 75 percent share of the gross does not understand what it takes to find, recover and conserve the artifacts sitting in front of them.”

"If a 75/25 split is the new law, Allen Exploration will stop searching for anything underwater. Period. Mr Allen is not in the business of turning money into heat by lighting dollar bills on fire.” Mr Concannon said that while there had been "general discussions" with the Government on the split, there had been no mention of a total flip.

"We would be happy to have a full and frank conversation with the Government about the economics of finding, recovering and conserving artifacts from underwater. We have had some general discussions about the share percentages shifting, but not in detail, and nobody has ever said anything about reversing the split to 75/25," he added.

"Searching for - and recovering - artifacts underwater costs tens of thousands of dollars every single day. The Government knows this because we have shared those specific figures with members of the Government.”

No dollar value has been assigned to what Allen Exploration has recovered already from the Nuestra Senora de la Maravillas, the sunken Spanish treasure galleon that some have described as “the most valuable shipwreck in the Western Hemisphere”. Mr Concannon said: "Value is assigned based on a point system agreed upon by the parties."

While it has been reported that Allen Exploration has found items such as silver and gold coins, and an emerald-encrusted broach along with an 11-foot long gold chain, Mr Concannon said any value assigned to finds such as this would more often than not be exaggerated by other explorers looking to bait investors into the process. “Allen Exploration does not have outside investors,” he added.

Tribune Business understands that Allen Exploration's licence, first issued by the Minnis administration, has already been renewed on its existing terms, so it is unclear how any legislative changes will impact its activities until the renewal comes around again.

However, several sources speaking on condition of anonymity said that the Government's plans to take a majority share of underwater exploration proceeds would undermine efforts to properly licence and regulate such activities.

"It sends it underground again," one added. Another said: "That is not going to work. It will drive everything underground and what you'll be attracting is the true pirates. The real issue about this is self-governance. Florida gives people licences and permits, and it's the same 75/25 split [in favour of the developer]. They have strict reporting requirements. This is only going to attract the baddies. The issue is regulation."

The Bahamas, and successive administrations, have long struggled to get to grips with underwater exploration and treasure salvaging within this nation’s territorial waters - hence the long-standing moratoriums on new licences.

Lacking the necessary expertise and resources to conduct proper oversight, together with the required regulatory regime, The Bahamas has allowed many of these sites to be pillaged and ransacked by unauthorized foreign salvors. This has resulted in many Bahamian artifacts appearing at overseas auctions and sales without this nation receiving a cent in benefits for them.

But, while underwater exploration did not merit much mention in the two major political parties’ election manifestos, the sector holds much-needed economic and fiscal potential for The Bahamas should it get it right at a time when the country needs every cent it can get post-COVID-19.

One industry source, asked about the industry’s potential value to The Bahamas, simply responded: “Billions”. They added: “The second and third most valuable wrecks in the entire western hemisphere are located off Grand Bahama.

“It would be an entire industry. It has the ability to effectively put Freeport back on the map. You’re talking about billions in artifacts, and I mean billions. You’ve got from conservation of artifacts to research to study to inventory. The question is where is the transparency and the accountability.”

Another added: “People have been coming into our waters for decades and pilfering this. They’re coming in, taking it and putting it on the US market. Bahamian officials have shared how things are being sold in the US that are found in Bahamian waters. The last [Christie] administration put a moratorium on this to try and fix it.”