Vessels are liable for fines if they damage coral - and government has powers to seize the vessels too

Paul Allen faces having his $160 million super yacht confiscated after its anchor dragged through a coral reef in the Cayman Islands.

The billionaire Microsoft co-founder and his crew could also be fined up to $600,000 and be jailed for up to four years for the incident involving the 300ft MV Tatoosh.

Tim Austin, the deputy director of research and Department of the Environment said that under the Cayman Islands national conservation law, damaging coral could be prosecuted as a criminal offence.

Along with the $600,000 fine and jail term any assets involved - in this case the Tatoosh - could be seized during a prosecution.

Officials in the Cayman Islands say the MV Tatoosh's anchor chain destroyed 80 per cent of a protected yacht. It's still unclear how the destruction happened

Evidence: The Cayman Islands Port Authority released this image of what it said was the damaged reef

Allen's officials have pitted the blame on the Port Authority, saying they were simply following instructions from officials on where to anchor the boat

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Paul Allen's (pictured in October 2014) super yacht has reportedly caused extensive damage to a protected reef in the Cayman Islands

On top of that there could be a civil prosecution which has an unlimited fine.

Allen is currently estimated by Forbes as having a net worth of $18.2 billion.

Austin said that in the area where the anchor dragged the 'prime attraction' is the reef which is vital for aquatic life.

He said: 'The whole of the west side of a prime diving site - because of the coral it's a great dive site.'

A spokesman for Vulcan Inc, Mr Allen's investment and philanthropy company, said that the incident had been 'greatly exaggerated'.

The spokesman said: 'The local port authority had directed the Tatoosh to anchor in a designated area, and the crew moved the vessel, on its own accord, as soon as it learned from local divers that there might be a problem.

'The crew is cooperating fully with the local authorities in this matter'.

The spokesman refused to say if Allen was on board at the time of the incident.

In a later statement, the spokesman added a more detailed account of Allen's side of events.

'Vulcan Inc. and Paul G. Allen have a long history of responsible exploration and a commitment to ocean conservation,' the spokesman said.

'On January 14, 2016, MV Tatoosh was moored in a position explicitly directed by the local Port Authority.

'When its crew was alerted by a diver that her anchor chain may have impacted coral in the area, the crew promptly, and on their own accord, relocated their position to ensure the reef was protected.

'Vulcan and the ship’s crew are actively and cooperatively working with local authorities to determine the details of what happened. An investigation by local authorities is ongoing.

'Through his longtime philanthropic and scientific endeavors, Paul G. Allen is a global leader in supporting ocean health. Earlier this year, he announced support for cutting-edge research designed to stabilize and restore coral reefs.'

An investigation is now ongoing involving the Department of the Environment, the Cayman Islands Port Authority and Allen's crew.

Local divers conducted a survey of the damage last week.

They found that 13,800 square feet of reef had been damaged - and within that area 80 per cent of the coral was destroyed, the department of the environment said. The reef is in the larger West Bay diving zone.

A spokesman for the department told Cayman News Service: 'In addition to assessing the damage and determining the cause of this incident, we are also paying close attention to lessons learned so that we can more effectively prevent these accidents while still hosting visiting yachts,'

The incident happened on January 12 and pictures on social media show that Allen's yacht was in the islands last week. The Tatoosh is also based there.

Officials say the boat was anchored close to the Doc Poulson shipwreck and The Knife dive site when it did the damage.

Allen tried selling the yacht for $160million in 2010, but he took it off the market in 2014 after failing to find a buyer. The boat pictured above anchored in Venice, Italy

Officials say the boat was anchored close to the Doc Poulson shipwreck and The Knife dive site when it did the damage. It's unclear if Allen was on the yacht at the time

Technically, any vessel that damages protected reef in the islands is subject to a fine, but the government has reportedly failed time and time again to collect on these sanctions, according to CNS.

Allen celebrated his 63rd birthday last week, on January 21, and was recently in the news for reportedly purchasing a $5.4million bungalow on Seattle's exclusive Mercer Island.

He owns a 10,000-square-foot home on the island, and has been known to buy up smaller properties around it for house guests. Microsoft co-founder Bill Gates also has his main home on the island.

Were the Tatoosh found to be to blame for the damage to the reef it would be embarrassing for Allen, who in the past has championed environmental causes.

In 2014 he spent $2.6 million funding the University of British Columbia's Sea Around Us project fight illegal fishing.