The Board of Land and Natural Resources yesterday levied $550,000 in fines against a Maui tour boat company for damaging coral in the pristine waters of Molokini.

The administrative fine against Maui Snorkel Charters, which does business as Maui Dive Shop, is the largest ever issued by the state in a case involving coral damage within a marine life conservation district, said Dan Polhemus, administrator of the state Division of Aquatic Resources.

The board also suspended the company's Molokini commercial use permit for its Kai Anela tour boat, with the term of suspension to be determined. The permit has an estimated yearly net value of $687,000, according to the Department of Land and Natural Resources.

The decision does not affect Maui Snorkel Charters' permits to operate three other vessels in the Molokini conservation district, Polhemus said.

The Advertiser was unable to reach company officials yesterday for comment.

Polhemus said Maui Snorkel Charters co-owner Jeffrey Strahn appeared before the BLNR yesterday, expressing "true remorse" and "a sincere apology" for actions that led to the Sept. 29, 2006, sinking of the 32-foot Kai Anela and subsequent salvage efforts that killed or injured 661 to 871 coral colonies over a total area of 2,067 square feet.

Several other Molokini tour boat operators testified on behalf of Maui Snorkel Charters, pointing to the company's 30-year history of responsible operations. Referring to the sudden sinking of the Kai Anela after one of its bow lines became tangled in an engine, Polhemus said the operators told the board that sometimes bad things happen at sea in a manner in which there's little time to react.

But Polhemus said board members noted the coral damage played out over a week's time, with one bad decision following another.

The company's mechanic on shore had ignored the Kai Anela captain's plea for a tow after the vessel was floundering. Life preservers were not made available to the 15 people aboard the tour boat before they had to jump into choppy seas dangerously close to Molokini crater, according to a DLNR report.

After sinking below the surface, the Kai Anela was partially suspended in the ocean, and DLNR investigators believe someone from the company, without guidance, put a hole in the hull to bring it to rest on the ocean floor, where it impacted coral beds.

Two days later the vessel was dragged away from the crater in a salvage effort, resulting in further coral damage, the DLNR said. When floatation devices slipped out of place, the boat sank a second time, causing even more damage to corals.

On Oct. 6, 2006, the vessel was floated and towed to the Kihei Boat Harbor. The vessel was repaired and is back in service.

Division of Aquatic Resources staff had recommended $672,618 in fines and revoking the company's commercial use permit.

Polhemus called Molokini "one of our crown jewels" and said yesterday's board action shouldn't be considered "a judgment against a company but a decision in favor of our reefs."

He said the fines will be put into a fund to benefit the Molokini Marine Life Conservation District. Negotiations are under way to allow Maui Snorkel Charters to pay the fines in installments, Polhemus said.

Reach Christie Wilson at cwilson@honoluluadvertiser.com.