The crew were always Russian, and a detachment of KGB agents were placed on board. Initially, these agents would constantly shadow the crew, ensuring that there were no defections, and to prevent "excessive fraternisation with foreigners". However, by the 1980s, the atmosphere had grown more relaxed and the KGB no longer carried out such intense surveillance of the crew, though it is probable that the crew's cabins were still bugged.
The Lermontov was originally used for liner passage voyages, almost like a long distance ferry. However, the Soviet government realised that there was more money to be made by converting the Lermontov to a cruise liner, and the accomodation and facilities on board were significantly improved during the 1970s.
However, Jamison believed that the passage at Cape Jackson was nearly twice as wide than it actually was, and that there were no dangerous rocks or reefs in the passage. Operating without a map, Jamison foolishly proceeded towards Cape Jackson.
Hugging the shoreline to give the Australian passengers a good view of the area, Jamison continued towards the cape. About one mile from the cape, Jamison made the decision to take the Lermontov through the passage. A Russian officer tried to discourage Jamison, but the harbour master assured him it would be fine.
Jamison beached the Lermontov successfully, however, he did not lower the anchors to keep him there. No reasonable explanation has ever been put forward in regards to why Jamison neglected to do this. As a result, the ship drifted into deeper waters. Water tight doors were broken open by the pressure of the sea water gushing into the ship. The Mikhail Lermontov was doomed.
For reasons unknown, no distress signal was sent to the local authorities, and rescue ships, seeing that the Lermontov was in trouble, were gruffly told that their assistance was not required. Luckily for the passengers, the rescue ships knew that their assistance was required, and stood by to evacuate the passengers.
By 8:30pm, many passengers were being loaded on to these rescue ships of their own accord, but the Russian crew refused to disembark. The passengers were put on to an LPG tanker that was in the area, the Tarihiko.
As darkness set in, Wellington Radio ordered all passengers to disembark as the Mikhail Lermontov listen further to starboard. Within twenty minutes of the last passenger being rescued, the Lermontov had disappeared completely. 11 people escaped with minor injuries.
The inquiry report failed to mention the practice of pilots taking ships through the Cape Jackson passage with no knowledge of the rocks, despite tesimonies that proved that it was commonplace for pilots to do so.
Frequent statements by the Russian crew that were contradicted by dozens of eyewitness reports, such as the denial of the existence of the water tight doors that burst open, and denial that the ship was beached, were believed over the eyewitness reports. It was never explained why the crew failed to lower the anchors.
One of the most important issues that the inquiry did not look into was the insufficient life saving equipment on the Mikhail Lermontov. Many of the life rafts had clearly not been serviced for years, and many did not even inflate. However, the inquiry chose to ignore this as, in the end, the evacuation from the ship was successful.
As well as the issues it failed to address, the inquiry was also criticised for the facts it got wrong. It was stated, for example, that the Lermontov struck rocks on his starboard side, when the opposite was true. In a final, damning move, the inquiry included crude, almost childlike, drawings of the ship's layout by the Russian officers, which proved that they had next to no idea about how the ship they were running operated.