It was February 28, 1942, and Banten Bay, on the north-west coast of Java, was swarming with enemy ships. Manning was a gunner on board HMAS Perth I, under siege from Japanese destroyers. The Allied cruiser had run out of ammunition, Manning, now 93, recalls from his home in Ballarat.

These days he is hard of hearing but his voice over the crackling phone line is as firm as his memory of that desperate night. "We had nothing else left." So Manning started firing star shells, a form of flare used to illuminate the battlefield. "They were being fired on low trajectories, in the hope they might hit something and do some damage."

Manning was still firing star shells when the order was given to abandon ship. "I happened to be making up my mind about leaving the ship when the fourth torpedo hit. And it blew me to the water," Manning recalls. "I had no memory of it whatsoever, which was just as well. I left the ship in a hurry."

It was the fourth torpedo that finished HMAS Perth. She sunk shortly after midnight on March 1.

"The last they saw of her was a battle ensign flying at her mainmast, lit by the Japanese searchlights – a splash of red, white and blue in the night," Mike Carlton writes in Cruiser: The Life and Loss of HMAS Perth and her Crew. "And then she was gone, a stately actress at her last curtain call. Almost serenely, His Majesty's Australian Ship Perth slipped under – some of them said she steamed out – about six kilometres to the north-north-east of St Nicholas Point."

The Battle of Sunda Strait was all but over. The American heavy cruiser USS Houston, which had fought alongside HMAS Perth, sank soon after. About 1100 sailors from both ships lost their lives. "The commander in Perth had told me I would go ashore shortly," Manning says wryly. "He was right but it was the wrong shore."

There was something special about HMAS Perth. Everyone says so. Last year I attended a memorial service over the site of the wreck on board the HMAS Perth III. Her captain, Ivan Ingham, had met the five remaining crew members of HMAS Perth still alive at the time. "When I met the men, without prompting, each said the Perth was a really special ship and their favourite to serve on," Ingham said.

In three remarkable years HMAS Perth helped evacuate Allied troops from Greece, fought against Vichy France forces in Syria and lost 13 men in the Battle of Crete. HMAS Perth and USS Houston had been the only large Allied ships to survive the Battle of the Java Sea.

"No ship was more loved in the Royal Australian Navy, and no ship's company saw more of the horrors of war or endured them with such courage," Carlton writes in Cruiser. "Whatever ships they might have sailed in before or since, the men of HMAS Perth belonged to her first and foremost, and she to them."

This reverence explains why the discovery in 2013 was so shocking. In early September Indonesia-based diver Richard Rigby conducted a regular six-month dive of the shipwreck of HMAS Perth.

What he found caused outrage and heartache: the cruiser had been commercially salvaged for scrap metal. "The mid-section above deck where the bridge was has been completely removed, the bow guns have been damaged by what appears to be explosives with the barrels missing and the tops peeled off, the bow has collapsed completely," Rigby said in a report posted on Facebook.

"I dived her in May .. and she was all there so it must have happened in the last four months."

Military historian Pattie Wright still gets emotional talking about it. "Historians estimate 40 to 60 men would have been caught in sealed compartments when Perth went down – that's a war grave. It's no different to the war graves in Villers-Bretonneux or Kokoda," Wright says.

"There are men and boys who are still there unless the salvagers have ripped her open. Barges have raped the ship … to build bloody microwaves and may have scattered the men to the currents. It's vile."

The discovery could hardly have come at a worst time in the bilateral relationship. Indonesia was livid over revelations Australia had tapped the phone calls of former Indonesian president Susilo Bambang Yudhoyono, his wife and senior officials. Wright says her pleas to the Australian government to protect the wreck fell on deaf ears. "I was duck shoved from department to department," she says. "To say it has been a silent hot potato in Canberra is an understatement."

In December 2013 Wright was shocked to learn the Commonwealth War Graves Commission did not consider a shipwreck to be a war grave. "A war grave under its charter is defined as official commemoration by interment of remains in an established grave with a regulation headstone," Michael Ronaldson, then minister for veterans affairs, told her in a letter.

"Further there is no guarantee that declaring wrecks war graves or amending the charter … would add anything further in terms of protection of such sites."

The shipwrecks of HMAS Perth and USS Houston lay undisturbed for decades. However in the late 1960s the wrecks, accessible at a depth of about 50 metres, were rediscovered by divers. "The wartime legacy of these ships sat uneasily with their increasing popularity as tourist dive sites," writes Natali Pearson in Inside Indonesia. "Souveniring was common, especially among descendents of the crew, who felt a special connection to the ships."

In 2013 retired Australian farmer Frank Craven, whose mother's first husband had died in HMAS Perth, placed a lock of his mother's hair in the wreck. In a subsequent dive he found a trumpet near the carcass of the USS Houston.

The USS Houston CA-30 Survivors Association refused to accept it because it was illegal to remove property from a US Navy wreck. Eventually Craven was able to hand over the trumpet to the US Embassy's Navy Attache in Canberra.

Pearson, who is completing a PhD at the University of Sydney on the ethics of cultural heritage in Indonesia, says underwater cultural heritage is a difficult area. Under international law, the HMAS Perth remains under the jurisdiction of the Australian government, even though it lies in Indonesian waters. But the shipwreck is not an official war grave. However Pearson hopes there could be a happy ending to the story.

In August 2015 the Australian National Maritime Museum and the Indonesian National Centre for Archaeology agreed to work together to achieve formal protection for the HMAS Perth. "We understand that the state of HMAS Perth is of grave concern to the families of the servicemen lost on board and we remain committed to working with them, with our colleagues in Indonesia and with all other relevant agencies to achieve formal heritage protection for the site," says Australian National Maritime Museum's director Kevin Sumption.

Last November another maritime scandal hit the headlines. The wrecks of Dutch warships, sunk during the Battle of the Java Sea in 1942, had mysteriously vanished. The finger of blame was once again pointed at illegal salvagers. The Dutch defence ministry was appalled. An investigation had been launched, it said, warning the desecration of a war grave was a serious offence.

The shock disappearance gave fresh impetus to the fight to save HMAS Perth. "It inspired us to recommend that the Navy do a routine patrol around the site where HMAS Perth is," says Indonesian National Centre for Archaeology researcher Shinatria Adhityatama.

"Based on our monitoring the damage [to HMAS Perth] has been quite bad. Besides parts of the ship being stolen, its condition has also been worsened by nature. The ship was badly damaged when the Japanese bombed it."

The centre is writing up its final report on HMAS Perth. Aside from routine patrols, it will also make a recommendation to heritage list the shipwreck under Indonesia's law concerning cultural conservation.

In the early hours of March 1, 1942, Manning "came to" in the ocean. "I was sort of corkscrewing in the water, I thought I was going down, but I was coming up apparently because I broke the surface."

He made it to shore after 27 hours by clambering into a Japanese lifeboat. "And then I spent five days walking across Java looking for the Dutch Army. Unfortunately I found the wrong army."

Like most of the 328 survivors of HMAS Perth taken captive by the Japanese, Manning was forced to labour on the Burma-Thai Railway, known as the Death Railway. More than 100 died as prisoners of war. Only 218 men – less than a third of her crew – returned home at the end of the war. Now Manning is one of only two survivors.

Seventy-five years after he washed up on the "wrong shore", Manning will be the guest of honour at the 75th commemoration of the Battle of Sunda Strait at Melbourne's Shrine of Remembrance on March 1.

"Perhaps I am biased but no ship in the Australian Navy has seen more action in a short time than Perth did both in the Mediterranean and the Pacific," he says. "It came as a shock ... to find it was being salvaged by persons unknown. I have said for years it was a war grave and should be treated as such."

Follow Jewel Topsfield on Facebook