On 28 April San Flaviano was in Balikpapan Harbour, in the East Kalimantan Province of Borneo, when a Douglas B-26 Invader bomber aircraft, flown by the CIA and painted black and with no markings,[3] bombed and sank her.

[5] Most of San Flaviano's complement were also evacuated to Singapore, travelling on two oil tankers of Anglo-Saxon Petroleum, another of Royal Dutch Shell's British subsidiaries.

[8] The B-26, its 500 lb (230 kg) bombs and its pilot, former United States Army Air Forces officer William H. Beale, were sent by the CIA as part of US covert support for the rebellion.

For some months previously, UK Prime Minister Harold Macmillan and Foreign Secretary Selwyn Lloyd had supported US policy to aid Permesta.

[9] On 6 May 1958, more than a week after the CIA sank San Flaviano, Lloyd secretly told US Secretary of State John Foster Dulles that this was still his position.

[11][12] Nevertheless, in June 1958 both Indonesia and the UK publicly claimed that the aircraft had been flown by Indonesian rebels,[5] concealing the CIA involvement of which both governments were well aware.