Well, there's a cemetary here on Scabb Island.
That's probably a very good place to look.
In particular, try looking on the hill in the background of the cemetary (the one labelled "graves" by the interface).
You'll find the grave of one of Largo's relatives up there, on the left of the second screen in the cemetary.
All you have to do is dig up the grave, and you'll have your item.