June 05, 2009

The Logistics of Piracy

Despite strong denials from segments of the industry, reports that the pirates today have accomplices in countries in Europe, Africa and the Middle East persist. Recent reports on the aftermath of the Karagol hijacking suggest that the pirate gang involved was run by an ex General from Somalia and that the pirates were in extremely organised, had a negotiator that spoke very good English and were in constant touch with suspected partners in London, Dubai and Yemen. This was reportedly confirmed by Haldun Dincel, General Manager of Ayder Tankers, the firm that manages the Turkish tanker, who told the Associated Press that the pirates were taking orders or receiving advice over the phone.

It is widely believed by negotiators and those in the know that piracy is being run increasingly like a corporate style criminal enterprise these days; the percentage of the ransom that has to be paid to each accomplice or corrupt official in the chain is well fixed by now. Broadly, the ransom is split half and half between the pirates and the support system ashore, with some security analysts saying that a large proportion eventually finds its way to Islamic militant outfits in Somalia. The corporatisation of piracy is apparently a recent development; a year or two ago, pirates were disorganised, opportunistic and often did not even have a well thought out plan post hijack.

All that is changing now. Shipping experts say that four main pirate groups operate from Somalia. At least one of the groups seems to have prior naval or military experience, with some senior members having been trained in the former Soviet Union before its collapse. These groups are organised, and even share information with each other. It is believed that accomplices in Europe, Yemen and the Middle East are involved in either supplying information or arms, assisting negotiations or helping with the logistics of ransom airdrops and money laundering, where the infamous havala system is in much use. It is also believed that Somali immigrants in UK and parts of Europe are ‘hidden’ members of these gangs. Many fingers also point at corrupt officials and businessmen in Yemen, which is the transit point for much of the arms that flow into Somalia.

Also changing is the economy of Somalia and beyond, as new opportunities for shady deals across the globe arise. These are in addition to the lucrative and legitimate industry has sprung up in the region and in the West, with lawyers, security companies, hostage negotiators and others make a killing that is, by many reports, as lucrative as the ransoms themselves. There are also corrupt officials on the payroll that must be paid off in Somalia and elsewhere and money to be laundered in the Gulf States. The next hit has to be financed.
Although there is no ‘smoking gun’ linking Somali pirates to bankers and others running legitimate businesses, parallels are already being drawn with how drug money is laundered worldwide, where direct evidence of links between criminals and bankers is usually in short supply. Not surprisingly, the Gulf States and the London based shipping community has strongly denied these reports, claiming gross falsehood and exaggeration and an attempt by security consultants to drum up business for themselves.

In other developments, a BBC report claims that rumours are doing the rounds of some ship owners being involved in piracy as well. If true, this is quite alarming. Given the present economic climate, a few ship-owners may well be tempted to make a quick million or two by insuring their vessels against piracy and then arranging for them to be hijacked. One does wonder what is next. Crew involvement in piracy, similar to the persistent rumours of yesterday of crew involvement in the scuttling of some ships for insurance?

Another worrysome trend that, oddly, the international community continues to ignore, is the link between piracy and Al Shabaab, the Islamist organisation that many (including the US) say is linked to Al Qaeda. Although Al Shabaab, which in the last month or two is involved again in the war on the ground in Somalia and which already controls large swathes of that country, has publicly said that it is against piracy, security analysts remain sceptical. They believe that Al Shabaab and other Islamist fighters are getting much of the Somali ransom money; security consultant Bruno Schiemsky says as much as fifty percent.

In a bizarre twist to events, the BBC reports, in a separate article, that a group of around 200 pirates in Yemen have ‘renounced piracy’. “Pirate representative Abshir Abdullah told the BBC all the ships and hostages they were holding would now be freed”, the BBC says.

Change of heart? Or is it that ransoms have been received already? Or is it that the monsoons are coming, a time of rough seas and terrible weather and a time when boarding large ships from small skiffs will not be so easy?

'Compensation' scheme for pirates

The BBC quotes, on its website, a UN report based on information gathered from pirates in Somalia. This is what the report apparently says on how ransoms are divided; apparently, the loot is split so many ways that each gun toting crook is more likely get ten thousand dollars than a million. The businessmen ashore will get more.

• Maritime militia, pirates involved in actual hijacking - 30%

• Ground militia (armed groups who control the territory where the pirates are based) - 10%

• Local community (elders and local officials) - 10%

• Financier - 20%

• Sponsor - 30%

No one can say that the pirates are not fair. The report says that the first pirate to board the target vessel gets double share, or a car. In addition, compensation is paid to a pirate’s next of kin if he is killed in the attack.