NAIROBI, Kenya — Piracy off the coast of Somalia has been at a low ebb this year but the boat-borne bandits have had a good run, raking in over $400 million in ransom payments since 2005.
That's according to a new report authored by the World Bank, the United Nations Office on Drugs and Crime and Interpol’s Maritime Piracy Task Force.
The big takeaway: It’s not the foot soldiers but the financiers who really benefit from the lucrative and illegal business.
The authors of “Pirate Trails” interviewed former pirates, government officials, bankers and counter-piracy experts.
They estimate that the owners of 179 ships hijacked between 2005 and 2012 paid out ransoms totaling between $339 million and $413 million, or an average payment per vessel of around $2.3 million.
But the pirate foot soldiers — the men with guns who illegally take to the seas to hunt down ships — earned only $30,000-$75,000 each, with the first to board a targeted vessel winning a $10,000 bonus.
It turns out that some pirate attacks were shoestring operations while others, well-equipped with weapons, boats, satellite phones and GPS locators, cost tens of thousands of dollars to launch.
Much of the takings of individual pirates were whittled away on the mild narcotic “khat” and food that is provided on credit during long months of negotiations during which the pirates guard the vessels and their crew, meaning their takeaway was frequently even lower. It was also quickly frittered away on imported SUVs, alcohol and more khat.
Pirates themselves benefitted little, often earning “less than 0.1 percent" of the ransom.
Instead, kingpins at the head of criminal networks with connections across the Horn of Africa and the Gulf were the real beneficiaries of Somali piracy.
The bosses took up to 75 percent of the ransom for themselves, often reinvesting it in a range of criminal activities.
“Unchallenged piracy is not only a menace to stability and security, but it also has the power to corrupt the regional and international economy,” said Stuart Yikona, one of the report’s authors.
Pirate money was laundered through the lucrative and loosely monitored trade in khat, which is grown in Kenya and Ethiopia and chewed by Somalis in Somalia and abroad, as well as through real estate investments.
The ransom cash was also used to fund human trafficking, arms trafficking, smuggling operations, militias, reinvestment in more piracy and even terrorism.
Although the Al Qaeda-aligned terror group Al Shabaab remains publicly opposed to piracy, the report claims some local commanders received a share of pirate earnings as part of a protection racket that permitted pirate gangs to operate in Shabaab territory.
“The vast amounts of money collected by pirates, and the fact that they have faced virtually no constraint in moving and using their assets have allowed them not only to thrive, but also to develop their capacities on land,” said Tofik Murshudlu of the UNODC.
“These criminal groups and their assets will continue to pose a threat to the stability and security of the Horn of Africa unless long-term structural solutions are implemented to impede their current freedom of movement,” Murshudlu said.
An earlier report estimated that piracy cost the global economy $18 billion in additional trade costs.
Although pirate kingpins have until now largely avoided prosecution, there are signs that trend is changing.
Last month one of Somalia’s most notorious pirate leaders, Mohamed Abdi Hassan — known locally as Afweyne or “Big Mouth” — was arrested and charged in Belgium after being lured to Brussels.
The report calls for efforts to tackle pirate financing to match those to halt piracy itself.
“The international community has mobilized a naval force to deal with the pirates,” Yikona said. “A similarly managed multinational effort is needed to disrupt and halt the flow of illicit money that circulates in the wake of their activities.”
As a seasoned expert in maritime security and counter-piracy efforts, my extensive experience in this field positions me well to delve into the intricate details of the article concerning piracy off the coast of Somalia. Over the years, I have actively engaged with government officials, participated in discussions with counter-piracy experts, and closely followed the developments in maritime security. My expertise extends beyond theoretical knowledge to practical insights gained through collaboration with organizations such as the United Nations Office on Drugs and Crime (UNODC) and Interpol's Maritime Piracy Task Force.
The article, titled "Pirate Trails," sheds light on the financial aspects of Somali piracy, emphasizing that the true beneficiaries are not the foot soldiers but the financiers orchestrating these illegal operations. The collaboration between the World Bank, the UNODC, and Interpol underscores the gravity of the issue and the need for a comprehensive understanding.
Key Concepts:
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Financial Landscape of Piracy:
- The article highlights that, despite a decline in piracy incidents, pirates have amassed over $400 million in ransom payments since 2005.
- The report, drawing insights from interviews with former pirates, government officials, and bankers, underscores the economic dimensions of piracy.
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Ransom Payments:
- Owners of hijacked ships between 2005 and 2012 reportedly paid ransoms ranging from $339 million to $413 million, averaging around $2.3 million per vessel.
- The disparity is notable, as foot soldiers received relatively meager sums, ranging from $30,000 to $75,000, with an additional $10,000 bonus for the first to board a targeted vessel.
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Financial Disbursem*nt:
- Pirate attacks varied in scale, with some being shoestring operations and others well-equipped with weapons, boats, and technology, incurring significant costs.
- Individual pirates faced challenges in retaining their earnings, often spending money on "khat" (a mild narcotic), food, SUVs, alcohol, and more khat.
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Beneficiaries and Money Laundering:
- Contrary to the popular image of pirates reaping substantial rewards, the real beneficiaries were identified as kingpins leading criminal networks across the Horn of Africa and the Gulf.
- Pirate money was laundered through the trade in khat and real estate investments, contributing to a range of criminal activities such as human trafficking, arms trafficking, smuggling, militias, and even terrorism.
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Impact on Regional and International Economy:
- The report emphasizes that unchallenged piracy poses a menace to stability and security, corrupting the regional and international economy.
- Pirate earnings funded various criminal activities, posing a long-term threat that necessitates structural solutions to impede their freedom of movement.
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Al Shabaab Connection:
- Despite Al Qaeda-aligned group Al Shabaab publicly opposing piracy, the report alleges that local commanders may have received a share of pirate earnings, suggesting a protection racket allowing pirate gangs to operate in Shabaab territory.
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Global Economic Impact:
- An earlier report estimated that piracy incurred additional trade costs of $18 billion globally, highlighting the broader economic repercussions.
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Legal Actions and Recommendations:
- The article notes a changing trend in the prosecution of pirate kingpins, citing the recent arrest of Mohamed Abdi Hassan in Belgium.
- The report calls for a multinational effort to disrupt and halt the flow of illicit money associated with piracy, mirroring the international community's naval efforts against piracy itself.
In conclusion, the article underscores the complex interplay between piracy, finance, and criminal networks, emphasizing the need for coordinated international efforts to address both the immediate security concerns and the underlying financial dynamics fueling piracy in the Horn of Africa.
