Murphy's Law: Searching For Mister Big

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May 21, 2013: The Somali pirates have been having a bad year, as in it has been over twelve months since any of them captured a ship they could hold for ransom. Some small coastal freighters and fishing boats have been taken but you can’t get much, if any, ransom for these. Pirate attacks were down 70 percent last year but all the security measures have increased global shipping costs by $18 billion. That’s a tiny slice of worldwide shipping expenses but is a tax everyone who depends on maritime transportation pays.

With that kind of incentive, governments, spurred on by shipping companies and sailors unions, have sought to take apart the support network the pirate gangs depend on. This would greatly reduce the incentives that attract so many Somalis to pirate gangs. Various police and intelligence agencies have been scrutinizing how the pirates operated and noted that the pirates themselves only keep about half the ransom money. The rest goes to financiers, negotiators, and, well, behind-the-scenes “facilitators” who are essential in making piracy the expensive problem it has become. The key to eliminating piracy is getting these support personnel. This has proven difficult, as most of these fellows live outside of Somalia, usually in the Persian Gulf, and must be prosecuted under local law. This means going after old pros who have been working various semi-legal (or outright illegal) scams for years and know how to protect themselves from prosecution.

To best understand how this works, let’s follow the money. Last year pirates got paid over $200 million in ransom. Most of that was taken by the pirate gang leaders, local warlords, and Persian Gulf negotiators who deal with the shipping companies. But for the pirates who took the ship, then helped guard it for months until the money was paid, the take was still huge. Pirates who actually boarded the ship tend to receive at least $150,000 each, which is ten times what the average Somali man makes over his entire lifetime. Even the lowest ranking member of the pirate gang gets a few thousand dollars per ransom.

The general rule is that half the ransom goes to the financiers, the gang leaders, and ransom negotiators. About a quarter of the money goes to the crew that took the ship, with a bonus for whoever got on board first. The pirates who guard the ship and look after the crew gets ten percent. Ten percent (more or less) goes to local clans and warlords, as protection money (or bribes). There is no shortage of eager young Somalis seeking to join the pirate gangs. Most will not get much more than weapons, food, and the use of a speed boat. If they want to make more, they have to capture a ship and hold it for ransom.

At its peak a year ago there were a dozen or so pirate gangs, led by men who were local warlords or tribal leaders, getting really rich off those ransoms. There were plenty of local warlords and merchants (local or otherwise) willing to finance new pirate gangs, in return for up to 50 percent of whatever that gang gets in ransoms over a certain period. The money men will advance several hundred thousand dollars, often selling needed weapons and equipment, as well as providing technical advice. For the pirates, it's a business. With the current drought in captured ships it’s become more difficult (but not impossible) to find financial backers.

A few of these facilitators have been prosecuted, but if more of them can be taken down, supporting piracy will become an unattractive option for the people who have been key in financing the pirates and negotiating the large ransoms. Take the big money out of play and the pirate gangs become unable to defend themselves by local governments (with guns or bribes).

This battle against the facilitators gets little media attention, which is usually the case with investigations like this. A bunch of lawyers, accountants, and investigators sniffing does not make for exciting news headlines. Yet this approach is often key in taking down many of the more newsworthy characters the facilitators sustain.

 


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