A photo taken on January 4, 2010 shows an armed Somali pirate keeping
vigil on the coastline near Hobyo, northeastern Somalia. AFP / MOHAMED
DAHIR
Saturday, November 02, 2013
It says that pirates, hijacking vessels from small sailboats to
oil supertankers off the busy coast of East Africa, have been able to
ransom off their captives for between $339 million and $413 million
between 2005 and 2012.
From 30 per cent to 75 per cent
of the money ends up in the hands of "financiers," with only a small
amount going to the pirates themselves.
Most
of the money stays in the region, with a substantial amount laundered
through the trade in khat, a popular narcotic leaf in the East African
region.
Horn of Africa pirates have raked in up to $413 million in
ransom since 2005, with most of it used to finance "global scale"
criminal operations, a new study said Friday.
The study
said the pirates themselves get little of the money paid them by
international ship and cargo owners, with their financiers getting most
of the take.
The money then is spun into criminal
operations including arms trafficking, migrant smuggling, and to fund
militias, as well as into legitimate businesses, according to the joint
study by the World Bank, United Nations and Interpol.
The
study, "Pirate Trails," points to the need to go after the money
itself, as it is laundered and used in other areas, and not just the
pirates.
"The international community has mobilised a
naval force to deal with the pirates," said Stuart Yikona, a World Bank
financial sector expert and co-author of the report.
"A
similarly managed multinational effort is needed to disrupt and halt
the flow of illicit money that circulates in the wake of their
activities."
The study paints a picture of an increasingly sophisticated industry operating mainly from Somalia.
It is based on interviews with government officials, bankers, local businesses and former pirates.
The study says there is evidence that pirate financiers have used their gains to establish their own stakes in the khat trade.
In addition, they buy heavily into real estate, and could be getting into oil trade, transportation, restaurants and hotels.
But
it cited a greater concern over pirate financiers "investing in
militias and military capabilities" in Somalia, running human
trafficking operations, and other criminal activities.
"The
fact that proceeds from piracy are being used to perpetuate other
criminal activities is concerning for the development and stability of
the region as a whole, and deserves increased attention from local and
international stakeholders," it said.
The study paints a
picture of a piracy economy in impoverished coastal Somalia that has
brought benefits, but also sharply pushed up living costs, due to the
flood of ransom cash.
Pirates end up paying more for many crucial goods; khat costs three times the price in non-pirate towns.
Three
key pirate networks dominate the industry, in operations more complex,
and formal enough to now involve operating contracts, with lawyers
acting as go-betweens to conclude deals between the key parties in the
piracy event.
Businessmen involved on the pirates' side also clean up by selling goods at hugely inflated prices to the pirates themselves.
"All pirates accept the situation and realise this is the cost and social norm of doing business," it said.
Aside
from higher prices, the study argued though that Somalia has paid the
price in terms of lower security, less willingness by outsiders to
travel there, and regional instability.
Fishing has
declined in the region, with a sharp 28.5 per cent fall since 2006 of
fish product exports from piracy-affected East African countries.