Saturday, May 14, 2011

Big Money: Somali Pirates' Rich Returns

From BusinessWeek:

Imagine if you could invest $100,000 to control a $200 million asset for three months and sell it back to the owners for $10 million—tax-free. That's the Somali pirate way
Tucked behind the shouting dockworkers and fishermen cleaning their nets at the wharf in Bosaso, on the Gulf of Aden, there's a row of decrepit gray skiffs and patrol boats. Strewn with rusted antiaircraft shells and old mattresses, these dead ships look more like floating homeless shelters than vehicles of terror. Out on the water, though, they played a starring role in a booming criminal enterprise. These are the impounded attack vessels used by Somali pirates to hijack passing cargo ships, private yachts, and even massive oil tankers.
Drive a few hundred yards west along the beach, and there, just past the presidential compound, is a well-worn and crowded jail, with 248 pirates among its 400 prisoners. Abdirahman Mohamed Farole, the president of Puntland, insisted that I visit the prison to prove that his tough stand on maritime kidnappers was not just talk. (Somalia has not had an effective central government since 1991; Puntland is one of the country's seven autonomous regions.) Minutes after entering the prison, I was face to face with 51-year-old Farah Hirsi Kulan, or "Boyah," the unrepentant John Dillinger of the Indian Ocean.

Halfway into an eight-year sentence for piracy, Kulan—an arrogant, flash-tempered stick-insect of a man—lounged outside a packed cell block with another famous bandit, Omar Bagaley. A newly arrested 13-year-old, Saynab, sat wedged between Bagaley's knees on a concrete slab. Back in November 2008, Kulan was the first public face of Somali piracy. Not only was he the region's chief scoundrel—he had coordinated the seizure of 25 ships, as he boasted to the BBC in 2009—Kulan began a second career as a "reformed" pirate, advocating for pirates to quit, stop the violence, and go to the mosque. Some believed him, until Kulan was apprehended while fleeing a major pirate planning meeting in Garowe, Puntland's central city, and thrown in jail.

Our conversation was brief and loud. Bagaley stabbed the air with his finger, warning me and my interpreter to back off, while Kulan declaimed, insisting that he had ceased to be a pirate before his arrest and, anyway, he was merely a fisherman, enlisted to repel poachers. What money he earned, he shared with friends. This is a common refrain among Somali pirates: that they're just poor fishermen taking up arms to defend the seas from the predatory practices of foreign poachers—the real piracy, in their view. Some will tell you they go to sea to prevent toxic dumping, too, à la Greenpeace.

It's a romantic angle—and it's wrong. The U.N. Monitoring Group on Somalia estimates that only 6.5 percent of the attacks by gangs of Somali men have been against fishing vessels. According to the International Maritime Bureau (IMB), a London-based nonprofit specializing in global commerce, the estimated $150 million to $300 million in ransom money paid out last year was provided to free the crews of bulk carriers, container ships, and other vessels carrying unglamorous (and lightly protected) cargo. Some of that was paid to recover private yachtsmen. And while a pirate's take may trickle down to friends, President Farole said most burn through cash conspicuously on Land Cruisers, lavish parties, and a steady supply of qat (a mild stimulant chewed like tobacco and imported from Kenya)....MORE