USD 360 million paid in ransom to pirates

The pirates off the coast of Somalia have received around USD 360 million in ransom, while piracy has cost the world around USD 18 billion. "A grotesque situation we've been through," says Jan Fritz Hansen of the Danish Shipowners' Association.

The Somali pirates have made millions upon millions of dollars on hijacking ships, taking hostages, and demanding ransoms.

From 2005 to 2012, the Somali pirates have been paid around USD 360 million in ransom, according to a new report, "Pirate Trails," produced by World Bank, the UN Office on Drugs and Crime, and Interpol. The report shows that the pirates cost the world around USD 18 billion every year.

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The actual pirates, who have performed hundreds of hijackings from their small dingies off the coast of Somalia, receive just 0.1 percent of the ransom. Instead, the big money goes to criminal kingpins, who take 30 to 75 percent of the money every time a hostage is bought out.

According to Jan Fritz Hansen, vice president of the Danish Shipowners' Association, the report shows the massive sums of money wasted by the global society.

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"This illustrates the grotesque situation we've been through. The pirates have gotten less than 1 percent in profits from hijacking ships and taking hostages. Instead, shipowners have spent enormous amounts of money on evading the pirates. Danish shipowners alone have used an additional USD 271.6 million a year because of the pirates," says Jan Fritz Hansen.

"As much as half of this additional expense has gone to extra fuel, as ships have been sailing faster and longer."

No commercial ships have been hijacked off the coast of Somalia in more than a year.

The new report reveals that a large part of the ransoms is spent on financing a wide scope of criminal activities on a global scale. Among other things, the study looks at how pirates are involved in trading the narcotic drug khat, weapons trade, militia financing, human trafficking, and human smuggling.

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Pirate interviews

The report "Pirate Trails" was made through interviews with former pirates, officials, bankers, and others involved with the anti-piracy effort.

59 pirate kingpins have been analyzed, and the results show that they use the funds for both legal businesses as well as criminal enterprises.

The report also determines that these pirate backers get between 30 and 75 percent of the ransom. The pirates out in the small boats, holding the hostages, get less than 0.1 percent of the ransom, says the report.

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Stuart Yikona, financial expert at the World Bank and co-author of the report, says that the results highlight the fact that the hijackings in themselves are not the only dangerous part of the problem.

"The pirates also have the power to corrupt the regional and international economies," he says in a press release.

Piracy has reduced the maritime activity at the Horn of Africa and the East African countries since 2006, and tourism has also declined in those countries since 2006 due to piracy.

Photo: IMO
Photo: IMO

Stuart Yikona points out that a coordinated effort from the international financial authorities is necessary in order to curb the pirates' illegal enterprises.

"The international society has mobilized a naval fleet to deal with the pirates. A similar international effort is needed to interrupt and stop the flow of money circulating in the wake of their activities," says Stuart Yikona.

And the pirates at sea are not the only ones that need to be fought. The problem is also very much the kingpins on land, concludes the report.

The report focuses on Djibouti, Ethiopia, Kenya, The Seychelles, and Somalia, but the authors behind report also drew on information from Denmark, the UK, and the United States.

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