Archive for category Letter Of Marque

Maritime Security: Typhon–Yet Another Bid At A Private Navy

What better way to start the new year off than with a post about another private navy? lol The last couple of years, I have been posting about the Jardine Lloyd Thompson CEP ‘private navy’. With that venture, they made a lot of promotional announcements, but never got it off the ground.  Funding of such a thing is the problem, and we will see how this new private navy venture by Typhon does in their drive to get set up.

So lets look at the business model, as was stated by Typhon in January of last year.

“A huge difference between our model and others is that we will negotiate reduced insurance rates. Rates have skyrocketed because it’s costing the industry $10bn-$12bn a year when you add everything up. Ransoms alone are $800m-$1.2bn.”
South Korea reportedly paid $25m to reclaim a ship last year. “And then that’s the new bar. It throws out Lloyds’ actuarial valuations,” says Sharp. “You have no idea what to charge as a premium. For my clients, we can take out some of the risk. I’ve got a letter from a Lloyds broker saying we can offer a 50pc discount on rates. That more than caters for our services.”

You know, in fairness to potential clients, the company should post that letter from Lloyds on their website. Matter of fact, they should do a lot of things with their website in order to spell out exactly what they are all about because it is ‘vacant’.

Furthermore, when a company puts it out there that it is recruiting 240 former Royal Marines, you kind of think there would be some talk of that within the industry? I haven’t heard anything about it, nor is there any lively talk about it over at Close Protection World. I would also like to see this recruitment advertisement or maybe even a recruitment career page on their website, but there is nothing.

I do know that their website is registered in the UAE and supposedly they are based in Abu Dhabi. I do know that they made a promotional video for the company and concept, and you can watch that over at the gCaptain’s website here.

According to the article last year, they have brought on some interesting folks to run this navy. Here is the list.

The ribs will be manned by ex-Royal Marines, as will the group’s base in Abu Dhabi. Murray, a former French Foreign Legionnaire, will be Typhon’s chairman, with Lord Dannatt a non-executive. They will be joined by non-executives including General Sir Jack Deverell, former commander of Allied Forces Northern Europe; Admiral Harry Ulrich, ex-head of US naval forces in Europe; and Peter Ahlas, former chief of HSBC’s marine and insurance business. It’s quite a roll-call for a company that’s just completing its first fund-raising, of just $15m, and has yet to put to sea.

On a side note, Simon Murray has an interesting background. He did a stint in the French Foreign Legion. He is also a power broker and wealthy enough to make a project like this work. He is also partnered up with a non-military guy who I guess was the one that came up with the idea of Typhon. Here is the quote.

But Sharp himself is new to the all-action side of things. His career has seen him invest in start-up travel ventures from lastminute.com to GoAmerica, take AIM minnow Cashbox public, and launch Earthshine, a commodities distributor.
“I had the idea for Typhon playing polo one afternoon, thinking about what my next business might be,” says Sharp. “I picked on maritime security. Two years later we’re completing our funding round, acquiring our first vessel in weeks, and hope to be in theatre shortly after.”

It is always funny to me when you hear about the inception of an idea, like with Sharp’s statement of ‘while playing polo one afternoon, thinking about what my next business might be…’ lol  Polo or golf, it seems like a lot of ideas for businesses get their start during play.

No mention of a Letter of Marque being issued either. Here is what was mentioned, and it would be cool to hear more about the legal side of this private navy.

The Britons intend to sail under a sovereign flag which will give them the legal right to carry their weaponry into harbour, rather than cache them on platforms in international waters.

Interesting stuff and I wish the company luck in their goal of firing up a private navy. -Matt

Company website here.

 

Glencore chief Simon Murray launches private navy to combat Somali pirate threat
By NICHOLAS HELLEN
January 06, 2013

BRITAIN’S first private navy in almost two centuries is being created by a group of businessmen to take on the Somali pirates who are terrorising an expanse of the Indian Ocean.
Its armed vessels – including a 10,000-ton mother ship and high-speed armoured patrol boats – will be led by a former Royal Navy commodore. He is recruiting 240 former marines and other sailors for the force.
It will escort its first convoy of oil tankers, bulk carriers – and possibly an occasional yacht – along the east coast of Africa in late March or April.
Typhon, the company behind the venture, is chaired by Simon Murray, a millionaire businessman who joined the French Foreign Legion as a teenager and walked unsupported to the South Pole aged 63.
Typhon has been set up because the Royal Navy, NATO and the European Union Naval Force lack the vessels to patrol an area of ocean that is as large as North America, said Anthony Sharp, chief executive. “They can’t do the job because they haven’t got the budget and deploying a billion-pound warship against six guys [pirates] with $500 of kit is not a very good use of the asset,” he said.

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Maritime Security: Piracy Plunges As More Ships Start Carrying Armed Guards

“In 2011, the numbers of private armed security teams went up significantly and that has been a big game-changer as well, though not the only factor,” Olive said. “If that pressure is taken off it can all start to be unpicked relatively rapidly,” he added, referring to industry and military measures to combat piracy.

It’s nice to see some recognition going towards the efforts of armed security out there. They have been a ‘big game-changer’ and the statistics speak for themselves.

Although one looming iceberg that can really mangle the record of private armed guards are shootings that result in innocent people being killed. I have to imagine that we will see private maritime security industry involved in such a thing, and an example of how that might turn out can be seen with the shooting accident that happened last February between some Italian Marine vessel protection guards and an Indian fishing vessel.

In that accident, one innocent person was killed, and it is the type of deal that has been all over the news in both India and Italy. This kind of international incident would literally destroy a security company and absolutely embarrass the client. But it would also be the kind of incident that would put some extreme negative attention on the maritime security industry as a whole. The question is how do you prevent something like that from happening, and can you?

Logically speaking, it is bound to happen. So the prudent thing for companies is to actually prepare your legal strategic defense for such an event. To study how this specific event between the Italians and Indians, and learn from it to get a good game plan together. Of course you always want to refine your rules of engagement and enforce it with training and good management/leadership, but in the realm of combat, unfortunate things happen and companies must be prepared.

One final point is the use of the Letter of Marque (LoM) or a similar licensing system. This could be used as a form of protection for those armed guards on the high seas. If the ship’s captain carries a LoM for that vessel, issued by the same state the vessel is flagged under, then in that case the state can identify through that license what they are legally willing to support when it comes to the defense of that vessel. Under the terms of the LoM, you can list all sorts of requirements of the vessel’s protection team, and you can write up legal protections for that team and vessel.

The main point of this type of LoM is to get the state back into the game of regulating armed force on these vessels and provide some kind of legal protections and accountability. If states are willing to put their flag on a vessel, then why not go the whole way and allow them to issue a LoM or similar license for this kind of ‘warfare on the high seas’? -Matt

 

Piracy plunges as more ships start carrying armed guards
November 30, 2012
By Michelle Wiese Bockmann
Pirate attacks on merchant vessels in the Gulf of Aden and the Indian Ocean fell 81 per cent this year as the use of armed security guards on ships acted as a “game-changer,” according to the European Union’s naval force.
There were 34 attacks by Somali pirates, with five vessels hijacked so far in 2012, compared to a record 176 assaults in the whole of last year that resulted in 25 ships seized for ransom, according to Peter Olive, the EU Naval Force’s chief of staff.
Ransom payments to Somali pirates totaled $36 million so far this year, compared with $147 million last year, he said Thursday at a briefing at the EU’s naval force headquarters at Northwood, England. As well as more aggressive military operations, the increasing deployment of private guards over the last 18 months on vessels transiting high-risk areas contributed to the declines, Olive said.
“In 2011, the numbers of private armed security teams went up significantly and that has been a big game-changer as well, though not the only factor,” Olive said. “If that pressure is taken off it can all start to be unpicked relatively rapidly,” he added, referring to industry and military measures to combat piracy.

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Building Snowmobiles: Institutions Vs. Collaboration… And The Strength Of Offense Industry

In this deal I wanted to highlight the Power Law concept and the Pareto principle (80-20 rule) mentioned by Clay Shirky at around 8:30 in the TED video below. To me, this is an important element of Offense Industry, and it also shows how the collaborative nature of Offense Industry is able to compete against enemies that use institutions for warfighting.

Specifically, I wanted to highlight the actions of privateers during the war of 1812 versus the British Royal Navy. One group is a collaborative effort, and the other was an institution. At the end of the day, the collaborative effort of the privateers being focused on merchants and other valuable British prizes, ended up contributing greatly to the overall success of the war effort. And yet, there was no admiral coordinating the privateer attacks, no institution that dictated how each privateer operated other than a license (letter of marque) giving them authority, and there was room in this offense industry for the top performers all the way down to the one hit wonders.

Privateers during that time period also seem to exhibit a power law, 20-80 type effort. There were the privateers that were the top performers (20 percent that captured most of the prizes), and then there were the long tail of privateers who would get a prize here and there (one hit wonders or 80 percent). This entire grouping of privateers ended up accomplishing quite a lot, and at no cost the US government. Actually, the government made money off of these privateers and usually collected about 10 percent from each prize taken, which then went back into the war chest to further fund ‘institutions’ like the navy.

This system also rewards the top 20 percent, but still gives hope to those that are part of the effort. But governments that utilize the privateering system should know that those 20 percent are crucial to your effort, and every effort should be given to identifying and working with this 20 percent so they continue to be successful. A government should also be aware of the 80 percent and understand their place in the effort as well.

It should also be noted that the US Navy only had 23 ships during the war and the total registered amount of privateers was 517. Likewise, privateers were able to capture 1300 prizes and the navy was able to capture 254. Yet privateers funded their own vessels and self organized, whereas the navy was an institution requiring investment by the US. This is expensive and time consuming and obviously the US was not able to raise an adequate Navy in time for this war.

So instead, the US depended upon the ‘collaborative’ strength and cost effectiveness of a privateering system to accomplish the task of attacking British commerce and logistics.  To me, this collaborative nature of offense industry is it’s strength. I also wanted to identify this strength and archive it for future discussions about Offense Industry. You can also see that the more inclusive and massive the privateering system is, the more effective that privateering system will be at gaining prizes. It’s a numbers game, and institutions will have a hard time competing with that.

You could also apply this concept to what is happening in the arab spring. You have people who are part of a collaborative effort to overthrow their government and it’s ‘institutions’. These collaborative efforts follow the power law curve as well, and you will have the top performers and the one hit wonders throughout the effort, and the overall results of that effort equate to great accomplishments and the overthrow of dictators. Interesting stuff and the video below is definitely worth your time to watch. -Matt

 

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Maritime Security: Germany Plans To License And Regulate Anti-piracy Security Firms

“We are breaking new ground here,” Otto said. “We mainly have foreign companies that operate in international waters.” The German government estimates that British and US companies in particular could apply for a license.

This is interesting and I really liked the quote up top. To have a German ‘Letter of Marque’ or a license would be pretty cool. Although on the down side, I did not like the limitations that the Germans were putting on weapons use.

Weapons for the private ship protectors will have to be registered separately. The law stipulates that no heavy military weapons can be employed. Semi-automatic weapons, though, could be permitted.

So the pirates can operate heavy military weapons for attacks, but armed security defending these boats are not allowed too have them?  And what exactly is the German definition of ‘heavy military weapons’?

The other point that was kind of interesting is the license fees and process.

The Federal Office of Economics and Export Control (BAFA) will most likely be the office in charge of the procedure. It will be able to call in the Federal Police for consultation. Security firms will have to pay between 8,000 euros ($9,800) and 16,000 euros for the licenses, which will be valid for two years.

This is peculiar to me and I was wondering how the fee schedule works?  Do you pay less for a license if you are only defending small vessels, or what?  Or do you pay more if you are a foreign security company versus a national one? We will see…

The last part of this article also mentioned some key statistics. Like ‘German shipping companies operate the third largest merchant fleet in the world’! Specifically, they mentioned these numbers.

German shipping companies operate the third largest merchant fleet in the world. However, only a small proportion flies under the German flag. The country’s black-red-gold flag only flies on 492 ships. This makes the vessels German territory. Criminal offences on board, for example, are tried before German courts.
On the other hand, 3,161 ships operated by German shipping companies sail under foreign flags. Shipowners, unions and the government are aiming to bring a total of 600 ships under the German flag. But to date, this goal has shown little success.

492 ships flying the flag of Germany is a significant number of vessels to protect under this scheme. No telling how many of them transit through dangerous waters. But increasing that to 600 ships will only increase the odds of more work for security firms. Not to mention the 3,161 vessels out there operated by German shipping companies. Perhaps these security measures will bring more vessels back under their flag? -Matt

 

Germany plans to regulate anti-piracy security firms
July 19, 2012
Sea piracy off the coast of Somalia has dropped dramatically, in part as the result of private security forces accompanying the ships. The German government now wants to regulate their certification.
The German Cabinet has agreed on legislation to introduce a licensing procedure for security companies on board ships. The draft bill determines which requirements these firms have to fulfill if they are protecting German-registered vessels. The government coordinator for the maritime industry, Hans-Joachim Otto, welcomed the decision.

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History: Privateers Reenact Battle Of The War Of 1812 In Boston Harbor

Happy 4th of July and I thought this was a cool little deal to put out there. Private industry or privateers were very much a part of this country’s war for independence. It is great that we have such a strong military now, but it is equally great that private industry is able to contribute if need be…and our early days is proof of that. -Matt

 

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Books: The Privateering Stroke, By Capt. Michael Rustein

Henry Adams stated flatly that “the privateers contributed more than the regular navy to bring about a disposition for peace in the British classes most responsible for the war.”

For those of you that have been following along with the blog’s focus on privateering, letter of marque and reprisal, and offense industry, then you will know why this book would interest me. I have not had a chance to check it out yet, but from the sounds of it, it was written by a privateering ‘maven‘.

The author has actually built a schooner called the Fame, based on the first privateering vessel to capture a prize during the War of 1812. He has written several books on the subject and even has a business that teaches the public the history and the workings of a privateer vessel. I would say that would be defined as pretty passionate about the subject. lol

Probably the most interesting aspect of this book from the description below, is the author’s focus on how important privateers really were during the war. This was the ultimate in old school privatized warfare and offense industry in overdrive.

An entire industry focused on attacking the weakness of an enemy, and Britain’s weakness was their commerce/trade. There is no way our navy and privateers could have taken on the Royal Navy directly, so instead we did like most small disadvantaged forces would do in that situation, and attacked their poorly defended commerce/trade. Check this quote out.

Deprived of customs duties, the United States government was in dire straits by the end of 1814. Had the conflict continued, the nation would have been incapable of defending itself without a central bank, new taxes, and conscription. Meanwhile, America’s privateers were waging a highly effective war against British trade. They captured an estimated 2,000 prizes worth $40 million, sent insurance rates to unprecedented levels, and drove up prices at a time when Britain’s economy was groaning under the strain of two decades of warfare. The British public was outraged; merchants bombarded the government with protests and appeals. With the United States incapable of maintaining the initiative in Canada, privateering became the nation’s last, best, and only offensive weapon. 

Pretty neat and this book would be another good one to check out. Especially if you are a student of ‘offense industry’ or are interested in the letter of marque concept. This would also be a good read for those of you interested in naval history and guerrilla warfare. -Matt

The Privateering Stroke

By Capt. Michael Rustein
Book Description
Publication Date: March 25, 2012
High school and even college textbooks oversimplify the War of 1812 — when they don’t ignore it completely. Popular histories emphasize the military as opposed to the economic and political aspects of the war. The U.S. Navy’s role has been written about ad nauseum. Meanwhile, we are still waiting for a definitive work on the equally important contributions of American privateers. While the Navy’s outstanding performance in single-ship engagements remains a source of national pride, those victories did not change the course of the war one iota. Had Constitution defeated a dozen British frigates, the thousand-ship Royal Navy would still have blockaded our coasts, strangled our commerce, bottled up our warships, and hunted down those that escaped. Even her former commander, Tyrone Martin, conceded that Constitution’s victories were “no more than pin pricks” that “had no direct effect on the course of the war.”

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