How do you pay a pirate’s ransom?
By Robyn Hunter
BBC News
03/12/2008
Pirates in Somalia are making a fortune by hijacking ships and demanding ransoms to set them and their crews free – one official estimates the total this year to be around $150m.
There are conflicting reports about how much they want for the Saudi oil tanker they seized last month, the Sirius Star, and its cargo of two million barrels of oil, but how do you negotiate and deliver a pirate ransom in the 21st Century?
From what can be gleaned – how the negotiations run their course and how the ransoms are paid – what goes on would be worthy of a Hollywood action movie script.
“No matter what process is taken, they always go through a middleman,” advises BBC Somali service analyst Said Musa. “And trust is at the heart of everything.”
Fahid Hassan, who has experience of the negotiations, says that after boarding the ship, the first step for the pirates is to make contact with its owners.
“All the important documents are there on the ship, so the pirates can know easily all the information they need,” he says.
“The talks are by telephone, mostly satellite phone but sometimes even SMS/text messages are sent. The pirates do not negotiate themselves. They hire someone and often this person is a relative; someone they can trust.”
“For the Sirius Star, there are two negotiators. Sometimes they are on the ship, sometimes they are in town. The negotiator must work and work and work to get the money which is a very difficult job. It is very difficult to please the owner and please the pirates,” he adds.
“But once the money is delivered the negotiator gets a share, the same as a pirate. Everyone on the ship gets an equal share.”
Mr Hassan says that in the past, the ransom was delivered by money transfer, but that now owners hire a third party to hand over the money directly.
“They come onto the ship or the pirates get onto their boat for the handover of the bags of cash,” he says.
“The men who bring the money then go; they leave the ship to let the pirates count and check. Some of the pirates have counting machines and also machines to detect fake notes.”
Security firms
Roger Middleton, a Horn of Africa specialist at the Chatham House, says the ship-owners hire professionals, from specialist negotiators to private security firms, to transfer the ransoms.
“They are mostly ex-SAS and British or Australian. A lot are also South African,” he says.
Not much more is known for certain, however, as it is an unwritten rule among members of such firms that there are no kiss-and-tell stories.
Understandably, those involved are also aware of the needs of their clients and the strict demand for secrecy with people’s lives being at stake.
However, Mr Middleton says that such operations cost about $1m, not including the ransom.
“The professional negotiators, acting on behalf of the ship owners, get about $100,000 for their services and the lawyers receive a fee of about $300,000 for ensuring that the shipping companies are not putting themselves in any dubious positions,” he explains.
Regarding what goes on behind closed doors, be it the negotiations and the legal and insurance matters as a result of these hijackings, Mr Middleton says it would be fair to say that, “most of it happens in London,” he adds.
Gavin Simmonds, head of international affairs at the British Chamber of Shipping, agrees this assumption is “highly likely” as London is the centre of the global maritime industry.
“It seems perfectly plausible that the actual facilitation of ransom money is being done by London-based insurers,” he says.
However, Mr Simmonds says he has also heard rumours that some exchanges have taken place in Dubai.
Bags of cash
The pirates ask that the ransom is all in used dollar bills – normally $50 or $100 notes – according to those with experience of such negotiations.
Kenyan sailor Athman Said Mangore, who was held captive for more than 120 days by Somali pirates, says they are known to make many demands and put in place a number of restrictions.
“They sometimes say they want $208,000 exactly in $100 bills only,” he says.
“I don’t know why they make those demands. They usually also don’t like dollar bills that were printed in 2000 or the years before. If it was printed in 1999, they say: ‘This is not fit to be used in our shop’,” he adds.
Once the ship’s owners have sourced cash, a private security firm takes over.
They then hire a tug boat, often from the Kenyan port of Mombasa, which they take further north up the coast towards Somali waters.
The security personnel then board the boat with the bags of cash and enough weaponry to keep it safe.
When the ransom has been paid, the pirates are left to count the money and are allowed to leave the vessel freely.
“The navies in the Somali waters of course must have a pretty good idea of what goes on, as they have spy drones and they are watching the hijacked vessels,” Mr Middleton says.
“Whether there’s any coordination between the ransom payers and the navies is unknown.”
The BBC’s Joseph Odhiambo in Mombasa says that on at least two prior occasions the ransom money was delivered to the hijacked vessels via air-drops.
He also says that other payments were flown from Wilson Airport in the Kenyan capital, Nairobi, into Somalia on cargo planes transporting the stimulant, khat.
No-one knows how long it will be until the Sirius Star is set free, but it is fair to say the ransom negotiations will be both complicated and delicate, with its cargo believed to be worth $100m.
And the families of its 25 crew members, who are being held hostage, will be hoping that the pirates stay true to their word that they have no intention of harming them.
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