Ransoms Total Over US$339 Million, Says new research
Image credit: World Bank
A new study traces the flow of more than US$400 million in ransom money from the hijacking of ships in the Indian Ocean and calls for coordinated international action to address the isue.
A new study, entitled as ”Pirate Trails” sheds lights to the illicit financial flows from pirate activities off the Horn of Africa and unveils that between US$339 million and US$413 million was taken in ransom from the hijacking of ships off the coast of Somalia and the Horn of Africa the last seven years (2012 -2005). The new report has been recently released by theWorld Bank, theUNODC, andINTERPOL and hasused data and evidence from interviews with former pirates, government officials, bankers and others involved in countering piracy – investigates the flow of ransom money paid out to Somali pirates operating in the Indian Ocean.
The study examines the reach of the pirates into the stimulant “khat” trade, human trafficking and other illegal activities that hinder development. Tracing a pattern that it calls “the pirate money model,” the study analyzes the investments made by a sample of 59 pirate “financiers” to reveal the range of sectors – including both legitimate businesses and criminal ventures – that were funded by the ransom money.
Emphasizing the prominent position of pirate financiers, the report estimates that between 30 percent and 75 percent of the ransom money ends up with these financiers. The pirate “footsoldiers” aboard the ships receive just a fraction of the proceeds, amounting to less than 0.1% of the total.
The Financial Flows of Proceeds of Piracy
Image credit: ‘Pirate Trail’ study
Figure above graphically summarizesthe analysis of the flow of proceeds of piracy from the moment a ransom is paid. At the top of the hierarchy is “Ransom.” Oncereceived, the money filters down through the “system” to fund the activities ofpirates and pirate financiers, which include acts of piracy and various other criminal and business activities, including buying into the khat trade and human trafficing. Specifically, the ransom is distributed among the relevant stakeholders – the pirates involved with the capture of the ship (the pirate action group); the local community that has provided services to the piratesl and the pirate financiers who, having invested in the pirate operation, will receive the bulk of the ransom monies. The ransom monies are then moved through and around Somalia and the region, and invested on other sectors of the region’s economy and also reinvested back into the Somali piracy business model. In that regard, piracty is sustained and reinforced throught the proceeds of piracy.
The study results in the following four key findings:
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Despite a temporary decrease in pirate activities off the coast of Somalia, piracystill poses a significant risk to Somalia and the region.For that reason, the study offers five key recommendations which are intended to provide orientation on what policy direction to take and in which domains. These actions will contribute to significantly mitigating the risk associated with the financial flows from piracy within the region and beyond.
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For more information, please read the study by clicking at the image below
View relevant video by clikcing at Over US$339 million Taken in Pirates’ Ransom
Also read previous report by World Bank on piracy