Somali Piracy: Show Them the Money

Here's a piece on the financial aspects of Somali pirates. Clans and money and corruption- what a nice soup:

Yet the pirates’ business practices are effective primarily because of their simplicity. In a country where banking has ceased to function after more than a decade of chaos and in the wake of US anti-money laundering sanctions, everything is done by cash. Tens of thousands of $100 notes are airdropped as ransom payments and the cars, houses, televisions and wedding parties they fund are bought with cash.

The party shows how piracy has become embedded in Somalia’s complex society. One western military analyst says the pirates now employ “accountants” to divide up ransoms.

There are carefully worked out formulae determining how much is paid to everyone, from the lowliest guards to gang leaders. The pirates follow a code of conduct which proscribes, for example, the harming of crewmen, with fines for miscreants.

Personal ties and talent together decide how careers progress, according to Mark Genung, captain of the USS Vella Gulf. “If you’re a good pirate, I suppose you get good pirate jobs,” he says. “If you’re a bad pirate, I guess you get bad pirate jobs.”

Most significantly, the delivery of cash ransoms and their division leave no trace on systems that track and disrupt organised crime financing.

“You can’t check to see where the money is going,” the military analyst says.
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The Vella Gulf helped to capture two groups of pirates totalling 16 men on February 11 and 12, while the Russian Navy has also caught some pirates in the Gulf of Aden.

However, no one involved believes such action can resolve a problem with its roots in the long-term collapse of the Somali state. Those who captured the pirates on February 11 and 12 say they must have been desperate to put to sea in such leaky, dangerous craft. Anything other than a lasting political solution on shore will only ever be a “sticking plaster”, according to the military analyst.

“You have hungry people who don’t have any legitimate way to make money,” she says. “They think, ‘We want a piece of this pie’.”

More here and a nice post on Somali clans with a link to this commentary by Seth Kaplan.