PIRACY ALONG THE EAST AFRICAN COAST

Pirates are a frequent topic in fiction and are associated with certain fictional reading materials. Nearly all our notions about their behavior comes from the golden age fictional piracy literature by such authors as  Robert Louis Stevenson‘s Treasure Island (Quick john Silver),   J.M. Barrie’s novel, Peter Pan, and others such as Sinbad the Sailor, and Films such as Pirates of the Caribbean etc.

Piracy Defined:

Piracy is a war-like act committed by private parties (not affiliated with any government) that engaged in acts of robbery and /or criminal violence at Sea.

 

The term includes acts committed in other major bodies of water or on shore. It does not normally include crimes committed against persons traveling on the same vessel as the perpetrator of the crime e.g. one passenger stealing from others on the same vessel does not constitute piracy.

 

According to the International Maritime Bureau, “Piracy is defined as the Act of boarding any vessel with intent to commit theft or any other crime, and with an intent or capacity to use force in furtherance of that act”.

 

In order to distinguish it from simple hijacking, a piracy crime requires:-

 

• That two vessels are involved in the incident.

•  That the crime has been undertaken for private and not political purposes. When done for political gains, then it is terrorism.

 

These are important considerations when determining coverage under a policy of Marine Insurance.

 

We have been made to believe that Pirates were part of the Wild wind of adventure. The reality is that piracy is alive and with us today and going by the number of vessels hijacked, number of deaths caused, amount of ransom paid, amount of cargo stolen, murder, rape, mutilation, robbery and a host of other crimes committed by  pirates, it is of grave concern and should be treated so by all the authorities concerned.

 

Pirates are sailing the high seas once more. This time instead of carrying flintlock pistols and cutlasses, they are wielding Kalashnikovs and rocket propelled grenades.

Modern day pirates are proving just as troublesome as their swashbuckling forerunners and are striking terror across the Gulf of Aden, one of the busiest shipping channels in the World, among other areas.

 

The World for sometime took little notice of Modern High Seas piracy’ and the International situation has grown worse each year according to International Maritime Bureau. This is captured by a recent statement by the IMB that went on like this, “any hijacked plane is considered big news, but when a ship is taken forever, and its crew murdered, no one seems to care.”

 

According to the Bureau, the statistics for pirate’s attacks since year 2006 are as follows:-

 

Year	No of attacks
2006	239
2007	263
2008	293
First 9 months of 2009	306

 

Since the end of the cold war, the once proud global Russian Navy is now practically non-existence and the naval presence of the U.S and Great Britain have been reduced by almost 50%. Indeed, the number of international pirate attacks has risen in direct inverse proportion to decreases in the International naval presence.

With the end of cold war, navies have decreased in size and patrol and trade has increased, making organized piracy far easier.

 

This situation becomes worse when you consider that most countries have extended their territorial waters out to 200 nautical miles, but fail to plan for corresponding maritime patrol ability.

 

 The Worldwide losses occasioned by piracy ranges between US$.13-16 Billion per year. This makes Sea borne piracy against transport vessels a significant issue particularly in the waters between the Red Sea and The Indian Ocean off the Somalia Coast, and also in the straight of Malacca and Singapore, which are used by over 50,000 commercial ships per year.

 

 

Recent up surge in piracy off the Somalia coast spurred a multi –national efforts led by United States to patrol the waters of Somalia.

 

 

Concern for Insurance Industry

 

This worrying seafaring trend doesn’t just pose a threat to vessels, crews, cargoes and ship-owners. It has also set insurance Companies a big challenge. The African Insurance Market has not woken up to this challenge yet, but the Industry elsewhere has responded with a spate of new policy launches.

 

The Peril of piracy is not new to underwriting and has been an Insurance Peril for Marine underwriters as long as there has been maritime trade covered by traditional Hull and Cargo policies. The difference this time is that pirates typically are not targeting the cargo, but are taking the crew for ransom which is sometimes as high as US$. 50M.

 

Pirates are hitting the entire global supply chain interrupting deliveries, and escalating costs. More than 90% of shipping companies, already quizzed by high fuel costs and stiff competition, fail to take out adequate special risk insurance cover and leave their vessels, crew and cargo exposed in the event of an attack or hijacking attempt thereat.

 

Until recently, there has been no cover for financial impact of business interruption or loss of earnings under Marine Insurance.

 

Whenever a vessel is captured by the pirates, the average period in which it is held is 60 days, during which the leasers must meet the cost of charter hire even if they have lost control of the ship and are loosing income. They also risk losing contracts because of the delays.

 

New Insurance Products

 

The need for some kind of Insurance to cover the emerging piracy trends cannot be gainsaid. In on recent case reported in the Daily nation of 15^th December, 2009 “Importers of Assorted goods that had been detained at a go-down in Mombasa following a court order have now signed a deal with the ship owners to have them released.

 

The ship owners hired to carry the cargo declined to release it until their claim estimated at US$ 3,553,000 is paid being 40% of the value of the containers. This was after their vessel was hijacked while in transit from the Middle East to Mombasa. They wanted the importers cargo to be detained as security after they were compelled to pay a ransom of US$. 3,000,000 to the pirates.”

 

MV Faina steams into Mombasa Harbour cheered on by hundreds of Kenyans

 

MV Faina was hijacked off the coast of Somalia in September 2008 and released in February 2009

 

 

One of the new Insurance products will protect charters hiring a vessel held by pirates. It will also cover ship-owners who may loose out on charter revenues due to contract frustration and cargo owners particularly of seasonable goods, which face cancellation of contracts if the goods are detained or are spoiled or becomes obsolete on arrival at the intended destination.

 

Cover is triggered from day one of the attack, with no deductible, and is a stand alone policy to complement existing Hull, War, Cargo and protection of Indemnity (P & I) cover.

 

The second product launched provides for ransom and demands on captured crew members. Kidnap and ransom cover has been available for many years with policies typically targeting business executives, celebrities and public figures, but none existed for the ship’s crew.

 

The cover for ransom payment is issued against the cost of paying a ransom to release entire kidnapped crews and ensures that ransom actually reaches the right people.

 

The plan covers individual ships or an entire fleet per insured event with between 12.5%-25% of the premiums returned if no claim is made.

 

The policy also offers risk management advice, including training crews, and other measures to make ships less vulnerable to hijackers.

 

It can be loosely said that Piracy is the price we pay for having peace i.e. the “peace dividend”.

 

 

History of Piracy:

 

Pirates have been around as long as people have used oceans as trade routes. The earliest documented instances of piracy are the exploits of the sea peoples who threatened the Aegean and Mediterranean in the 13^th Century BC.

 

In the middle Ages, the most widely known and so far reaching pirates in medieval Europe were the Vikings, warriors and looters from Scandinavia who raided from 783 to 1066, during the Viking age.

 

The Ancient Fall

 

The 19^th and the 20^th Centuries experienced a decline in piracy and piracy related crimes. The reasons for the apparent decline were:-

 

1. Technology: the increased size and speed of merchant vessels severely disadvantaged pursuing pirates.
2. Increased Naval Presence: The 19^th & 20^th centuries saw an ever increasing level of International Naval Patrols along most ocean highways and particularly in support of colonial networks.
3. Increased Government Administration: The 19^th and 20^th Centuries were marked by the regular administration of most Islands and Land areas by colonies or nations which took a direct interest in protecting their merchant fleets.
4. Uniform Regulations: There was a general recognition of piracy as a serious International offense which would not be tolerated by countries determined to protect their national fleets and able to do so.

 

The Modern Rise:

 

Over time, these four factors that lead to the decline of piracy actually encouraged the activity:

 

1. Technology: The protection once afforded to merchant vessels by their modern size and speed is now offset by further technical advances which have reduced crew size, as well as vessel’s ability to defend itself. On the other hand, the technological advances have improved the pirate’s chief weapons of speed, shock, surprise, fire power and rapid escape.
2. Reduced Naval Presence: The trend is for smaller navies. This dramatically decreased International Ocean patrols have left merchant vessels virtually unprotected on the sea frontier.
3. Disrupted Governmental Administration: Decisions of former colonies not to maintain ties with their colonial masters and the financial inability of some governments to afford effective Naval Assets are factors which have simply encouraged pirate attacks.
4. Lack of Regulations: In some quarters, there has been erosion of the view that piracy is a serious crime, or even a crime of which anyone should take notice. With most of the world’s fleet 64 million tonnage fleets under flags of convenience such as Panama, Honduras, and Liberia, there is no political will to smash high seas piracy.

 

Flags of convenience Nations have neither the interest nor the ability to amount an effective deterrence.

 

Where is piracy?

 

Piracy is often referred to as a movable crime because new hot spots tend to pop up all the time, while other locations return to relative peace.

 

For sometime, the two most dangerous areas were on either side of the Straight of Malacca, between Malaysia on one side and the Indonesian Island of Sumatra on the other side. This is the main Ocean Highway from Asia to Europe, used by commercial ships 50,000 per year.

 

The number three area of concern is Bangladesh, while India ranks fourth in the World.

 

Other areas of concern are the Philippines, The Arabian Peninsular, the West African Coast the Niger Delta), The Cost of Venezuela and Columbia. Having been number one in the 1990s, Brazil remains a particular hotbed of pirate activity.

 

The East African Coast along the Somali coast line is increasingly becoming a hotspot for Piracy.

 

Piracy off the Somali coast:

 

Piracy off the Somali coast has been a threat to International shipping since the beginning of the Somali Civil War in the early 1990s. Since 2005, many International Organizations including the International Maritime Organization and the World Food Programme have expressed concern over the rise in acts of piracy.

 

 Piracy has   contributed to an increase in the shipping costs and impeded the delivery of food aid shipments and other items. Ninety percent of the shipments to Africa arrive by sea.

 

In November, 2008, Somali pirates began hijacking ships well outside the Gulf of Aden, mainly targeting ships headed for the Ports of Mombasa and Dar es Salaam. The frequency and sophistication of the attacks also increased around this time, as did the size of the vessels being targeted. Large cargo ships, Oil and Chemical Tankers on International voyages became new target of choice for the Pirates.

 

Recent developments point to a situation where Insurance Companies are going to be hit harder  as there have been observed changing patters in the execution of the piracy, where instead of demanding the ransom, the Pirates are now taking the cargo which they sell, and which is the subject of Insurance Policies

Causes of piracy along the Somalia Coast.

 

During the Siad Barre regime, Somali had developed a fishing Industry that was run by Co-operative societies, and there was a lot of fish exports. Money so derived and aid money improved the ships and the shipping facilities of Somalia.

 

After the fall of the Barre regime, the income from fishing decreased due to the Somali Civil War.  In addition, there were no coast guards to protect against fishing trawlers from other countries illegally fishing along the coastal waters of Somalia.

 

Big companies dumped waste in the Ocean as well and this resulted in the death of fish in Somali Waters. Eventually combinations of these factors lead to the erosion of the fish stock, and the fishermen lost their revenue and livelihood.

 

To protect their turf, and source of income, the local fishermen started to band together to protect their resource, and soon, some realized that piracy was an easier way of making money than fishing.

 

Other conditions that made piracy a better option are the levels of poverty in Somalia, which is currently ranked among the poorest in the world with a per capita GDP of US$. 600 per year; the clan based organization of Somali society, the lack of Central Government, and the Country’s strategic location at the Horn of Africa. These conditions were fodder for growth of piracy in the early 1990s and the persistence to date.

 

The lucrative success of many hijackings operations have drawn a number of young men towards gangs of pirates, whose wealth and strength often make them part of the local Social and Economic elite. The pirates are building big houses, they have new cars, new guns and wed the most beautiful girls. Ransoms are paid in large denominations of US$ bills. It is delivered to them in burlap sacks which are either dropped from helicopters or cased in waterproof suitcases loaded onto tiny skiffs or via parachutes.

 

Parachute dropped by a small plane with ransom of money

 

After seeing the profitability of piracy, since ransoms are usually paid, war lords have begun to facilitate pirate activities, splitting the profits with the pirates.

 

Most of the pirates are aged 20-35 years and the pirates can be grouped into three main categories:-

 

• Local Fishermen, considered the brains of the pirates operation due to their skills and knowledge of the Sea.
• Ex-Militia men who used to fight for local clan war loads, used as the muscle or enforcers.
• Technical experts who operate high tech equipments such as GPS devices.

 

 Somali pirates have attacked dozens of vessels, with a fraction resulting in a successful hijacking. In 2008, there were 111 attacks which included 42 successful hijackings. The rate of attacks in January 2009 was about 10 times higher than the same period in 2008 and there have been almost daily attack in March, 2009, with 79 attacks being successful. Most of the attacks occur in the Gulf of Aden but the Somali pirates have been increasing their range and have started attacking ships as far South as off the coast of Kenya in the Indian Ocean.

 

Somali pirates so far have been careful to avoid damaging ships under their charge. which has helped limit insurance company costs. This could however quickly change if there is a major catastrophe for example if the pirates were to blow up an oil tanker such as “Sirus Star”. It is also entirely possible that such vessel, which demands the highest level of seamanship from its crew and expert piloting when close to shore, could be damaged accidentally perhaps by running aground.

 

 

With no authority in Somalia willing or able to tackle the pirates, the International community has been stepping up its efforts. The UN Security Council recently authorized countries to pursue pirates at Sea, on land and by air. Countries such as China, India and Russia have also joined the International efforts to fight the menace and have sent warships to the Gulf of Aden.

 

The challenge so far experienced is that the logistics in the area are difficult and the ongoing regional instability is creating more challenges. In addition the few number of warships (less than ten) cannot guarantee complete safety.

 

Types of pirates:

 

1. The Low-life criminal-like the Somali Pirates

Somali pirates captured in Gulf of Aden

 

2. Organized crime group such as the five gangs thought to control a significance percentage of piracy in South East Asia or one of the several triads believed to control this crime in China. These are more sophisticated that the first lot.

 

3. Modern Pirates these are very sophisticated, using radar and global positioning systems to track their prey. They even carry computer generated manifests which have been obtained in advance. They sometimes literally interview their intended victims at port and then radio ahead to the pirate ship at sea with all the details.

 

This type can also plant a phony crew member a board a victim vessel, who would then relay his ship’s position and route to the pirates. They also use the “Little Mermaid” concept, where prostitutes are used for luring crew members, making the vessels more easily attacked and subdued.

 

Modern pirates use a great deal of technology. It has been reported that crimes of piracy have used mobile phones, satellite phones, GPS, Sonar Systems, modern speed boats, machetes, combat knives, assault rifles, shotguns, pistols, mounted machine guns and even RPGs and grenade Launchers. Currency machines are used to count and verify the ransom moneys.

 

With profits from stolen cargo ranging well into millions of dollars per vessel, pirates can well afford the luxuries of new technology and proper planning.

 

4. Semi-official military pirates-This is the most troubling type as seen in China, Indonesia and Somalia.  This happens when the coast guards become mischievous when on official patrol. This has become a big  scare to shippers  particularly when there is an  approaching Coastguard Patrol Boat and the crew  cannot tell:-

 

1. Whether the Boat is on official government business. Even if the patrol boat is on official business, there is no guarantee of safety.
2. Whether the boat is  a real Coastguard Patrol Boat but freelancing as a pirate ship to earn some extra cash or income;
3. Whether the boat belongs to actual pirates who have merely painted their vessels to look like one of the real Coastguards.

 

The Pirate attacks:

 

Pirates often operate in regions of developing or struggling countries with smaller navies and large trade routes. They sometimes evade capture by sailing into waters controlled by their pursuer’s enemies.

 

There are essentially three types of pirate attacks.

 

1.         Where the pirates Board the merchant vessel, rob the crew and escape. These are the most common attacks and the yields are low, on average US$. 20,000. This cash is commonly held in merchant ships safe for payment of port charges and payroll fees. The number of pirates involves is between 6 and 7 men.

2.         Where the pirates not only rob the crew but also steal the cargo. The number of pirates involved here are 70 and above. This group is usually after untraceable cargo such as timber, wire, metal and minerals. The time of attack is usually between 1.00am and 6.00am. During these times, most of the ships crew is asleep, on the bridge or below decks in noisy engine spaces.

 

The attacks can take various forms, but escape is always easy because help for merchant vessel is not around the corner. Frequently the pirates have the ability to monitor communications and will mete out further punishments to victims who might make a May Day or distress call.

 

3.         The Phantom Ship-This is the most sophisticated version of crime, where pirates literally take everything including the merchant vessel itself. Here, the phantom ship is acquired, repainted, renamed, and re-flagged (flag of convenience). The next stage is to find the victim, usually a shipper who is short on time to move his cargo or has a letter of credit that is about to expire.

 

The cargo is loaded onto the phantom ship, issues authentic bill of lading to the proper destination port and sails off into the sunset. The pirates will divert the phantom ship to a different port, sell the cargo, repaint the ship, rename it and re-flag it.

 

This phantom ship phenomenon is estimated to costs shippers US$. 200, Million per year.

 

 

 

Dealing with the crime of piracy:

 

Not much has been done by the authorities to fight the crime of piracy.

 

Reporting:

 

The official reports mention only a fraction of the problem. The problem is under reporting and only 10% of the crime is reported.

 

Ship owners are reluctant to report or directly address piracy for several reasons.

 

1. Ship owners are well aware that authorities are unlikely to solve a particular crime. Indeed, there is often fear that the authorities themselves are involved. There is so much money that pirate gangs have penetrated shipping companies, port authorities and even custom services.

 

2. Another reason for not reporting the incidences is the consequent adverse media publicity which eventually leads to increase in business costs especially Insurance Premiums.

 

 

3. Ship owners mainly discourage their Masters from filing piracy reports because it is an expensive affair. With daily vessel operating costs ranging from US$. 10,000 to US$. 50,000 or more spending a week in port, while untrained local police fumble through an investigation will usually cost more in lost time than pirate attack itself.   So unless there is murder, or a vessel seizure, the act of piracy may go unreported.

 

Anti-Piracy Efforts:

 

Not much is being done.

 

1. Use of the Legal Authority:

 

Following the 1988 United Nations “Rome Conventions for Suppression of Unlawful Acts Against the Safety of Marine Navigation”, the 41 Nations adopting that treaty have seen piracy increase.

 

The 1994 United Nations Law of the Sea convention advanced the concept of Hot pursuit whereby naval units could chase pirates into the territorial waters of other nations, capture the pirates and then put them on trial at home all under one legal jurisdiction . This is a good legal idea, but it is the naval units that are absent from the mix.

 

New laws will also not stop piracy. There are legal barriers to prosecuting individuals captured in International Waters. Countries are struggling to apply existing Maritime Law, International Law and their own Laws, which limit them to jurisdiction over their own citizens. According to piracy experts, the goal is to deter and disrupt pirate activity and pirates are often detained, interrogated, disarmed and released.

 

Prosecutions are rare for several reasons:-

 

a.      Modern laws against piracy are almost non-existent. For example, the Dutch are using a 17^th Century Law against “Sea Robbery” to prosecute.

b.       Warships that capture pirates have no jurisdiction to try them,

c.       NATO does not have a detention policy in place.

d.      Prosecutors have a hard time assembling witnesses and finding translators,

e.      Countries are reluctant to imprison pirates because they would be saddled with them upon their release.

f.        Piracy also takes place outside the territorial waters of any state; the prosecutions of pirates by sovereign states represent a complex legal situation.

g.      The prosecution of pirates at seas contravenes the conventional freedom of the high seas. However because of universal jurisdiction, action can be taken against pirates without the objection from flag state of the pirate vessel.

 

 

2. Private Navies:

 

It is the private efforts which are likely to be the most effective in the short term.

 

For example, Somali has recently established a new “Maritime Security Force” which will be run by 70 British operatives (Politically correct term for mercenary) supplied by the Hart Group of Bermuda.

 

India has recently retained the Services of a Florida company known as “Special Cops Associates” for use as anti piracy force.

 
Somali Pirates

 

Meanwhile, 24 ship owners have retained the unique services of a British company known as Gurkha International Manpower Services. This company will supply teams of Ex-British Gurkha for cruise line security and anti piracy patrol services.

 

This trend of hiring Private Navies for combating piracy is expected to continue.

 

3. The International Maritime Bureau:

 

In 1981, the International Chamber of Commerce established the London based International Maritime Bureau. The Bureau has almost single handedly waged war against piracy over the last twenty years.

 

In 1992, the IMB established a special “Piracy Reporting Center” in Kuala Lampur. Rapid reporting by these agencies has been credited with many foiled piracy attempts and multiple victim vessels recovered.

 

The IMB has moved forward to create a variety of public and private programs designed to combat piracy. One programme about to be launched is the “Rapid Response Investigative Service.” Teams of trained anti-pirate investigators will move within hours to complete criminal investigations often requiring many days on the part of the poorly trained port officials. The program is not only designed to bring more of the criminals to justice, but also will hopefully address the problem of under-reporting.

 

4. Arming the Merchant Vessels:

 

Most nations have placed an outright ban on arming the merchant vessels in order to avoid creating the "Wild West" at Sea.

 

The fear is that the use of guns by crew members could easily escalate both the violence of these attacks and the harshness of the pirate reprisals.

 

Worse shooting the “wrong pirate” could cause political, military or legal problems, which could be very difficult to solve. In addition there are issues of legality of carrying weapons when entering foreign ports, while some flags states do not allow ships carrying their flags to carry small arms on board. Shipping owners also fear that an armed response could make pirates quicker to use violence in future attacks, and spark an arms race between the two sides.

 

The cargo carried is also a hindrance. For example a spark on a tanker vessel might explode the whole vessel.

 

So far, the effective weapons used by merchant vessels are the fire hose flare gun, and the ship’s horn. Used together, an alert crew can startle, blind and hose a pirate group off the deck before an attack takes place. The key here is to rob the pirates of their chief weapon; i.e. the element of surprise.

 

On the technology side, all sorts of gadgets have been proposed including bullet proof life jackets.

 

The “Shiploc” has been particularly an effective system. The system uses a hidden personal computer aboard a ship to monitor position by satellite 24 hours a day. Should anyone breach a fiber optic network stretched around the vessel’s perimeter, an automatic signal is provided both to the ship’s crew and the authorities ashore.

 

Whatever the method used to combat the piracy menace, it seems clear that increased public awareness of modern high sea piracy is going to be required before this deadly trend is truly reversed.

 

International ships equipped with Helicopter patrol the waters where pirate activity has been reported but the area is very large. Some ships are equipped with anti-piracy weaponry such as sonic devices that sends our sonic waves to a directed target.

Other measures taken by ship owners are posting of water cannons at vulnerable points, putting barbed wires around the freeboard or greasing or electrifying handrails or evening having private security firms; the presence of which might lead to a reduction in insurance premiums.

 

Helicopter patrol

 

With millions of dollars at stake, pirates have little incentive to stop.

 

To put it in another way, piracy is on the rise because there is lots of valuable stuff out there to steal, but no one to stop them.