In your interest.
Online Personal Finance Magazine
No beating about the bush.
The inside story behind why Somali pirates released the 23 crewmembers on board, after nearly one year of captivity
First of all, for all those in the media and outside going shrill about wanting the Indian Navy to go into 'hot pursuit' on pirates hijacking ships, a small question-would you send the Indian Army to chase and capture bandits hijacking Indians on an Isle of Man registered bus in Albania or Montenegro, for example? No. We would not.
The days of sending gunboats up the Yangtze Kiang River or the Hooghly to motivate the natives are also now over, and if we try it near the Horn of Africa, then an established system of maritime realities and truths will soon put paid to things. And some poor Indian Navy officer will be strung up, likely at the Hague, for war crimes.
And besides, it is simply not feasible-too many small boats operating out of a large number of 'mother ships' and trawlers, over an ocean area larger than a few continents put together, an entity, concept and aspect which people ashore will simply not be able to relate to.
Besides, this is largely business as usual, though on a rapidly growing curve-so unless we are trying to establish our colonial rights there, it would be better to send in our bankers and evangelists, rather than our sailors, which is also the established wisdom of ages. Already, everything the "pirates" need is easily available, and if Amex, MasterCard and Visa are present, and doing very well, thank you, then can the rest of the organised retail and wholesale trade be too far behind? It is only the transaction cost and underwriting expenses that go up, which is also good for the bottom-line of the FIIs (foreign institutional investors), so everybody plays happy campers.
Next, barring some dhows and other local sailing craft which in any case are regulars on that route, so they know the game-no Indian flagship has, so far, been successfully hijacked.
Certainly, many have been attacked, more than a few have had near escapes-but they've all got through. There is what appears to be a reasonably efficient escort system by the Indian Navy for Indian flagships, facts on which one cannot and will not speak or write about, which is working as of now especially in the piracy impacted areas-but this is also a cause of concern as the piracy-impacted area is simply growing larger and larger.
From near coastal Horn of Africa to Socotra a few years ago, it extends now to the mouth of the Persian Gulf, along the coasts of the Indian Subcontinent as well as Africa till Madagascar, and reaches almost 70 degrees east and now well below the Equator.
See that on a map, and see how it is spreading.
You can use this link to see annual growth rate of piracy, too, and make pretty graphs if so desired like in an annual report.
Incidentally, there are a large number of piracy attacks in the South China Sea area too, which often go unreported because they are far more violent, often leaving no survivors, and ensuring that the ships, their crew, and the cargoes disappear. No body, no crime. The African hijacks, by comparison, are more humane-but they go and on, without closure.
Likewise, many more seafarers die every year due to run-ins on unseaworthy ships which have gone to the bottom and therefore that, their being unseaworthy, cannot be proved.
Barring the famed Derbyshire case, where friends and family of those who went down, actually spent large sums of money to find out what really happened.
Third, and most importantly, this business is no longer 'controlled' from Somalian ports or towns. The money trail, which is now well-established apparently, goes right back to the "developed" countries, often through the "oil-rich" countries.
There are "rules" and "systems" for everything now-it seems that the pirates also have an "instruction book" on how to deal with the hostages as well as their family members when they call up. The whole process is run like a stock exchange, and at last reports, there were 72 entities in the business in Puntland, whose shares were literally traded depending on success or failure at sea. It is, what do we say, a bull market on over there.
Some accounts on how the ransom money is distributed, often dropped by chopper or light plane into the ocean next to the hijacked ship, are amazing. About the best collection of reports on the pirate organisations and their commercial methods can be found here:
More worrying is the political state of affairs in Saudi Arabia, especially the ports in the Red Sea, which are accessed only through this piracy-impacted area.
(Other than through the Suez Canal, of course, but that is not currently an issue).
It is a simple fact of life that the piracy business cannot survive without strong backing, and for long it has been suspected that the commercial routes are through Saudi Arabia, which is a part of the world which itself has had a long tradition of piracy, before the Bedouins got their act together and made it a Nation. The writ of the Arab pirates was said to extend to Gibraltar at one end and well into Malacca on the other.
So, to get on with this report, what are the numbers like?
Take the case of the RAK Afrikana, recently in the news, where crew onboard have been released after 11 months in captivity. Incidentally, of the 26 people onboard, 25 are reported to now be onboard another recently ransom-released ship called the York currently heading under escort for Mombasa. About the RAK Afrikana itself, what is known is that she is taking water from a large hold in the hold, and is likely to sink soon, if not already sunk.
The RAK Afrikana is a 30-year-old cargo ship, small as ships go at about 8,000 tonnes DWT, flying what is called an "open register" flag, or Flag of Convenience (FOC).
But this vessel is basically an ageing rust bucket surviving on the deficiencies in this system of "anything that goes flags". In this case, St Vincent & Grenadines, which just happens to also be blessed with a Governor General and a Queen, both from England, thank you very much.
But not British enough to send the British Navy, sure. She was based in Ras Al Khaimah, part of the UAE, where she functioned as a cadet-training ship, preparing young people for a career at sea under the New Zealand marine system, with a link also to BIT, India.
The operators are of Indian origin, as are some of the crew, though it was long thought that the financial backing was from Italy and China, blessed by the local RAK (UAE) Government, who were justifiably very proud of these efforts to re-launch ancient maritime traditions. And finally, various other Governments and shipping companies also wanted to take this concept further, which is why she went on a voyage to Mauritius, after picking up some cargo on the way to make the voyage commercially viable too-and give the cadets some real experience.
And then she got hijacked. North of Seychelles.
The initial stages of negotiation were handled by an Indian who went by the code-name 'SADMAR', who was also the single point contact for the hijackers/pirates and their representatives. There was also a gentleman of European origin, let us call him 'JOE', who was an "advisor" functioning vaguely on behalf of the insurance companies and beneficial owners-both of whom were not fully declared.
At a meeting with the family members in a south-west Delhi 5-star hotel in the summer of 2010, it was made clear to the family members that if they wanted their kith and kin back safely, then they would have to keep the peace-interim financial sustenance was offered and accepted.
At that juncture, the pirates were demanding $3 million-$5 million, and 'SADMAR' had the authority to offer $700,000.
Then, very sadly, probably because the negotiations were literally killing him, 'SADMAR' died, and negotiations came to a grinding halt, while fresh channels were set up-trust being an important part. At all points of time, however, safety and good treatment of the crew onboard was paramount, as also looking after their families back home, so this episode did not make the shrill headlines.
For that, full marks to the owners, the Kotwals. Interim, 'JOE' tried hard to build confidences with the pirates as well as the crew onboard, but everybody wanted 'SADMAR', which was not possible as by now he had been cremated in Kochi.
Long story cut short, a few days ago, the ransom was paid out, and the pirates abandoned the ship, which was literally on its last legs anyways. The sum is rumoured to be around $1.2 million. A total of 25 of the seafarers onboard were first transferred to an Italian warship, and then again to another merchant ship recently freed, and now headed for Mombasa. The Captain of the ship, who played a stellar and strong role throughout, as well as his
Noida-based wife, are amongst the many heroes of this episode.
Which may or may not ever be really told again.
At the end of the day, however, it was all about how the fiscal aspects of the whole "transaction" were handled. From ensuring that family members were provided sustenance, to spending money on keeping communications going, and getting solid good professional advice from 'JOE'-the owners and pirates played the rules by the book.
Going to the media while negotiations are on, is not playing by the rules-and only endangers the lives of those on board.