What Next? Will Somali Pirates Issue an IPO?
Though still deadly, Somali pirates have become business-like.
Somali piracy is down 32 percent from last year, reports Ben Berkowitz for Reuters, but it's still highly profitable. In fact, they've professionalized their operations and now present their victims with a package of material outlining the ransom process -- printed on letterhead. Berkowitz writes:
The cover sheet, in memo format, is addressed "To Whom It May Concern" with the subject line "Congratulations to the Company/Owner."
"Having seen when my Pirate Action Group (P.A.G) had controlled over your valuable vessel we are saying to you Company/Owner welcome to Jamal's Pirate Action Group (J.P.A.G) and you have to follow by our law to return back your vessel and crew safely," the memo begins. …
"Do not imagine that we are making to you intimidation," the memo says, before signing off with "Best regards" and the signature of Jamal Faahiye Culusow, the General Commander of the Group.
The tone of the memo belies the violent reality of the pirate's actions. [They] were responsible for 35 deaths in 2011 alone.
Lest there be any doubt about who Jamal is or what he does, his signature is accompanied by his seal -- yes, Jamal has a stamped seal -- depicting a skull and crossed swords with the name of the group.
The pirates are not the only ones profiting.
A small coterie of companies … offer "kidnap and ransom" policies to shipping companies for just these kinds of situations.
Guess one hand washes the other. But insurance companies have long offered war risk insurance. In fact, writes Berkowitz:
Because the number of attacks have declined, piracy coverage prices have, too, said Amanda Holt, a vice president in the financial and professional liability unit at insurance brokerage Marsh in Norwich, England. "Often if you buy piracy cover you'll get a discount on your war premium. It makes a lot of sense for ship owners and managers."