Tue, Aug 14, 2012 - Page 7 News List

FEATURE: African coast pirates present hijacking demands, complete with a letterhead

Reuters

Welcome to the Pirate Action Group. Pirate commander Jamal wishes to congratulate you on being hijacked. Kindly speak to his negotiator about your ransom, bearing in mind that his demands are similar for every vessel he seizes.

This is not an absurd joke — this is how the pirates of the African coast do business, and it is a serious matter for the companies that have to pay out.

Last year, Somalian piracy cost the world economy US$7 billion and earned the pirates about US$160 million in ransoms, according to a recent report by the International Maritime Bureau. Piracy is receding of late, but it is still a threat. The bureau reported 69 hijacking incidents by Somalian pirates from Jan. 1 to July 12, down 32 percent from last year.

Rogues though they may be, these pirates in many cases are surprisingly well-organized, down to having their own packets of paperwork — on letterhead — for their victims.

Reuters obtained a copy of one such packet, presented to the owner of a hijacked oil tanker and the owner’s insurer after the ship was taken. Because of the commercial sensitivities, the names of the insurer and ship owner were redacted from the document, as was the size of the ransom request.

However, what remains is colorful enough, and somewhat surprising. 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.

The tone of the memo belies the violent reality of the pirate’s actions. As of early this month, armed Somalian pirates hold more than 170 hostages, according to the bureau, and were responsible for 35 deaths last year alone.

“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.

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.

Anything can be insured for the right price, and the risk of people or property being held for ransom is no exception. A small coterie of firms, among them Travelers, Chubb and AIG, offer “kidnap and ransom” policies to shipping companies for just these kinds of situations.

In the event of a hijacking, they will pay up, just as Jamal and his ilk request.

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,” Holt said.

A ship owner looking to insure a single transit can now get US$5 million in coverage for anywhere from US$3,000 to US$5,000, assuming the ship has armed guards. In this case, that means negotiating how and when the money is paid, and of course how much.

Jamal provided the ship owners a breakdown of the value of their tanker, the oil it contained and also the worth of the crew (at least in his opinion), presenting a final demand figure for them to consider.

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