Somali pirates and their marauding peers off the Horn of Africa plundered roughly $400 million in the last seven years, financing slavery, arms deals, drugs trafficking, and legitimate business investments, according to a new report published Friday.
In the ground-breaking study, “Pirate Trails, the International Criminal Police Organization,” United Nations Office on Drugs and Crime and World Bank track financial flows from piracy around Djibouti, Ethiopia, Kenya, Seychelles and Somalia.
The report is based on interviews with crime-fighting agencies, former pirates, government officials, and bankers and analyzes investments made by several dozen pirate financiers.
“Unchallenged piracy is not only a menace to stability and security, but it also has the power to corrupt the regional and international economy,” said Stuart Yikona, a World Bank senior financing specialist and co-author of the report.
Globally, the bank estimates piracy costs the global economy about $18 billion a year in increased trade costs.
It’s a downward spiral for the local economy that inflames political and economic instability. Piracy in East Africa has been a significant factor in the fall in tourism and fishing yields. Remittances — international cash lifelines for many poor families — have dropped off as banks shut down operations.
Among the findings:
–Pirate “foot soldiers” who do the dirty work on the ships – such as those portrayed in the new movie “Captain Phillips” — typically receive $30,000-$75,000 a ship, roughly 0.01%-0.025% of an average ransom.
–Pirate financiers are the hub of the piracy network, the “money kingpin” investors and piracy beneficiaries. On average, they collect from 30 to 50 % of total ransom, working individually or as a group.
–Aside from funding militias, human trafficking and weapons deals, a substantial portion of their blood money is laundered through the trade of the stimulant “khat,” particularly in Kenya. The World Bank said authorities there do little to monitor the khat trade and so “is the most vulnerable to illicit international flows of money.”
While Mr. Yikona said the international community has mobilized a naval force to deal with pirates, he said “a similarly managed multinational effort is needed to disrupt and halt the flow of illicit money that circulates in the wake of their activities.”
Tofik Murshudlu, a division chief at the UNODC said authorities must more aggressively tackle the piracy kingpins and their financiers.