Pirates: insurance policies to say negotiators
The report also states that skilled ransom negotiators can help to keep risk to life and vessels, as well as ransom payments, to a minimum. Where ship owners intend to pay a ransom to recover their vessel and crew, and recommends that they use experienced and effective ransom negotiators. Where insurance policies do not already insist on experienced negotiators, they should do so.
The pirates were largely based around three clans, which tended to have their own "pirate companies". They left from numerous pirate ports, including coves and harbors along the 3,000 km-long coast. They brought seized ships back to a central location, where they maintained the security of the ships and conducted ransom negotiations
A significant number of Somali pirates are organized in clan-based sophisticated criminal networks. However the method of attack has remained basic. Ironically, it is a measure of the success of Atalanta and other international forces in the Gulf of Aden that pirates have been forced to operate further offshore in the Indian Ocean. This increases the risk-to-reward ratio for the pirates as they have to use mother ships which are more easily identified by surveillance.
Hostage taking and ransoms
53. Rear Admiral Hudson [Rear Admiral Peter Hudson CBE] said that the piracy of ships for ransom had generated around $80 million in 2009. Generally, hostages had been well treated notwithstanding the psychological impact. Tracing where the money went was a key part of the overall assault on piracy but he did not believe there were any direct links between terrorist organisations such as Al-Qaeda and piracy (Q 108). We understand that it is very difficult to ascertain the ultimate destination of proceeds of piracy. Although the Government have so far found no evidence of any operational or organisational link between piracy and terrorism, there must be a danger of such links.
54. Lord Malloch-Brown (then FCO Minister) acknowledged the reality that ransom payments were made by ship owners to save the life of their crews, and confirmed that such payments were not illegal under international law. However, the Government would not endorse, condone or participate in such a transaction, in line with the common EU position (QQ 79-80).
55. Baroness Kinnock of Holyhead confirmed that the payment of ransoms was not a criminal offence under UK law; the Government's position was that such payments should be discouraged as they would only exacerbate the piracy problem. Mr Holtby stated that once a ransom was received by pirates it became criminal proceeds which could then technically be recovered (Q 340).
56. The insurance industry confirmed that the payment of a ransom was insurable and it was not illegal to insure such a payment (Croom-Johnson Q 278). The FCO told us that the US had recently suggested that pirate individuals should be designated under the UN anti-terror sanctions regime, which could require States to freeze funds and financial assets associated with an individual. They noted the reported concerns of the shipping industry that such a move might render the payment of ransoms more complicated and thus potentially endanger the lives of crews (Q 340).
57. We support the status quo whereby the payment of ransom to pirates is not a criminal offence under United Kingdom law. We recommend that the Government continue to monitor the potential risks of monies reaching terrorists.
58. We understand that skilled ransom negotiators can help to keep risk to life and vessels, as well as ransom payments, to a minimum. Where ship owners intend to pay a ransom to recover their vessel and crew, we recommend that they use experienced and effective ransom negotiators. Where insurance policies do not already insist on experienced negotiators, they should do so.
Combating Somali Piracy: the EU's Naval Operation Atalanta - European Union Committee, by Sub-Committee C (Foreign Affairs, Defence and Development)