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STORY: WORLD BANK/PIRACY REPORT
TRT: 02.21
SOURCE: WORLD BANK
RESTRICTIONS: NONE
LANGUAGE: ENGLISH
DATELINE: RECENT 2013, WASHINGTON DC, UNITED STATES
RECENT 2013, WASHINGTON DC, UNITED STATES
1. Med shot, World Bank sign
2. Pan right, World Bank building
3. SOUNDBITE (English) Stuart Yikona, report author, World Bank:
“This report is the study by the World Bank and the United Nations, which is called the Pirate trails. It looks at how much ransoms were paid and we found that it was more than 339 million dollars, up to 413 million dollars that was raised in ransoms from pirate activities. Two main findings to emphasize. One, that the money that was raised was invested in legitimate as well as illegitimate activities. The legitimate activities, such as, for example, hotels, restaurants, the transport sectors. But also, in terms of criminal activities, such as human trafficking, arms trafficking in terms of funding of militias, as well as money going back into financing further pirate activities. But also we discovered that some of the monies is invested in the cot trade. Cot is a stimulant, which is legal in countries like Djibouti, Ethiopia, Kenya as well as Somali itself. It goes back more than 100 years. So it also invested in that. There is no monitoring in particular in Kenya, where it is not regulated. So those were the two main findings that we found.”
FILE - KENYA, 2012
4. Wide shot, Kenyan skyline
5. Med shot, people walking along street
RECENT 2013, WASHINGTON DC, UNITED STATES
6. SOUNDBITE (English) Stuart Yikona, report author, World Bank
“The study concludes three things that need to be looked at. One, is regional and international support to better monitor financial flaws from pirate activities. I think that is very, very important. The second one, is supporting, particularly the local authorities in terms of monitoring cross-border cash smuggling. That is very, very, very important. The third thing which is critical, but from the World Bank perspective, is to help the Somali government and to better monitor and perhaps even regulate the money-value transport systems, the ones that look at remittances to and from Somali. That’s a very, very important developmental issue and so it’s important to help them to better monitor on a risk-based basis that particular sector.”
FILE - KENYA, 2012
7. Wide shot, people walking across street
Between US$339 million and US$413 million was taken in ransom from the hijacking of ships off the coast of Somalia and the Horn of Africa between 2005 and 2012, according to a report released today.
The study carried out by the by the World Bank, the UNODC and INTERPOL reveals that much of the ransom money was used to fuel a wide range of criminal activities on a global scale.
Stuart Yikona, a World Bank Senior Financial Sector Specialist and the report’s co-author, said that two of the main findings to emphasize were “one, that the money that was raised was invested in legitimate as well as illegitimate activities. The legitimate activities, such as, for example, hotels, restaurants, the transport sectors. But also, in terms of criminal activities, such as human trafficking, arms trafficking in terms of funding of militias, as well as money going back into financing further pirate activities.” Secondly he said, “we discovered that some of the monies is invested in the cot trade. Cot is a stimulant, which is legal in countries like Djibouti, Ethiopia, Kenya as well as Somali itself. It goes back more than 100 years. So it also invested in that. There is no monitoring in particular in Kenya, where it is not regulated. So those were the two main findings that we found.”
Piracy costs the global economy about US$18 billion a year in increased trade costs. Because the outbreak of piracy has reduced maritime activity around the Horn of Africa, East African countries since 2006 have suffered a significant decline in tourist arrivals and fishing yields. International remittances – a lifeline for the poor – have been affected by the decision of some banks to cease their operations with money remitters working with Somalia, which some financial institutions associate with risks involving the funding of terrorist activities.
Yikona said that the studies conclusion was that three things needed to be looked upon, “one, is regional and international support to better monitor financial flaws from pirate activities. I think that is very, very important. The second one, is supporting, particularly the local authorities in terms of monitoring cross-border cash smuggling. That is very, very, very important. The third thing which is critical, but from the World Bank perspective, is to help the Somali government and to better monitor and perhaps even regulate the money-value transport systems, the ones that look at remittances to and from Somali. That’s a very, very important developmental issue and so it’s important to help them to better monitor on a risk-based basis that particular sector.”
“Pirate Trails” – using data and evidence from interviews with former pirates, government officials, bankers and others involved in countering piracy – investigates the flow of ransom money paid out to Somali pirates operating in the Indian Ocean. The study examines the reach of the pirates into the narcotic “khat” trade, human trafficking and other illegal activities that hinder development.
Tracing a pattern that it calls “the pirate money model,” the study analyzes the investments made by a sample of 59 pirate “financiers” to reveal the range of sectors – including both legitimate businesses and criminal ventures – that were funded by the ransom money. Emphasizing the prominent position of pirate financiers, the report estimates that between 30 percent and 75 percent of the ransom money ends up with these financiers. The pirate “footsoldiers” aboard the ships receive just a fraction of the proceeds, amounting to less than 0.1% of the total.
“Pirate Trails” assesses how the ransom proceeds are moved, invested and used. The report calls for coordinated international action to address the issue, and it sets out how the flow of illicit money from the Indian Ocean can be disrupted.
“Pirate Trails” also illustrates the effect of the hijackings on the local Somali economy in terms of the employment of foot soldiers and the purchase of goods to sustain the piracy operations.
