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Live from Abu Dhabi Connect the World takes you on a journey across continents, investigating the stories that are changing our world.

Live from Abu Dhabi Connect the World takes you on a journey across continents, investigating the stories that are changing our world.

Doing business the pirate way

January 11th, 2011
05:01 PM ET

When you see Somali pirates out on the high seas, you see a rag-tag bunch of young men with weapons charging across the water, often high on a drug called khat. 

I never imagined that behind them, there is a very well structured, well-organized business plan that would impress any Wall-street firm.

Their business plan works like a well oiled machine and it’s intriguing. 

Investors and suppliers provide money and equipment to run the operation.  A gang leader then oversees, pirate action groups, the onboard commander, the accountant, a logistics manager... there is even a chef and a sous-chef.

According to a UN report, pirates are divided into class A and class B. 

Class A are the men who actually crew the mother ships (larger ships at sea where pirates sit and wait for their victims). These men also attack skiffs and carry out the attacks.  This group will typically consist of fishermen, who know how to operate at sea.

Fighters are former militiamen or young guys who have fought for years in clan wars and civil war. These guys will perform the actual boarding of the ship which is the most dangerous part of the operation.

There are financial benefits for anyone who gets on board first, and penalties for breaking the strict rules like hurting hostages or damaging the vessel for example. There are also technical specialists in this group, pirates with expertise in GPS, AIS, radios.

Class B pirates are the guards, usually older men who don’t do much fighting. Negotiators fall into this class, as well even though they are not usually even in Somalia.  Interpreters, boat builders, suppliers also come under this.

When the ransom money comes in - and it can range from two to four million dollars in cash - the first payment goes to the class A pirates and shareholders. 

Fighters are often paid in credit when the hijacked ship arrives to moor off the Somali coast. 

Class B guys are part of the operating costs. Financiers and investors get a 30 percent return on their initial investments!  Town elders usually get anywhere between 5-10 percent in mooring costs.

There is a whole industry that has sprung up in pirate towns.  People are needed to maintain the boats, provide the prostitutes, booze and drugs for pirates coming back with a hijacked ship, food, fuel, accommodation. Everything.  Pirate towns are booming.

It’s big money.  I mean think of being a young Somali man today.  You don’t have much hope of a decent livelihood. Piracy offers big bucks.

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