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Somali Pirates' buisness model?

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  • Somali Pirates' buisness model?

    Apparently so according to the UN, here at page 99:

    A basic piracy operation requires a minimum eight to twelve militia prepared to stay at sea for extended periods of time, in the hopes of hijacking a passing vessel. Each team requires a minimum of two attack skiffs, weapons, equipment, provisions, fuel and preferably a supply boat. The costs of the operation are usually borne by investors, some of whom may also be pirates.

    To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this ‘contribution’, he receives a ‘class A’ share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.

    At least 12 other volunteers are recruited as militiamen to provide protection on land if a ship is hijacked, In addition, each member of the pirate team may bring a partner or relative to be part of this land-based force. Militiamen must possess their own weapon, and receive a ‘class B’ share — usually a fixed amount equivalent to approximately US$15,000.

    If a ship is successfully hijacked and brought to anchor, the pirates and the
    militiamen require food, drink, qaad, fresh clothes, cell phones, air time, etc. The captured crew must also be cared for. In most cases, these services are provided by one or more suppliers, who advance the costs in anticipation of reimbursement, with a significant margin of profit, when ransom is eventually paid.

    When ransom is received, fixed costs are the first to be paid out. These are typically:

    • Reimbursement of supplier(s)
    • Financier(s) and/or investor(s): 30% of the ransom
    • Local elders: 5 to 10 %of the ransom (anchoring rights)
    • Class B shares (approx. $15,000 each): militiamen, interpreters etc.

    The remaining sum — the profit — is divided between class-A shareholders.
    As Mark Leon Goldberg writes here: "Wonder if they teach that at Wharton?"

  • #2
    I read on a piracy/security blog that many of the "investors" are smugglers, human trafficers, and similar gangsters who get into piracy in between their other activities.
    Any metaphor will tear if stretched over too much reality.

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    • #3
      Any racket needs to be organised no? Fascinating reading nonetheless. Thanks Ibis.


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