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Somalia Report recently traveled to Somalia’s pirate hub of Hobyo in order to try and find out how the pirates are spending their ransoms. To do this, our correspondent spent time with two pirates: Hayle Mohamed, the leader of a 150 man pirate group responsible for hijacking 13 ships including the MV Faina and Samho Dream, and Rage Abdi, a shareholder of the Samho Dream hijacking, both of whom explained that $1 million really doesn’t go very far for a pirate today.
Young Somali males have little hope of becoming anything beyond becoming fishermen, militiamen, or even charcoal merchants. To local youths, the lucrative business of piracy promises wealth beyond comprehension and thousands are willing to risk imprisonment, major injury, and even death to find that one big payoff.
Some religious figures and community elders have attempted to deter Somali men from joining this dangerous and illicit trade by appealing to their faith, pointing out that the money earned from piracy is considered haram or “religiously forbidden” because it is obtained by theft, abusing people and extortion. There are other ills caused by piracy that include a lifestyle of alcohol, drugs, prostitution and violence. But none of this deters dozens of youths who seek their fortunes on the seas.
Where Does the Money Go?
Hobyo, an ancient coastal city once known by mariners for its fresh water, is now known for pirates. The tiny village is approximately 500 kilometers northeast of Mogadishu in Mudug region.
It was here that our correspondent met with Hayle Mohamed who has run his 150 man gang for the last four years. Mohamed, who is in his early 40s, claimed he had been involved in the hijacking-for-ransom of at least thirteen ships including the Ukrainian merchant ship MV Faina with its cargo of Russian battle tanks and the MV Samho Dream, a South Korean oil supertanker, both of which were successfully ransomed by Mohamed and his men.
Although he refused to provide details as to how much of the $3.2 million ransom paid for the safe release of MV Faina and its crew, one of his close relatives did tell our reporter that Mohamed took approximately $1 million as his share of the overall payment.
Responding to questions about what becomes of the cash he said, “Although it is a large amount of money, it – the ransom money – almost immediately ends up vanishing into nothing,” Mohamed told Somalia Report.
“The money comes and goes quite easily,” he said, adding that he and others originally never expected to earn such vast sums of cash simply by hijacking ships.
Mohamed was also one of the main shareholders of the $3.5 million ransom from the owners of the Spanish fishing trawler Alakrana, which was released in late 2009.
The Alakrana, hijacked in the Indian Ocean 360 nautical miles off the Somali coast, was released following payment of the ransom. Spanish naval vessels, however, captured some of the pirates as they attempted to make their way back to the Somali coast in one of the small boats used in the hijacking. Two men were arrested and later sentenced to 400 years in prison. Mohamed’s luck held, however, and he and most of his men escaped and returned safely to Hobyo.
While speaking to Mohamed in one of his new Toyota Land Cruisers with the air conditioning blasting cool air, he claimed, “I own only a newly built house in Hobyo and many luxury Toyotas, nothing else.” He seemed to know, or believe, that he was one of the better-known names in the Somali piracy business when he commented, “When you heard my story you must have thought I was a multi-millionaire. I am because I own the most expensive Land Cruisers, which cost almost $30,000 USD each. Even your boss may never own such a luxury car,” he offered with a smile.
The Land Cruiser, in which one of the interviews was conducted, was the sixth that Mohamed had purchased since his career in piracy began four years earlier. Such is the wealth of many pirates that, when their expensive vehicles are even only slightly damaged, they are often returned to the seller and another is purchased, rather than simply repairing the damage.
“It is hard for me to take a car to Galkayo so whenever it broke down I left it behind and ordered a new one, more expensive than the one before it,” he said proudly.
After a short drive, Mohamed took our reporter to his house, at which sat two Land Cruisers, both of which he claimed were broken down. Yet, while they were inoperable, he bragged, “they definitely look better the cars that government officials use in Mogadishu.”
Abdirisaq Du’ale, an elder in Hobyo, told Somalia Report that pirates are ashamed to have their cars repaired (instead buying new ones) because of their high income and status. As a testament to this, there are scores of Land Cruisers throughout Hobyo and along the coast, abandoned over some small damage, such as a cracked windshield or scratches to the paint.
When asked again about how the local pirates spent their shares of the ransom money, Mohamed said the money was spent almost immediately on luxury cars, jewelry, drugs (including khat), female companions, marriages, giving money to friends, partying, and other such short-lived expenses. He did not provide any proof of these expenditures or an accounting to back up this statement.
Of course, some of the money must be reinvested into weaponry and other tools that facilitate the hijacking of vessels at sea. “Although every armed man comes with his gun, we use part of ransom to buy sophisticated weapons and speedboats,” Mohamed claimed.
Some pirates, including Mohamed, took a longer-term approach and used some of their ransom earning to finance other hijacking operations, thus at least providing some possibility of future income. And there is no shortage of hijacking operations in which to invest: Somali pirate groups operating in Hobyo and Haradhere in central Somalia and in the Bargal coastal town in Puntland in northeastern Somalia have hijacked more than 53 ships with 1,181 seafarers only last year.
While precise figures are difficult to come by, it is estimated that the pirates received approximately $240 million in ransom last year, accounting for 92% of all global hijacking incidents. Today pirates are holding at least 43 ships, plus one barge with at least 664 hostages including a South African yachting couple as well as Danish family with three children.
Mohamed told our reporter that when the ransom money is dropped into the hands of the pirates, it first gets divided amongst the operation’s investors, who are guaranteed 50% of the final payment. The hijackers themselves take the next 35%, while guards on the ships get 10%, and 5% is given to local residents and the city administrators.
The deputy mayor of Galmudug’s Hobyo administration, Sharif Wadad-Adde, declined to comment whether they get any money from the pirates. Puntland officials were tight-lipped when asked if they received any such funds.
King of the Big Spenders
Rage Abdi is also a pirate leader in Hobyo and was responsible for multiple successful hijack-for-ransom incidents including the hijacking of the MV Filitsa, a Marshall Islands-flagged cargo ship which he released in February last year after getting $3 million in ransom.
Despite the huge sums of money he earned, he is now growing poor and has been forced to sell off his two Land Cruisers, houses, and his lands in Hobyo. He is attempting to put together a sufficient sum of cash in order to invest in a future hijacking and, hopefully, return himself to his earlier levels of wealth and status.
However, Abdi is so cash-poor that the small sum he may be able to raise will not be enough, given that such investments cost at least $100 USD. He simply doesn't have this money due to his earlier poor spending habits. He is hopeful, however, that he will earn some of the money from the ransom of the Liberian-owned ship MV Polar, which is currently in the hands of Mohamed’s pirate gang.
The MV Polar owners offered to pay $10 million in ransom, but the kidnappers – increasingly emboldened with each successful hijacking – firmly demanded $15 million, according to Hayle Mohamed, the leader of captors. The ship, along with its 24-man crew, is right now off the coast of Hobyo, as negotiations continue.
Rage Abdi and Hayle Mohamed were primary shareholders of the MV Samho Dream, a South Korean oil supertanker which was carrying 2 million barrels of oil worth an estimated $170 million. The ship was released in November of last year after the pirates received payment of payment $9.5 million – a record amount at the time. Both Abdi and Mohamed, interviewed separately, told Somalia Report that they spent the money buying luxury cars and paying for elaborate weddings. One of the men who asked not to be named, divorced his wife with six children and spent his money to marry very young girls who came from poor families.
“We give money to, and buy cars for, the families of our wives. We also spend large amounts of money to get women who may live a great distance away, if we find them attractive enough,” said Rage. He did not elaborate on how he “obtained” such women, though there are reports of kidnappings and paying the woman’s family large sums of money to, effectively, “buy” her.
Rage further explained the rapid draining of ransom funds. “Our money goes quickly, in part because we simply spend a lot of money. We spend thousands of dollars for mobile credits so that we can talk to anyone anywhere at any time, be they family, friends, or girlfriends. We talk all day long,” he stated.
Once again it is hard to reconcile how millions of dollars can be spent on phone charges, women and fast living. But the story is consistent, if unconfirmed. This must be held against the other popular view that pirates are protecting the oceans even though less than 10% of the attacks are on fishing vessels.
Car Problems, Fuel Costs, and Khat
Rage spent some of his money buying land and houses in Galkayo, Hobyo and Harardhere. “To get a luxury Toyota Land Cruiser one needs to have $30,000 USD or more, and fuel costs can take up almost another $30,000,” Rage told Somalia Report. “Our Toyotas are constantly on the move, all day long, and that costs fuel so you can guess how much fuel we use each month. It is countless.”
Hobyo does not have a petroleum station or even a single garage to repair the pirates’ expensive vehicles, so the nearest place to get enough fuel is Galkayo, which is approximately 260 kilometers from Hobyo. Another source of fuel and repair is the coastal town of Harardhere which is also a good distance away. Fuel costs in these towns is high, for a variety of reasons, so in addition to the fuel being spent during the drive to and from these towns, the pirates must also pay exorbitantly for any fuel purchased there.
Abdiwali Nor, a resident in Hobyo, elaborated as to how he thinks the pirates spend their money. He indicated that most of pirates’ money goes to neighboring countries, such as Kenya and Ethiopia, where they can purchase large quantities of drugs and alcohol. “The pirates are always chewing khat and drinking alcohol,” said Ali.
Speaking about the possibility that ransom money was being invested outside Somalia, Ali laughed, saying, “the pirates do not have the knowledge to create businesses. All they think about is their drugs and their pals.”
It is also true that Somali culture values family so the pirate often feels obligated to spread his wealth amongst this family and friends. Given that these social groups can be quite extensive, it is easy to imagine how a young pirate, flush with cash but no knowledge of savings or investment, might watch his funds slowly disappear to nothing as he gives it away. Of course, even these young pirates seek the same status as those like Rage and Mohamed who, at least at certain points in their careers, owned many homes and luxury cars. It is there, too, that the youths spend their cash.
“When we get ransom, all the people including, family, friends and residents, come to us to get some money,” said Hayle Mohamed.
Pirates will also claim that their funds are a vital aspect in the survival of the towns in which they live. They claim that, without the cash dispensed to the city administrators, the cities would fall into even greater disrepair and poverty.
Sharif Wadad-Adde, the deputy mayor of Hobyo, denied the pirates’ claims, saying the pirates contribute only to the decline of their cities, not to their benefit. In recent months, locals have started protesting against pirates and denying them goods or services in their towns.