Pirates making hundreds of millions in ransoms, as attacks intensify off Somali coast

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Business is booming for Somali pirates

Attackers rake in hundreds of millions in ransoms

While much of the world's economy is in the doldrums, business is booming for Somalia's pirates, whose attacks on commercial ships sailing Africa's east coast are more frequent, violent and lucrative than ever.

Pirates took in an estimated $160 million in ransoms last year, and one study predicts the number will climb to $400 million by 2015, as the high seas thieves continue their brazen reign on the Indian Ocean. Efforts by shipping companies to beef up security, and by the European Union, which has mounted airstrikes on pirate ships, have so far been met with stepped-up attacks. Chillingly, pirates are now chopping off the limbs of captives in extreme cases when the airdrop of cash isn't made quickly enough to suit them.

"It's an established, structured model, where you have Somalis who are leading and financing operations and then you have pirates who actually go out to sea and conduct the activity," Brian Green, chief of the counter-piracy branch of the Office of Naval Intelligence, told FoxNews.com of the piracy industry. "They are, more or less, foot soldiers. They find targets of opportunity, attack them with the goal of hijacking and bringing that vessel back to Somalia."

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Piracy worldwide reached an all-time high in 2011, as 544 attacks against ships were reported to the International Maritime Organization, an increase of 11 percent from 2010. Nearly half occurred off East Africa, where Somali crews in small boats range hundreds of miles out into the Indian Ocean, boarding container ships sailing south toward the Mozambique Channel. Of the 17 hijackings reported to the International Maritime Bureau so far in 2012, a dozen have been off Somalia's coast.

Typically, they board the ship, overpower the crew and sail it toward any of the hundreds of islands that pepper the East African coast. They convey their demands to the shipping company, and wait. Pirates have been known to hold crews captive for months, waiting for the ransom payment. The initial demand is typically between $10 million to $20 million, eventually whittled down to $2 million to $5 million, usually after “months of negotiation,” Green said.

When the company agrees to meet the pirates' demand, a small plane or helicopter flies overhead, dropping a canister by parachute near the ship. They prefer to get paid in U.S. $100 bills, according to Green.

"It's a cash transaction," he said, noting that tracing the money later is all but impossible.

Last year, pirates took in 31 ransom payments, averaging just more than $5 million apiece. With so much money at stake, and so few other prospects for the lawless sailors of Somalia, consulting firm Geopolicity predicts that figure could skyrocket to as much as $400 million by 2015. The cost to the shipping industry, in extra security and lost time, will reach $15 billion by then, according to the study.

Somali pirates recruit their crews from among the teens that roam the streets of cities such as Eyl in the northern Puntland region. Promised a “quick score,” they sign on and learn the ropes at sea, according to Steve Collins, operations manager of Sea Marshals Ltd., a United Kingdom-based company that provides security teams for vessels in the pirate-infested waters of the Red Sea, Gulf of Aden, Indian Ocean and Gulf of Oman. The teen pirates are often under the influence of khat, a drug made from a native plant that induces an amphetamine-like high when chewed, as well as unpredictable behavior.

“From what we know, they are generally young men looking for a better life,” Collins told FoxNews.com. “They are told piracy is a quick way to become rich and get a part of the ransom. Basically, they are given an AK-47 and are thrown onto a vessel.”

Robert Young Pelton, publisher of the watchdog website Somalia Report, told FoxNews.com that pirates primarily target “low and slow” vessels and are growing more desperate as shipping companies and crews fight back. Captains have also adopted “best management practices,” vastly improving security with features like safe rooms, barbed wire and high-pressure fire hoses.

The seafaring outlaws have answered by plowing profits into faster boats and better arms -- and becoming increasingly ruthless, Collins said.

“With more vessels carrying arms, it’s getting harder for pirates to get what they want,” he said. “So they don’t just stop because someone fires at them once. Two years ago, if you shot at the [ship’s] bridge, they would stop. It doesn’t happen that way anymore. They are definitely getting more violent.”

In January, pirates off the Somali coast sawed off the lower arm of a Taiwanese trawler’s captain, Chao-I Wu, to extract a $3 million ransom, according to Somalia Report.

The Marine Police Force in Puntland, a region of northeastern Somalia that has become a pirate stronghold, has cracked down on piracy, recently arresting a suspect named Mohamed Mohamud Mohamed Hassan, known as “Dhafoor,” late last month. Dhafoor, 36, is believed to be the second in command of the pirate group that held a Danish family for six months before receiving a $3 million airdropped ransom last year. Jan Quist Johansen, wife Birgit Marie and the couple’s three children, ages 13 to 17, were captured 600 miles off the Somali coast along with two Danish crew members on Feb. 24, 2011.

The most well-known hijacking in recent years took place off Somalia in April 2009, when the Maersk Alabama, a Virginia-based ship, was overtaken by pirates. The five-day standoff, which ended when Navy SEAL snipers killed three of Capt. Richard Phillips’ captors, is now the subject of an upcoming movie starring Tom Hanks and a nearly $50 million lawsuit filed by more than half of the crew members who claim Phillips ignored warnings to stay at least 600 miles offshore from Somalia.

The surviving Somali-born pirate, Abdiwali Abdiqadir Muse, was later brought to New York to face trial and was sentenced to 33 years in prison. Philip Weinstein, one of Muse’s attorneys, told FoxNews.com that a combination of total anarchy and few viable industries in Somalia contribute to a culture that makes piracy attractive to young Somalis like Muse.

“It’s very, very dangerous in the high seas,” Weinstein said. “But the payoff is big.”

Green, the chief of the counter-piracy branch of the Office of Naval Intelligence, echoed that sentiment, predicting that Somali piracy will not end anytime soon. He characterized Somali piracy as a “regional activity that is having a global impact,” with coordinated international responses to piracy incidents and the alteration of shipping lanes to avoid known hotspots.

“We have to keep our guard up to the possibility of pirates evolving their tactics and to respond accordingly,” Green told FoxNews.com. “A permissive environment, coupled with a lack of opportunity ashore, will continue to fuel Somali piracy.”