Saturday, January 31, 2009

The Global Business of Crime

Take one part economic downturn. Add another part unspectacular terrorist movement. Then mix with cache of weapons and whatever tactical training remains from previous visits to radical camps in the mountains of Afghanistan or Pakistan. Let fester overnight, figuratively. Then, in the cold bitter morning of discontent, add to this mixture a combination of nothing-to-lose boldness and a smidgeon of any lessons learned from the FARC in Colombia about how best to extort money from multinationals. What does this recipe produce? Somali pirate hostage-taking and hijacking. A look at this Wall Street Journal article on a recent case (http://online.wsj.com/article/SB123335651246634995.html) yields some insight into how to run these operations with businesslike efficiency.

Why assume that these activities are informed by the FARC or any other international experiences? True, the article makes no such claim. Nevertheless, the article does reveal that the firms victimized in this case made use of British security guards and of crisis management advisors. The first company to go into business in this specialized world of responding to international kidnap for ransom and negotiating with the hostage-takers was a British firm with close ties to the insurance industry, specifically with one or more syndicates of Lloyd’s of London. And how did Lloyd’s get its start? Insuring international shipments. It should thus come as no surprise that if the shipping industry now being victimized by Somali pirates is looking to specialists to advise it in both securing its shipments and in managing hijackings and ransom payments, that the hijackers are also using their own jungle drums to share tribal knowledge within the ranks of like-minded villains.

If there is any good news about all this, it is that putting this crime and its response on a business footing this way is much less dangerous to human life. The pirates, as the article underscores, wanted only money. Their corporate victim wanted the release of both crew and cargo. By working to negotiate resolution professionally, both parties arrived at an understanding they could live with and no lives were lost – at least this time.

In a world overshadowed by the fear of terrorism and acts of carnage and brutality, it is occasionally refreshing to see even a bad thing resolve itself without bloodshed by being run on a business footing. This is what one British security service officer has referred to as, “ordinary, decent crime” as contrasted with terrorism. Both sides know what to expect, and the event follows a certain pas-de-deux from overture to denouement. Eventually, the victimized firms learn how to make it too unprofitable for the pirates to hijack freighters. Then the pirates move onto other criminal opportunities with a better payoff.

- Nick Catrantzos