As Somali pirates continue to rampage through the Gulf of Aden, seizing ships and threatening lives, Liz Booth speaks to a chief executive caught up in the nightmare of one particular hijack.
Somali pirates have turned hijacking into a big business, with an income to rival some major global corporations, and this has caught the public’s attention. But as Industrial Shipping Enterprises Corp (ISEC) chief executive James Christodoulou discovered, this is about way more than just the ransom.
One of the ISEC ships, the M/V Biscaglia, was taken in November last year, with a crew of 28 on board. Christodoulou says: “Our first concern was for the safety of the crew. We knew within the first five minutes that the ship was being taken – the captain managed to get a message out to our offices in Singapore as the pirates took control – and from that moment on, everything else was on hold while we fought for their release.”
As he explains, it was not as if the company had not tried to prevent a piracy attack. For two months before the ship set off, the company had been taking advice on whether or not to sail through the Gulf of Aden at all.
The crew had all been offered the opportunity not to sail – some did opt out – and had been fully briefed and trained by security experts. There were even three non-armed security staff on board, costing the firm $25,000. They managed to jump overboard and escape capture. The ship was also following a convoy, escorted by a naval vessel, but had fallen behind when it was seized.
“We had taken a belt and braces approach to security, doing everything we could to minimise our chances of being taken,” Christodoulou says. The company had also bought comprehensive insurance. Christodoulou will not give any details of that insurance, not a surprise given that standard K&R (kidnap and ransom) policies have confidentiality clauses. If any details emerge of a policy, it is automatically voided.
All he will say is that “we had a lot of different coverages”, arranged through UK brokerage Seascope.
But none of Christodoulou’s efforts prevented that fateful call to say the ship had been seized and was heading to a fishing village on the Somali coast where ransom negotiations would begin.
The first thing Christodoulou did on receiving the message was to call together the whole crisis response team, including the ship insurers and lawyers.
“What we have to remember is that when pirates take a ship it is not for the vessel or the cargo, it is for the value of the human life on board. It is a human drama and our job was to get our people back safely. It is not just piracy, it is a hostage crisis.”
The crisis team provided support and advice to Christodoulou as he personally negotiated with the pirates, as well as to the families of the captured crew. As the first US-owned ship to be taken, the case presented some unique challenges to ensure Christodoulou acted within US law.
He felt strongly that as chief executive it was very much his job to handle the negotiations. The first crisis meeting was held within an hour of the ship being seized but then the team had an agonising wait until the ship was at safe anchor.
“Unless you have been through this yourself,” says Christodoulou, “I really don’t think you can appreciate the stress and intense times we all went through. Our industry is very good at dealing with certain situations but this was very new for all of us.”
Added to the uncertainty of those first few days was that the ship had an Indian crew and the hijacking followed closely on the Mumbai terrorist attacks. So at the back of his mind Christodoulou feared his crew could be killed in some form of reprisal.
When the first contact came directly with the pirates via a faxed message, Christodoulou and his team had invented “Gus” as his pseudonym. Almost every day there was a call from the pirates. Gus discovered that their English was not good, the phone lines were filled with static and calls were always very short and to the point, lasting an average of four minutes.
But those four minutes were then analysed for hours as the team agreed the right strategy. For the next two months, the calls continued, building to a crescendo of up to 20 a day as terms were finally agreed.
“Christmas and New Year passed us right by, as we continued to talk,” Christodoulou says. “I was living a movie. All those things I had seen play out on TV and in films were in my mind. Those movies are really pretty close to the truth.
“We had got proof of life early on and sometimes the crew were able to call their families direct. But we could never forget that these people had guns to the crew’s heads, so as painful as it was, I had to develop a ‘relationship’ with the pirates; to remain cordial and establish some type of rapport.
“I would ask how they were and whether they needed anything but I got little back except for them saying ‘the Somali gentlemen need money’.”
Christodoulou remains coy about the level of ransom paid. He firmly believes that making figures public simply encourages copycat attacks. But recently paid ransoms have varied from $700,000 to nearer $3m, and this one is said to have hit $1m-plus.
Belt and braces
The insurers were involved in the process from the beginning and Christodoulou has nothing but praise for their support. They very much worked in tandem, using experience of other hostage situations to advise on the next move.
But he says: “The squabbling comes later. At the time, everybody understood it was a human life issue and everybody responded to resolve the crisis. But as for who ultimately pays the bill, they are still slicing and dicing that now.”
With his extra-cautious approach before the ship’s capture, Christodoulou had bought as much insurance coverage as possible. As he has discovered, the cost of capture is high, not just for the ransom payment, loss of cargo and damage to the ship, but also for the support and counselling needed for the crew and their families, as well as the cost to the business in terms of management time.
“It is very foolhardy not to be insured for as much as you can,” he says. “People need to make sure they have sufficient coverage in place. There were so many ancillary costs: legal, communication and so on.”
Eighteen months ago, he says, owners could get away with a “it won’t happen to me” approach but even though the pirates’ success rate has dropped, ships are continually being attacked, crews are being killed and ships are being damaged.
Financial interests aside, Christodoulou says buying his insurance policy also brought him some top professional advice throughout the crisis. A £30,000 policy may seem expensive at the outset but Christodoulou believes it was money extremely well spent.
Liz Booth is a freelance journalist