Obama Order May Block Ransoms Paid to Somali Pirates

Bloomberg
By Gregory Viscusi
Thursday, April 15, 2010

April 14 (Bloomberg) -- President Barack Obama signed an executive order freezing the assets of Somali militias that could also make it illegal for U.S. ship owners to pay ransoms to pirates.

The executive order signed late yesterday bars any U.S. citizens and companies, as well as their overseas branches, from having financial dealings with a list of 11 militia leaders and the Islamic guerrilla group al-Shabaab, as well anyone that has “engaged in acts that directly or indirectly threaten the peace, security, or stability of Somalia.”

While never using the word “ransom,” the order includes “acts of piracy and armed robbery at sea” among those acts.

“The wording could definitely be construed to make payments of ransoms illegal,” Bruce Paulsen, a partner at Seward & Kissel in New York, who negotiated a ransom payment with Somali pirates for a U.S. owned ship hijacked in 2008, said in a telephone interview. “The wording is just vague enough to give the Treasury some flexibility in how they apply it.”

U.S. government policy is “to deny hostage takers the benefits of ransom, prisoner releases, policy changes, or other acts of concession,” the White House said in a statement today.

Somali pirates mounted 217 attacks last year, hijacking 47 ships and taking 867 crew members hostage, the London-based International Maritime Bureau said in January. The country has lacked a central government since 1991. Al-Shabaab, which the U.S. says is linked to al-Qaeda, controls much of the center and south of the country, while pirates operate out of ports in the north. The Western-backed government controls a few neighborhoods of the capital, Mogadishu.

U.S. Ships

Only two U.S. ships have been among those seized. The MV Biscaglia, a U.S.-owned and Liberian flagged chemical tanker was taken in November 2008 and freed in January 2009 after the payment of an undisclosed ransom negotiated by Paulsen.

In April 2009, Somali pirates briefly seized the U.S. flagged Maersk Alabama before the crew took back control of the ship. U.S. navy snipers later freed the captain of the ship that the pirates had been holding hostage.

Rear Admiral Peter Hudson, commander of the European Union anti-piracy fleet, said in a December interview in London that shipping companies paid $80 million to $100 million in ransom money to Somali pirates in the previous two years. He also said there appeared to be no link between al-Shabaab and the pirates.

--Editors: Paul Tighe

To contact the reporter on this story: Gregory Viscusi in London at gviscusi@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net.