Shipowners or operators who pay ransom to Somali pirates could face U.S. civil penalties or criminal prosecution under a White House “Executive Order concerning Somalia.”
Issued April 13, the order says anyone providing money or materiel to “Specially Designated Nationals” in Somalia could be subject to fines or criminal prosecution by the Treasury Department’s Office of Foreign Asset Controls. The list includes the terrorist group al-Shabaab.
The order, the latest in ongoing attempts by governments and private operators to rein in the piracy that has hit shipping off East Africa, does not refer to piracy by name. But it certainly seems to criminalize payment of ransom to the pirates, something private companies have done to secure release of crews and ships.
“The executive order applies to U.S. persons. That can be defined to a citizen, a U.S. company, or the foreign subsidiary of a U.S. company, or the U.S. subsidiary of a foreign company,” said Joe Cox, president of the Chamber of Shipping of America.
“The government has a lot of reach,” Cox said, “the question now is how far are they going to go? This is what’s new in this industry. We just don’t know.”
|Piracy incidents in the Indian Ocean and East Africa dropped nearly in half between 2008 and 2009, according to data from the International Maritime Organization. Several nations support a flotilla of warships aimed at safeguarding commercial vessel operations in the region. That may account for the decline, but the military says it can’t keep all vessels safe from attack.
The U.S. established procedures to help protect merchant ships, including having armed guards aboard. But they still don’t give a shipowner a guarantee of protection from a pirate’s ransom demand.
Cox said owners face the prospect of being penalized for doing the right thing — keeping their crews safe.
“If your ship is taken by pirates, a company has to ask, does it act illegally to get their seafarers out?” Cox said. “I can’t speak for everybody, but I know if I were an owner, I’d open every page of every book to find out how I’d do it, but I would get my seafarers out of there.”
The executive order is not singling out shipowners. Its main objective is to keep money out of the hands of groups trying to destabilize the fragile Somali government.
“We have to recognize that, we can’t be supporting actions that can lead to a continuing failed state in Somalia where terrorists can live and thrive,” Cox said. “The industry is aware of that, but isn’t the government supposed to protect us on the high seas?”
The government can only impose sanctions if a U.S. citizen or company gives aid to someone on the SDN list. If an owner gets a ransom call, “How do we know that somebody we’re dealing with is al-Shabaab? How do we know if we’re dealing with that listed organization?” Cox said. “We’re not privy to the intelligence that the government has. Even if the pirate is connected to al-Shabaab, what do you do? You say you can’t pay because it’s illegal?”
Jon Waldron, a maritime attorney with Blank Rome in Washington, said, “The whole thing about ransom payments in some sense is a side issue. For the maritime industry, it’s huge.”
In the past, shipowners have had prolonged negotiations with Somali pirates over ransom. Waldron said the U.S. government recommends a shipowner get guidance from OFAC as soon as they receive a pirate’s demand. It’s not an idea the industry has warmed to.
“The government has made it clear that they have the discretion to apply sanctions. It’s not mandatory,” Waldron said. “The government could say it’s not going to assess civil penalties or pursue a criminal violation, but I’ve never seen the government give you assurances before an event to say, ‘We’re not going to pursue criminal charges.’ They can say, ‘Trust me,’ but they’ll never say, ‘We promise.’ ”
Waldron expects new regulations may provide some clarity, but it will take months. In the interim, he suggested the government publish policy guidelines for shipowners, but so far the idea hasn’t taken hold.
“They say they’ll think about it,” Waldron said. “They need to get out something in writing to get rid of some of this uncertainty.”
It’s a matter of life and death, Cox said. “After the Maersk Alabama, we know the next American taken is probably going to be a dead American.
“The OFAC regulations apply after a ship has been pirated. I suggest that’s way to late in the process,” Cox said. “Piracy is going to grow unless we do something about making sure the pirates can’t take any ship. We have to be concerned about preventing things from happening.”
Contact R.G. Edmonson at firstname.lastname@example.org.