Maritime Bulletin www.odin.tc
Study of Somali piracy falsifications
Report of the Secretary-General Ban Ki-moon pursuant to Security Council resolution 2020 (2011), presented on Oct 22 2012 during Security Council meeting, is a fantastic example of a world-scale lie.

Study of Somali piracy falsifications 2012

Frankly, I believed that with evaporating of the Somalia piracy well walk off the so-called Studies on The Economic Cost of Somalia Piracy (SECS further on), which were diligently concocted by Oceans beyond Piracy (OBP) Foundation, whatever this Foundation really is. I didnt expect any excuses or remorse from either OBP staff, or those who initiated and supported those Studies IMO, BIMCO and a number of other institutions, which regretfully, represent the shipping in the eyes of general public.

I was wrong, of course. OBP is very much alive and as shamelessly as ever concocted a new Study, The Economic Cost of Somali Piracy 2012.

Below is the Summary of my Study of this new falsification. I analyzed not all of the categories of the cost of the piracy, but only the most heavy ones, those which constitute the main bulk of the losses which unsuspicious of their mighty evil pirates still inflict upon the world economy. Thats why, for example, I dont check the sum of the ransoms it is vanishingly small in comparison with billions created by ingenious researches in other categories.

SECS is intentionally entangled, the purpose of it is explained in the Summary. The first SECS, SECS 2010, was 25 pages thick. Next one, SECS 2011, far outreached the naivety of the beginning, and was 62 pages thick. This newest one is again record-breaking, consisting of 80 pages. The less is the piracy, the more voluminous are the Studies.

From the Economic Cost of Somali Piracy 2012 Foreword:

We have found that the report fully lives up to the high standards necessary to earn respect and credibility among all antipiracy stakeholders in Government and Shipping Industry alike, and for the report to constitute an informed and constructive contribution to the anti-piracy debate.

-- Michael Lund, Deputy Secretary General, BIMCO

With this appraisal in mind, lets begin.

Voytenko Mikhail



OBP Studies:

Economic Cost of Somali Piracy 2010 download http://www.odin.tc/files/secs10.pdf

Economic Cost of Somali Piracy 2011 download http://www.odin.tc/files/secs11.pdf

Economic Cost of Somali Piracy 2012 download http://www.odin.tc/files/secs12.pdf



Maritime Bulletin:

Study of Somali piracy falsifications 2010

http:/www.odin.tc/files/Study_of_Somali_piracy_falsifications10.pdf 



Study of Somali piracy falsifications 2012 full report

http:/www.odin.tc/files/Study_of_Somali_piracy_falsifications12.pdf 





The Summary

1.


The OBP researchers already made three Studies, for years 2010, 2011 and 2012. The backbone of the Somalia Piracy Economic Cost is the number of the transits through HRA (High Risk Area). That figure determines actual losses suffered by the shipping.

Each Study is based on absolutely different methodology for calculating the number of transits. The lesser was the piracy threat, the bigger was the number of transits.

2010: 27,775

2011: 42,450

2012: 66,612

There are two basic known statistics to estimate the number of transits Suez Canal statistics, and statistics of tanker traffic via Hormuz Strait. According to these statistics (some 25,000 transits, and thats the main bulk of HRA transits), plus rough estimation of other traffics, the total number cant be more than 36,000.

There is substantial traffic of other types of cargo vessels via Hormuz Strait, there is some traffic to/from port of East Africa, but those traffics cant, even theoretically, be equal to, not to mention bigger, than the main bulk of traffic through Suez and via Hormuz.

With all the resources and support they have, OBP researchers could easily get the lacking statistics on Hormuz Strait and East Africa traffic, but instead, they invented a new method, which simply cant be proved or contradicted, because it can not be checked. All AIS messages sent from the HRA over a sixteen day period in both 2011 and 2012 were collected by ExactEarths satellites and licensed to OBP for use in this report. They claimed they processed some 1 million AIS signals. According to the data they use, there should be some 132,000 transits through HRA, more than all known traffic in all of Indian ocean, together with Malacca Strait States local traffic and fisheries! So much for the accuracy of the one million AIS messages method!

They made the final number as 66,612. How? It goes without explanations and illustrations of their methodology. It goes on trust, so to say. They just said we made a fairly significant downward adjustment in the number of ships



According to OBP Study for year 2012, there are some unknown to shipping and humankind traffics in Indian ocean, which are equal in volume to the known ones. It just cant be explained by a mistake or by applying a wrong methodology. It can only be explained by an intentional falsification in order to achieve pre-ordered figure of the so-called Somalia Piracy Economic Cost. I, for my calculations, applied a figure of 36,000 transits, collecting every traffic I could think of, and making all possible stretches. The real figure should be less than the one I applied, but so be it. Just in case, you know.

(See II. The number of transits)



2.

In estimating the cost of Navy presence in Indian ocean, the OBP researchers didnt explain and didnt take into account the difference between the basic cost of Navy ships and aircrafts, and the cost of their employment in the mission. According to OBP methodology, the Navy dont cost anything at all when not involved in anti-piracy operation. Hence the cost of the Navy presence, estimated by OBP as some $1,02 billion, is a falsification. We cant calculate the real cost, because we dont know military budgets and spendings. But whatever that real cost is, it simply cant be $1,02 billion, claimed by OBP, because the Navies do cost something, employed in missions or not, sailing around or being docked in their bases. The real cost is the difference between regular annual cost of the ship, and the cost of its employment in the mission.

Also, OBP made, from research point of view, a very grave mistake by not estimating the effectiveness of Navy mission. The truth is, Navies utterly failed to protect shipping from piracy. Private security and some serious changes, which took place in Somalia, did the job, not Navies.

(See I. The Cost of Military Operations)



3.

In estimating the cost of the wire protection, OBP researchers excelled themselves in their findings. They didnt ask the suppliers of the barbed wire in Suez or Singapore, they didnt ask the ship owners, they found in Internet a company based in California, which sells wire and ornamented fence to luxury villas, and used the cost taken from that companys website price-list. OBP decided it wasnt enough, and used absolutely unexplained, or to be more exact, twisted, logic, to calculate the cost of one-transit wire protection. According to OBP, the cost of wire protection per vessel is $16,000. According to the information I gathered from ship owners, it falls within the range of $500 $4,000. I estimated the cost of barbed wire as $28 -72 million, most probably it does not exceed $40 million, simply because I applied in all my calculations apparently exaggerated 36,000 number of transits. Hence the final figures: $28 -72 million against OBPs $447,888,000. OBP made the wire cost at lest 6 times more expensive than it really is. Mistake of the researchers? Or falsification again?



4.

There is one very important subject of War Risk Insurance Premiums. The gist of the subject is the understanding of those Premiums are they paid because of the piracy threat, or because Lloyds War Committee made them a must? The principal question in determining the cost in insurance is the character of war-risk insurance. As it stands, its not a necessary and justified insurance to be bought by a sensible ship owner, its to put it straight, an act of piracy in itself. Using Somalia piracy as a pretext, London-based insurers enforced on the shipping war-risk insurance, and enjoy tremendous profits for quite a number of years.

Predictably, OBP didnt raise this principal question in their 2012 Study, which actually, makes all their War Risk Premium Cost calculation meaningless. Nevertheless, I checked their calculations and expectedly, found some, to put it mild, exaggerations.

(See VII. The Cost of Piracy-Related Insurance)



5.

I meticulously studied other types of Costs presented in SECS, such as the Cost of Increased Speed, or Re-Routing, finding some of them quite amusing. For example, to prevent any outside check of their Cost of Increased Speed assessment, they illustrated their calculations by BIMCOs Curves, provided by BIMCO specially for the occasion. Those Curves are unreadable and make any check of the OBP methodology impossible. One has to find the graphics showing the correlation between fuel consumption and speed elsewhere. I found, and the results were very interesting.

There is rather simple and realistic approach to estimate the cost of all anti-piracy measures which could be taken by the ship owner. With the availability of armed guards and with safety they guarantee the only guarantee ship owners actually want all other measures can be estimated in comparison with the cost of armed guards, making all the OBP assessments just useless, unless they were made to achieve a pre-ordered figure of Somalia Piracy Economic Cost.

My estimation of the cost of all anti-piracy measures except guards:

$ 350,000,000

SECS:

$ 2,565,907,810

(See The Cost of all anti-piracy measures except armed guards)



6.

The Somalia piracy could have been done with at least three years ago. Be the safety of the shipping real concern of international community, Navies, politicians, the UN and maritime organizations, they could make shipping absolutely safe at a cost not exceeding $ 500,000,000. The army of private guards, employed by a horde of security agencies, in no time came up out of nowhere, and provided protection for anyone willing to guarantee the safety of his vessel. The Navies could (should) do it, using the same tactics, long time ago, at a much less cost and with a privilege of absolute legality. With no other costs and losses, from ransoms to war risk premiums to re-routing etc.

(See XI. The real Cost of Somalia Piracy)



7.

The study of the money wasted on pirates prosecution, on conferences and working groups of the UN, explains the roots of the OBP falsification.

Three-year cost of prosecuting: $62,576,587

Three year cost of organization: $ 69,883,953

Total: $ 132,460,540

Its too lucrative business to give it up easily which naturally, fathered the OBP Studies and researchers. Theyve been very well paid, too.

Report of the Secretary-General Ban Ki-moon pursuant to Security Council resolution 2020 (2011) http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/s_2012_783.pdf, presented on Oct 22 2012 during Security Council meeting, is a fantastic example of a world-scale lie. Mr. Ban Ki-moon praised for the sharp decrease of Somalia piracy international efforts, Naivies, Best Management Practice, and down the list he said, that The deployment of privately contracted armed security personnel on-board ships and of vessel protection detachments may also have contributed to deterring pirate attacks.

Mr. Ban Ki-moon praised the UN as the coordinator of anti-piracy campaign, he said many other amazing things, but to appreciate the real role the UN is playing in Somalia Piracy, wed have to read the following article:

How the UN saved the piracy http://dangerousmagazine.com/project/hijacked-how-the-un-saved-piracy/

Article is written by a well-known US journalist and author, Mr. Robert Young Pelton, who ran for some time a news agency Somialia Report, but happened to be too honest journalist and socially responsible person to play into the UN hands.

Mr. Ban Ki-moon referred to, and mentioned among institutions which contribute most to piracy fighting success, a World Bank. World Bank issued its own Study on Somalia Piracy Economic Cost, estimating the Cost at some $18 billion. The World Bank Study deserves a special Study of course. I ran through it, and found it much more amusing than the OBPs. Maybe Ill study it, too, sometime.

For now, let me confine myself by saying that the World Bank has a direct interest in fighting piracy roots, because some of the funds allocated to it are channeled via the World Bank, hence the riotous fantasies of the researchers hired by World Bank.

(See X. The Cost of Counter-Piracy Organizations)



8.

I ask anyone interested to check my Study, to check the Study prepared by OBP, and decide whose Study of the piracy costs is more plausible, mine or OBPs. If mines more trustworthy, then, I invite you to appreciate the following figures:

OBPs budget expenditure was $889,000 in 2011, which included $25,000 towards supporting an IMB initiative to develop reporting on the violence experienced by seafarers during piracy attacks.

(From the OBP Study The Economic Cost of Somalia Piracy 2011)

In 2012, OBP spent $775,000 on staff salaries, meeting costs, and other expenses related to furthering its mission.

(From the OBP Study The Economic Cost of Somalia Piracy 2012)

2010 spendings are unknown, but surely they cant be less than $500,000.

In 3 years the OBP spent on its Studies in total, $ 2,139,000.

It took me some 2 months to prepare this Study, I wasnt busy with it 8 hours / 7 days a week. Some 6-8 hours weekly, plus several phone calls.

Maritime Bulletin is kept afloat, presently, by a crewing agency. Actually, it means that Im kept alive, its the cost of my survival, nothing more. With the deduction of apartment cost and facilities costs, Im left with some $200 - $250 monthly for all the rest, including food, clothes, medicine, fuel for my motorbike, books, etc. Compare the cost of me with the cost of OBP, some $60,000 monthly budget. Feel the difference.

The cost of my research is some $500.

The cost of OBP research is $775,000.



9.

A question arises, in light of the above. How to appreciate the doings of the UN (starting from Mr. Ban Ki-moon), of the IMO, BIMCO and many others, including of course, the OBP researchers? They were, either directly, or indirectly, involved in inventing the falsification for the purpose of profiting from it. They voice the falsification throughout the world, and using it as grounds for their demands, get by now, hundreds of millions of dollars, to fight falsified and inflated problem. They profit from these falsifications personally.

I am not a lawyer. I dont know, if the intentional creation of a falsified Study of a falsified problem, which paves the way for the waste (theft) of multi-million funds, is a criminal act, or some act of public offence. I guess though, that its criminal.

If thats the case, whos to nail the falsifiers, is there any chance of brining them to justice? I dont think so.



Voytenko Mikhail

May June 2013


Hall of Shame

List of personalities and organizations, which make up, contribute to, or support three-year long falsification, called The Economic Cost of Somalia Piracy

Ban Ki-moon, UN Secretary-General

Marcel Arsenault, founder of One Earth Future Foundation OEF (with Ocean Beyond Piracy as one of the projects)

Efthimios Mitropoulos, former IMO Secretary- General

Michael Lund, Deputy Secretary General, BIMCO

Pottengal Mukundan, Head of IMB

Authors:

Lead Author 2012: Jonathan Bellish, Project Officer, OEF

Lead Author 2010-2011: Anna Bowden, Associate Director, Business Initiatives, OEF

Research Team:

Charles Marts

Andrew Lee

Eamon Aloyo

Thaddeus Cummins,

Anjuli Manrique,

Timothy Schommer,

Jim Gray,

Liza Kane-Hartnett,

Jon Huggins,

Kaija Hurlburt,

Jens Vestergaard Madsen,

Maisie Pigeon,

Urmila Venugopalan

Roberta Spivak.

Advisors and Consultants:

Peter Chalk, RAND Institute

Professor Pierre Cariou, World Maritime University, Malmȍ, Sweden

Dr. Adolf Ng, Hong Kong Polytechnic University

Dr. Theo Notteboom, ITMMA, University of Antwerp, and Antwerp Maritime Academy

Peter Sand, BIMCO Chief Shipping Analyst

Cyrus Mody, the International Maritime Bureau (IMB)

Raphael Kahn, Secure-Marine

Michael Frodl, C-Level Maritime Risks

Organizations:

IMO

BIMCO

International Chamber of Shipping

International Shipping Federation

INTERCARGO

INTERTANKO

ITF