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Archive for April, 2017

Review: Governing Criminal Markets: The role of insurers in kidnap for ransom

uctzrec28 April 2017

U.S. Navy photo by Mass Communication Specialist 2nd Class Tony D. Curtis/Released

The issue of kidnapping for ransom often appears in the media, with certain high profile cases dominating the headlines for weeks.  According to these cases, hostages are brutalized and regularly murdered to either send a political message or due to external environmental factors such as stress.  However, Dr Anja Shortland, of King’s College London, argues differently.  She claims through her extensive research on the subject that the majority of kidnapping for ransom cases end with the victim returning home safely.  And all this is thanks to a stable and well governed private market.

Dr Shortland began her research ‘when [Somali] piracy was cool’ back in 2014.  She was fascinated by questions revolving around the value of a human life and about how companies could interact with criminal organizations legitimately and safely.  When she analyzed the effectiveness of private companies in recovering prisoners, she discovered a surprisingly high success rate.  In fact, when foreign nationals or nationals working for multinational companies were kidnapped, 97.5% returned safely to their families.  In the remaining 2.5%, hostages were mainly killed due to rescue or escape attempts.  Therefore, it appears that the kidnap for ransom market is fairly stable and well governed.

One fascinating aspect of the kidnap for ransom business is the interplay between legitimate businesses and criminal enterprises.  On the business side, insurers play a role in the governance of the market.  In order to do so, they must accomplish certain tasks.  First and foremost they must conduct successful resolutions to hostage incidents, i.e. family members must return home safely.  However, they must do so by understanding the kidnapping risks in geographic areas, pricing policies accordingly and knowing the ‘average’ cost of a ransom.   If firms can fulfill these requirements, they can play an important role in saving lives and providing valuable services.

Dr Shortland also addressed the issue when terrorist groups conduct kidnapping for ransom activities.  Her research argues that private firms act as stabilizers in the market so long as ransom prices remain constant.  Therefore, it is in the interest of the market and in the interest of the victims that firms pay the required ransom amount.  This sum usually never rises above a few thousand US-Dollars (USD) and only in very rare circumstances will a group request and be paid over a million USD.  However, this dynamic changes when the ‘terrorist’ label is introduced, usually by governments.

State involvement in the market is seen as counterproductive and even dangerous for several reasons.  Given that the counterparty has changed from a private to a public organization, the stakes increase.  Governments tend to be weak negotiators because they are myopic and in part regulated by public perception and the media.  Essentially, while a private firm may be willing to conduct a relatively long negotiation (most kidnapping for ransom cases rarely extend more than a week or so), governments must deliver results in a short time frame and they must achieve success.

Furthermore, and more importantly, governments are not limited by a hard budget.  This means that while a terrorist group may request a lower ransom, governments generally overcompensate to ensure the release of the hostages.  While this is generally a positive outcome, overpaying destabilizes the market prices for hostages and can cause an increase in insurance premiums.  This, in turn, can reduce coverage and result in more uninsured and consequently vulnerable employees that might be at risk of being kidnapped.   Dr Shortland uses this argument to support her claims that private institutions are best suited to provide governance of the kidnapping for ransom market.

This academic work can help to understand market dynamics and provides some ideas of how public and private actors interact with each other.  Furthermore, the field addresses issues of how legitimate and legal firms can maintain complex and working relationships with criminal and terrorist organizations.  Shortland’s arguments provided a concise and detailed presentation of the research that she been conducting over several years.  For any further information please read her numerous papers on the subject and keep your eye out for upcoming publications.

 

I am an American/Italian MSc student reading for a degree in Countering Organized Crime and Terrorism at the Jill Dando Institute.  I like to think/write about the crime-terror nexus, organized crime in Italy and art crime. Contact: LinkedIn

The views expressed in this blog post are the author’s own and do not necessarily represent the views of UCL, the Department of Security and Crime Science or the UCL Organised Crime Research Network.

On The Question of Human Rights Abuses Perpetrated by the Mafia in Italy

uctzrec25 April 2017

U.S. Air Force graphic

U.S. Air Force graphic

The Italian Mafia and other criminal organizations prove a direct threat to the upholding of universal human rights and are fundamentally opposed to any pacific societal order.  These organizations have committed serious human rights violations such as routinely engaging in human trafficking operations.  As criminal associations constitute a very real issue for the Italian state, the government should take effective and constructive steps towards reducing opportunities for crime and increasing risks for criminals.

Human trafficking and forced labor are important sources of income for the Mafia and criminal organizations.  The problem has only worsened over the past several years due to a notable increase in immigration to Europe from African and Middle Eastern states (Bommes, Fassmann, and Sievers, 2014).  Out of the 900,000 immigrants that arrived in Europe after traveling through the Mediterranean Sea, circa 180,000 arrived in Italy (Il Post, 2015).  Given these geopolitical events, Italy is now ‘the final destination’ (Campana, 2016) for human traffickers and enslavers.  However, the issue then becomes local, as the ‘involvement [of traffickers] may also extend to control of victims during the exploitation stage’ (Campana, 2016).

Traffickers transport women for sex work in Italy and arrange transfers with local ‘madams’ or brothel managers.  The traffickers do not receive payment for the actual sex worker, rather they are paid for the transportation of the individual.  Conversations that the Italian government collected as signals intelligence provide evidence of this process.  During a recording, a trafficker instructs a colleague that the madam ‘has to pay first’ and to not allow her to see the girl (TrNA 2009).  He states ‘you have to get the money first’ (TrNA, 2009).

This exchange is indicative of the regular human trafficking that both global and local mafia groups conduct in Italy.  While the problem is extensive, there are solutions that will lessen its effects.  Situational crime prevention (SCP) theory provides several concrete responses.  SCP assesses the ‘opportunities that specific situations offer for crime’ and includes 25 techniques that can be used to remove environmental precursors for crime (Popcenter.org, 2017).  Clarke (1980) created techniques to remove the benefits of crime and to increase the risks associated with committing a crime.

Campana and Mancuso, two Italian scholars, have provided information on human trafficking from Nigeria across several international borders to Italy.  Mancuso et al., used a crime script to map the exact criminal process of human trafficking (Savona et al., 2014).  This approach is important because it gives specific information about the criminal process based on strong empirical evidence.

Mancuso et al., illustrates the process by providing a detailed crime script of human trafficking from Nigeria to Italy (2014).  They state that the transportation process occurred by bus, car, and plane and in the Nigerian case, victims arrived in Campobasso.  If the victims travel by plane or bus, they will do so alone whilst ‘following the orders of traffickers’.  Once in Italy, the victims are picked up at stations by an associate and brought to a ‘safe house’.  These steps allow security forces and law enforcement agencies to create specific and real world solutions to the problem.

Mancuso et al., identify that trafficking ‘requires negotiating a number of checks’ (Savona et al., 2014).  These organizations use ‘corruption to obtain forged documents’ and to cross borders.  Therefore, creating situational crime prevention measures to reduce the availability of forged documents would create disincentives.  This could be accomplished by ‘improving technical instruments to reduce… forgery’ such as biometric measures and ‘improving the controls where documents are stored’ (Savona et al., 2014).  These are examples of increasing the risks under the 25 Techniques framework (Popcenter.org, 2017).  Furthermore, the authors state that airline companies and officials should acknowledge ‘that their negligence could favor criminal activities’ (Savona et al., 2014).  This last measure would remove excuses, an important component of situational crime prevention (Popcenter.org, 2017).

The issue of human trafficking in Italy by mafia groups is troubling and extremely damaging, causing psychological and physical harm to thousands of victims.  However, through crime science measures, such as situational crime prevention theory and the use of crime scripts, law enforcement agencies, and security services can make real and effective progress in deterring criminal groups.  The Italian government must cooperate with international partners such as EUROPOL and other EU governments to strengthen border controls and to identify victims before they are passed into sex work.

Bibliography:

Bommes, M., Fassmann, H. and Sievers, W. ed., (2014). Migration from the Middle East and North Africa to Europe: Past Developments, Current Status, and Future Potentials. 1st ed. Amsterdam, Netherlands: Amsterdam University Press.

Clarke, R. (1980). ‘Situational’ Crime Prevention: Theory and Practice. British Journal of Criminology, [online] 20(2). Available at: https://academic.oup.com/bjc/article/20/2/136/356435/SITUATIONAL-CRIME-PREVENTION-THEORY-AND-PRACTICE.

Il Post. (2015). La tratta di donne dalla Nigeria all’Italia – Il Post. [online] Available at: http://www.ilpost.it/2015/12/08/tratta-donne-prostituzione-nigeria-italia/ [Accessed 24 Apr. 2017].

Popcenter.org. (2017). Center for Problem-Oriented Policing | About CPOP. [online] Available at: http://www.popcenter.org/about/?p=situational [Accessed 24 Apr. 2017].

Savona, E.U., Giommoni, L. and Mancuso, M., 2014. Human trafficking for sexual exploitation in Italy. Cognition and crime. Offender decision making and script analyses, pp.140-163.

TrNA. (2009), Tribunale di Napoli. Ordinanza di Applicazione Misure Cautelari, N. 164/096


 I am an American/Italian MSc student reading for a degree in Countering Organized Crime and Terrorism at the Jill Dando Institute.  I like to think/write about the crime-terror nexus, organized crime in Italy and art crime. Contact: LinkedIn

The views expressed in this blog post are the author’s own and do not necessarily represent the views of UCL, the Department of Security and Crime Science or the UCL Organised Crime Research Network.

Upcoming Seminar: “Governing Criminal Markets: The role of insurers in kidnap for ransom”

Patricio Estevez-Soto21 April 2017

We are happy to announce a new seminar: Governing Criminal Markets: The role of insurers in kidnap for ransom, by Dr Anja Shortland, from King’s College London.

The seminar will be held on Tuesday April 25, 2017 at 5:15 pm, in the Teaching room of the Department of Security and Crime Science (35 Tavistock Square, London, WC1H 9EZ). As usual we welcome all who are interested in the topic of organised crime, and the OCRN will provide refreshments for informal networking after the seminar.

Dr Anja Shortland is a Reader in Political Economy at King’s College London. Anja was an Engineering and Economics undergraduate at Oxford University and did her Masters and PhD in International Relations at LSE. Before joining King’s, she worked as a lecturer in Economics at Leicester, a Reader in Economics at Brunel University and as a consultant to the World Bank. Anja’s research broadly falls into three categories: 1) the economics of crime, 2) informal governance, and 3) civil conflict. She is currently working on the topic of kidnap for ransom, examining who kidnaps and why, how ransoms are negotiated and kidnaps resolved, and who provides the governance for this tricky market. She has published widely on the issue of maritime piracy and co-authored the 2013 World Bank Policy Report: “The Pirates of Somalia: Ending the Threat; Rebuilding a Nation.”

Seminar Overview

The intersection between the formal and criminal economies presents a range of intractable coordination and enforcement problems. Who orders and facilitates the interactions between private, legal entities and criminals (potentially) engaged in kidnap for ransom? Dr Shortland analyses the contracts, protocols, norms, and agencies created by insurers to govern this unusual market. Stringent insurance contracts, effective security measures and orderly resolutions create a profitable market for kidnap insurance. Underwriters manage moral hazard and adverse selection. Business risk consultancies minimise the kidnapping of insured workers, high net-worth individuals, and travellers. Crisis responders ensure that hostages are treated well, keep ransoms moderate and stable, and discourage kidnappers from reneging on agreed ransoms. The state, private sector and mafias incentivise co-operation and enforce contracts. Understanding this complex polycentric governance architecture is crucial for remedying current trends in “terrorist” kidnap for ransom.