The Impact of Recent UK Terrorism Legislation on the Risk ... · scores of Egyptian laborers and...

The Impact of Recent UK Terrorism Legislation on the Risk Insurance Market

Crisis Monitor / 1st Quarter Report 2015

2Crisis Monitor / Q1 Report 2015

> Table of Contents > At a Glance > Director’s Note > Regional Analysis > Special Focus > Bulletin Board > Contact Us

Americas

Europe

Africa

Middle East

Asia


> At a Glance

Most Affected Regionin Q1

Most Affected Nationality in Q1

Most Targeted Industry in Q1

Africa 54%

Asia 22%

Americas 20%

Middle East 3%

Europe 1%

Top 10 Foreigner Kidnapping Hotspots in Q1

Highest Ransom Payments (P) / Demands (D) in Q1

Libya 103

Mexico 38

South China Sea 36

Gulf of Guinea 12

Nigeria 10

Sudan 8

Philippines 7

Sri Lanka 7

Thailand 4

Haiti 4

Egyptian 69

Honduran 22

Malaysian 21

Indonesian 15

Ukrainian 15

Maritime 76

Laborers 48

Migrants 31

Medical 22

Aid Organizations 13

$12 million USD (P) Syria Two Italian Aid Workers

$500,000 USD (D) Costa Rica Canadian Resident

$500,000 USD (D) Nigeria Israeli National

$400,000 USD (P) Gulf of GuineaTwo Greek, One Pakistani Maritime Workers

$333,400 USD (D) PhilippinesChinese-Filipino Businesswoman

> At a Glance > Director’s Note > Regional Analysis > Special Focus > Bulletin Board > Contact UsAmericasEuropeAfricaMiddle EastAsia


A prevailing trend of political instability and social tensions afflicts the Americas region, particularly in Brazil and Venezuela. However, this has not directly translated into a greater number of kidnappings. On the contrary, Venezuela moved from fifth to eleventh place this quarter, and Brazil positioned outside the top ten rankings. Mexico continues to exhibit the characteristics of an extreme kidnap risk environment, including government corruption, neglected territory, and unhindered drug trafficking activities. There was a 36 percent increase in kidnappings with regional migrants primarily targeted. The northeast Tamaulipas State recorded the highest number of abductions this quarter.

In Asia, the kidnap risk environment remains extreme in Pakistan and Afghanistan, despite a much lower number of foreigner kidnappings this quarter. Neither country ranked in the top ten kidnap hotspots. However, a resurgent Taliban coupled with a migration of al-Qaeda affiliate group, the Tariq-e-Taliban (TTP) into Afghanistan should serve as a warning to international operations, especially aid working groups in the southern provinces.

In our Special Focus report, we explore the most recent legislation enacted by the British government on UK insurers. The Counter Terrorism and Security Act 2015 comes in the wake of terrorist

atrocities committed by the so-called ‘Islamic State’ in Syria and elsewhere.

Our Bulletin Board on the back page shows the busy Q2 that lies ahead and offers some key calendar dates for upcoming briefings, workshops and other events.

As always, we value your constructive feedback.

> Director’s Note

“Foreigner kidnappings have increased by 50 percent across the globe compared to the last quarter, while regional flashpoints reverberated in Africa and the Middle East.”

Paul AllumDirector – IntelligenceUnity Resources Group


It was an inauspicious start to 2015. Foreigner kidnappings have increased by 50 percent across the globe compared to the last quarter, while regional flashpoints reverberated in Africa and the Middle East causing greater instability and perpetuating an Islamist-inspired militancy.

Libya took first place in the top ten kidnapping hotspots this quarter, moving up from fourth position at the end of 2014. There was an uptick in the abduction of foreign aid workers and medical staff. The region fared no better, accounting for the greater percentage of all foreigner kidnappings with Nigeria, Sudan, and the Gulf of Guinea ranking in the top ten hotspots.

The Middle East appears to be spiralling further towards chaos. The abhorrent and brutal beheadings of Western hostages in Syria, coupled with the precipitous collapse of security in Yemen, has reduced the international footprint in the region. Subsequently, there has been a noticeable reduction in foreigner kidnappings this quarter.

>

Country Security Rating INSIGNIFICANT LOW MEDIUM HIGH EXTREME

Fig 2. Regional Risk Map


> Regional Analysis

73%

7%

6%

4%

2%

2%

2%

2%

MEXICO

HAITI

VENEZUELA

PARAGUAY

COSTA RICA

HONDURAS

EQUADOR

BOLIVIA

The Americas accounted for 20 percent of foreigner kidnappings this quarter, representing a 36 percent increase compared to Q4 2014. An uptick in regional migrant kidnappings in Mexico was to blame.Americas


> There is a persistent kidnapping risk in Mexico, a country that is synonymous with kidnap for ransom, express and virtual kidnapping, and extortion. Consistently Guerrero, Tamaulipas, Veracruz and the State of Mexico are the worst affected areas. In Tamaulipas, for example, official figures report a 125 percent increase in abductions for 2014 compared to 2013. Unity’s statistics indicate that nearly 20 percent of this quarter’s kidnapping cases took place in Tamaulipas. Guerrero witnessed a similar high number, where several miners were kidnapped on their way home from work in Cocula. This is less indicative of a threat against mining operations, but more reflective of the poor security conditions and rise in violence across rural Guerrero.

> Paraguay remains a medium risk country, however this quarter witnessed at least two kidnap-extortion cases by the left wing Paraguayan Peoples Army (EEP), one of which was fatal. In both cases the group demanded approximately $300,000 USD from two rancher families in Paraguay’s north. Last December, the

group held the son of a ranch owner hostage against a reported $500,000 USD ransom. The guerrilla group seeks to extort wealthy ranchers by presenting itself as protectors of impoverished farmers. Although a concern for the northern rural areas where security presence is weak, the EEP does not have a substantial reach, and does not present a significant threat to the state.

> Kidnappings in Colombia have experienced a steady decrease from over 3500 reported cases in the year 2000 to 277 abductions for 2014. Nearly half of last year’s victims were held for no more than a couple of days. This is representative of a shift from guerrilla group kidnappings where the victim was held for a longer period of time, to shorter-captivity abductions administered by common criminals for financial gains. Nevertheless, the FARC and ELN remain active in Colombia’s criminal landscape, and this quarter alleged ELN members stopped local civilians traveling on a highway in Choco demanding $20,000 USD ransom per hostage.Fig 1. Percentage Kidnapping

Incidents Q1 2015

A Kidnapping in Mexico

A small business owner was kidnapped while travelling in a private vehicle on a highway in Guerrero state. The kidnappers acted in a professional and business-like manner, conducting multiple calls over a period of three days. A ransom estimated at $100,000 USD was agreed upon, and the victim was released unharmed after four days in captivity.

>




> Regional AnalysisEurope


The kidnapping risk is insignificant across Europe with opportunistic criminals and intra-family disputes accounting for the few cases recorded this quarter. However, Europeans travelling to high-risk countries were targeted in Libya, Sudan, Mozambique, and the Gulf of Guinea.

> Criminals abducted an Ecuadorian mother and her child in Alicante, Spain, demanding a ransom payment of $3,900 USD, but the pair were rescued by police after seven hours in captivity.

> In a rare 'tiger kidnapping' case in northern France, gunmen held the family of a Bureau de Change employee hostage for 24 hours. The bank teller was then forced to hand over the contents of the safe at his workplace in Geneva, Switzerland. However, police intercepted the kidnapping and rescued the family members.

> Europeans travelling and working abroad in high-risk environments are vulnerable to kidnappings due to their perceived wealth, particularly in militant kidnapping cases where there is an expectation that European governments will pay for their release.

> French, German and Italian nationals accounted for half of the ransom payments above $1 million USD throughout 2014. The largest ransom payment this quarter was for two Italian aid workers released in Syria

after five months in captivity. A payment of $12 million USD was reportedly made by the Italian government.

> Medical staff and aid workers were the worst affected demographics this quarter, accounting for 71 percent of Europeans kidnapped. The oil and gas sector, and maritime workers were placed third and fourth respectively.

> Ukrainian and Bulgarian workers were the most targeted nationalities, the former targeted in a mass kidnapping in Libya, and the latter kidnapped in Sudan while working for the U.N. Three separate kidnappings targeted French nationals in the Central African Republic, Madagascar and Yemen.

An Illegal Detention in the Ukraine

A Western NGO worker was abducted by a group of armed men with a pro-Russian separatist group while providing humanitarian aid to the local population. The group accused the NGO of spying, and the worker was detained while the charges were investigated. Over the following two weeks, the NGO and the victim’s family communicated with individuals representing the separatist group. The victim was eventually released without notice or a ransom payment.

>




> Regional Analysis

73%

9%

7%

6%

2%

2%

1%

LIBYA

GULF OF GUINEA

NIGERIA

SUDAN

MADAGASCAR

MOZAMBIQUE

CENTRAL AFRICAN REP.

Africa


> Islamists operating in Libya kidnapped scores of Egyptian laborers and international oil workers this quarter. The former were religiously motivated or served as retaliation for Egyptian air strikes in Libya. The latter underscored the capability and intent of jihadist militants seeking to target international operations across the country.

> Tripoli, Benghazi, Derna and Sirte are extreme-kidnap risk areas. Further, the border with Tunisia and the south-western areas continue to witness clashes between groups vying for power.

> Nigeria experienced a 40 percent increase in foreigner kidnappings this quarter. Construction workers and miners were targeted. Ransom demands varied from $150,000 USD -$500,000 USD. There was also an increase in local kidnappings with ransom demands between $50,000 USD - $100,000 USD. Affluent businessmen and provincial-level government officials were mostly targeted.

> While the northern Boko Haram stronghold and the southern piracy-plagued states are Nigeria’s prime risk areas, this quarter also saw several kidnappings in the middle belt. Tensions during the pre-election period are especially elevated in the centre where the Muslim north and Christian south converge. Political instability coupled with weakened security and economic uncertainty (partly due to the oil price drop) has set ripe conditions for crime and kidnapping.

> Criminally motivated kidnappings befell Mozambique and Madagascar this quarter. While Mozambique ranked in Unity’s top 20 kidnap hotspots for 2014, the crime is not as prevalent in Madagascar. In both countries, urban areas pose the highest risks, with business executives the prime target. Ransom demands range in the tens of thousands of US Dollars and captivity periods average from two days to a week.

Africa ranked above Asia and the Americas as the worst affected region for foreigner kidnappings this quarter. Libya took first place in the top ten global kidnapping hotspots.

Fig 1. Percentage Kidnapping Incidents Q1 2015

A Construction Worker Kidnapped in Nigeria

A Syrian engineer was kidnapped as seven gunmen invaded the construction site he worked on. They shot sporadically in the air to scare off bystanders. Demanding $250,000 USD from his company, he was released unharmed after two days of negotiation. It remains unclear how high a ransom was paid.

>




> Regional Analysis

40%

20%

20%

20%

SYRIA

LEBANON

YEMEN

SAUDI ARABIA

Middle East


> The advance of the Houthi rebel movement forced Yemen’s president to resign in February. Subsequently, the country’s security situation has spiralled into chaos with heavy fighting and mass casualty attacks carried out by al-Qaeda in the Arabian Peninsula (AQAP). Several diplomatic missions have closed, and international airlines have suspended flights into the capital, Sanaa. A French World Bank consultant was kidnapped in February and held for three weeks before being released after an undisclosed ransom payment.

> Syria, Lebanon, and Iraq experienced fewer foreigner kidnappings. However, there was a persistent trend in kidnap for ransom in Iraq where Shia militias are operating with impunity. The average ransom payment for affluent individuals reported by Amnesty International is $60,000 USD. In Syria, a Swedish journalist was kidnapped by suspected militants and remains missing. In Lebanon, a local construction worker was kidnapped in Tripoli and released after a ransom of $39,000 USD was paid. The west of

Bekaa valley is a kidnap risk hotspot.

> The Middle East was twice ranked as the worst affected region for foreigner kidnappings throughout 2014 while Syria and Iraq held onto the top two kidnapping hotspots for at least two successive quarters. The majority of victims were regional nationals, followed by south-east Asians. Over 95 percent of victims fell into the latter demographic in Iraq and Lebanon. The greater number of Westerners were kidnapped in Yemen, and over fifty percent were Europeans – above all British and German nationals. The most targeted industries were diplomats, especially in Yemen, followed by aid workers in Syria.

A downward trend in foreigner kidnappings continued in the Middle East, which experienced a 58 percent decrease between Q4 2014 and Q1 2015. International operations reduced their activities in response to the worsening security climate in Syria, Iraq and Yemen.


A Kidnapping in Yemen

Tribesmen held a Tajik doctor for three months in Yemen. Following tribal mediation they reduced the ransom demand from $209,000 USD to $70,000 USD. These kidnappings are representative of tribal grievances with the government. In some cases, the motivation is financial, with the victim being upsold to AQAP. This expectedly extends the captivity period and increases the ransom demand.




> Regional Analysis

63%

12%

12%

7%

2%

2%

2%

S. CHINA SEA

PHILIPPINES

SRI LANKA

THAILAND

INDIA

MALAYSIA

AFGHANISTAN

Asia


> At least seven foreigners were abducted in the Philippines this quarter, six of whom were South Koreans. The majority were kidnapped by the Abu Sayyaf Group (ASG) or affiliated gangs operating in the Zamboanga Peninsula, Tawi-Tawi, Sulu and Basilan. A ransom demand of $185,000 USD was made for a South Korean businessman and three family members in Manila. South Koreans are a frequent target, and according to Unity’s statistics, account for approximately 50 percent of all foreigner abductions in the Philippines since the beginning of 2014.

> There is a persistent trend in piracy attacks in the South China Sea. Two vessels were hijacked in the coastal waters of Indonesia, and one in Malaysian waters. The incidents involved the theft of fuel while the crew were held for up to three days.

> The kidnap risk remains extreme across Afghanistan where a resurgent Taliban is exacerbating the security environment and creating renewed instability across the country. Despite

this regression, the number of kidnappings against individuals working for international operations remains relatively low. However, NGO employees are a traditional target due to the perception that international aid organizations will pay a ransom. Since 2014, nearly half of all worldwide aid worker kidnappings have taken place in Afghanistan. Security is weak outside urban areas, especially in the north and along the border with Pakistan where insurgent groups operate. Over 50 percent of recorded kidnapping cases, including local nationals, took place in the country’s north-east this quarter. The western province of Herat is a further kidnap hotspot.

> Jihadist militant groups kidnapped scores of locals in Pakistan’s Baluchistan province this quarter. The Pakistani Taliban (TTP) targeted victims to the northeast of Quetta, while Baloch separatists kidnapped employees of government-owned installations to the south-west. The groups use kidnappings as leverage with government officials, but also to finance their operations.

Asia has ranked consecutively in the top two worst affected regions for foreigner kidnappings since Q3 2014. The Philippines and South China Sea were in the top ten kidnapping hotspots this quarter.


Captivity in Pakistan and Afghanistan

Afghanistan and Pakistan witness some of the longest captivity periods, especially if the Taliban is involved. A German aid worker was held for nearly three years in Punjab while two Swiss tourists escaped after eight months in Balochistan. In Afghanistan, a recently freed aid worker was held for eight months, while two French journalists were released after 18 months in captivity in 2011.


> Special FocusQ1 2015


The Impact of Recent UK Terrorism Legislation on the Risk Insurance MarketThere has been much talk about the impact of recent legislation enacted by the British government on UK insurers. The Counter Terrorism and Security Act 2015 comes in the wake of terrorist atrocities committed by the so-called ‘Islamic State’ in Syria and elsewhere. It is summarised as ‘A bill to make provision in relation to terrorism; to make provision about retention of communications data, about information, authority to carry and security in relation to air, sea and rail transport and about reviews by the Special Immigration Appeals Commission against refusals to issue certificates of naturalisation; and for connected purposes.’

It is therefore a wide-ranging Act, and section 42 makes it an offence in the UK for an insurer to reimburse a policyholder for money or other property handed over in response to a demand made for the purposes of terrorism, where the insurer knew or reasonably suspected that this was the case. So what impact will this have on securing the release of victims held hostage? In brief, little.

The Act covers a lot of ground but in respect of kidnap (or extortion) it doesn’t seek to do much more than clarify

existing legislation. It is already a UK offence under s17 of the Terrorism Act 2000 to make money available to another person when the money is then to be used for the purposes of terrorism. The vast majority of global kidnap cases, probably more than 99 percent, relate to criminal not terrorist activity, and these are unaffected by the legislation. Furthermore, the legislation only applies to policies insured or reinsured in the UK.

Recent high profile terrorist kidnap cases that have been resolved with the safe release of the hostages have reportedly been as a consequence of ransom payments made by governments. The Counter Terrorism and Security Act allows the UK government, which refuses to pay in such cases, to attempt to influence other governments to discourage these payments, whilst avoiding the counter-argument that the London insurance market facilitates payments to the very same terrorists.

“99 percent of cases relate to criminal not terrorist activity”

A case could be made that a payment to terrorists to secure the release of a victim is protected by the Human Rights Act 1998, which makes provision for the right to life, the right to freedom from torture, or to inhumane and degrading treatment. However, the argument is probably more academic, as it is judged unlikely in the extreme that a UK insurer would reimburse a policyholder in contravention

of the Act and then claim a defence under Human Rights legislation, especially as at the point of reimbursement the victim might already be free.

It is worth noting that in many terrorist cases demands are directed towards governments, for example a requirement for a change in government policy, and are therefore beyond the ability of a family or company to consider. In all terrorist cases, it is probable that the victims’ representatives – family and employer – would be liaising closely with the government and the route to resolution is likely to be more complicated than in a criminal case. Legal advice is clearly important, and equally important is the provision of professional consultancy services to clients falling victim to crimes such as kidnap and extortion. Prevention being better than cure, much can be done to minimise the risks of falling victim in the first place, and training to help a client’s crisis management organisation understand the issues that will be faced in a real event, be it terrorist or criminal, should be conducted.


> Bulletin Board Dates

Unity Will Be Visiting the Following Locations:

The HCC Team Will Be Visiting the Following Locations:

14 Apr Chicago

20 Apr Amsterdam/Belgium

25 Apr Tel Aviv

May (date tbc) Lisbon

14 Apr Chicago

20 Apr Amsterdam/Belgium

25 Apr Tel Aviv

05 May Barcelona

11 May Brazil

May (date tbc) Lisbon

June (date tbc) India


www.unityresourcesgroup.com

Thank YouFor more information contact us at: AMERICAS – EUROPE – AFRICA & MIDDLE EAST – CENTRAL ASIA – AUSTRALASIA

[email protected]

Crisis Monitor / Q1 Report 2015 12

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