The Lucrative Business of… Pirating? — Matthew Campbell
The Lucrative Business of… Pirating? — Matthew Campbell
In July 2011, an oil tanker traveling through the Gulf of Aden was attacked by pirates. The tanker’s length was about the height of the Chrysler Building.
It was carrying $100 million worth of fuel. And then, it all went to pieces. An explosion and fire broke out.
Another story from Matt Campbell’s book, Dead in the Water: A True Story of Hijacking, Murder, and a Global Maritime Conspiracy, was also showcased in the Tom Hank’s movie, Captain Phillips.
Matt shared with me the hidden system that powers seaborne trade. And how terrible crimes can occur often with no consequences.
- An Introduction to Matthew Campbell (00:00:00)
- The Little-Known Near-$40 Billion Industry (00:01:10)
- True Events from the Movie Captain Phillips — Starring Tom Hanks (00:07:34)
- Insurance Fraud Happening Since the Dawn of Time (00:17:27)
- The Human Cost of Getting Your iPhone Delivered (00:37:11)
Matthew Campbell is an award-winning reporter and editor for Bloomberg Businessweek magazine.
His latest book —which he co-authors with Kit Chellel — is Dead in the Water: A True Story of Hijacking, Murder, and a Global Maritime Conspiracy.
Before You Leave:
Charles Mizrahi: Matt, thanks for coming on the show. I greatly appreciate it. I’ve been looking forward to it since I finished your book. Really great stuff, man.
Matt Campbell: Thanks so much for having me.
Charles: Folks, the name of the book is Dead in the Water: A True Story of Hijacking, Murder and a Global Maritime Conspiracy. I want to tell you, I just flew through this book. It was like reading fiction.
Matt: That’s what we were going for. My co-author Kit and I wanted this to read like a thriller. The events it describes are stranger than fiction in some ways. What we wanted to do was turn this into something riveting, despite the fact that it’s about, fundamentally, the insurance industry.
Charles: It’s crazy. I want to start from the beginning because not only is the hijacking – those who saw Captain Phillips with Tom Hanks, this really plays into that. It’s somewhat similar and in the vicinity of that in terms of what the story is about.
Before we erven go into that, what I find so interesting – you write about it in the beginning of the book – we’ve got our iPhones and virtually everything we wear, and all this and that through the ocean, right? Through big cargo ships going back and forth. I think it’s a $38 billion or $40 billion industry, ocean and coastal transportation.
Very, very little is known about what goes on in the open seas. Is that more or less right?
Matt: That is more or less right. Time was not all that long ago when a lot of people would have had a lot of exposure to the shipping business. If you think of New York City, the whole west side used to be piers where oceangoing vessel would load and unload.
After the Second World War it didn’t take too long for the ships to get too big. In New York’s case, the port got moved out to New Jersey. In London, what’s now Canary Wharf was the main oceangoing port. That’s all gone of course. One thing that happened was people just didn’t see or really interact with shipping in the way they did before.
Another thing that happened was the sailors who used to come from the U.S. and Europe – from the countries buying goods – were replaced by sailors in places like The Philippines, Indonesia, India. The other thing that happened – probably the most important – is the shipping business as a financial matter went completely offshore.
All through a network of shell companies in places like the Cayman Islands, tax havens, secrecy jurisdictions, and employing things like flags of convenience, which we can talk about, which are only in shipping. A crazy legal arrangement that allows a ship owner to get around a lot of regulation.
All these factors came together to make it so that it was just very hard for most of us to know anything about this industry.
Charles: So you met a lot of shady characters. I don’t know if you were threatened. I remember reading something. They said, “Don’t ask about this.” We’ll talk about that in a second what they told you. Is that more or less right? You were treading too close. In certain cases, asking the right questions in the wrong areas.
Matt: The case at the center of the book, which involves one vessel in particular, is one that has a dangerous reputation. One person involved has been murdered, another died in mysterious circumstances. There have been beatings. There have been extractions by armed security personnel of people thought to be in danger.
I think it is right to say that Kit and I knew we were in pretty uneasy territory in some cases. We were never directly threatened. Although, we were certainly warned to be attentive to our safety. That said, the risk isn’t really to us. We are international journalists who work for a big media organization and have a public profile.
Taking a pop at us would be pretty unwise on the part of whoever tried to do it. We were much more concerned about risks to our sources, which is something we did have to think about throughout this process.
Charles: So let’s start from the beginning. The industry today, the global maritime industry, is huge. We can get goods from any part of the world. We’re talking not only goods but commodities as well. This book centers around oil. Moving from point A to point B with very little regulation.
Out at sea, basically the law is the captain on the boat. And throw in something even better now: pirates. Which cause havoc throughout the whole shipping industry. Then we tie in Lloyd’s of London, the insurer, to all this. You have the makings of a lot of problems.
First of all, hundreds of millions of dollars at stake. And a lot of fraud with a lot of motivation for people to be caught because there’s not that many consequences.
Matt: That’s a pretty good sketch of it. This is a huge industry – shipping – which is responsible, as a great book about shipping said it, for 90% of everything. Basically, if you look around any room you’re in, most of what’s in there got to you on a boat at some stage of its journey.
Air freight is a big business, but shipping is really where the bulk of international goods go. Container ships, oil tankers, bulk carriers that carry things like iron ore or steel or coal. It is a huge industry. It’s one on which we all depend. The world, this id how we get consumer goods.
Countries like Vietnam, China, Thailand, there have been millions of people propelled into the middle class because of cheap shipping. Because if there wasn’t cheap and efficient shipping, manufacturing in those countries wouldn’t be viable as a matter of exporting to Europe and America.
I think there is a temptation, certainly when I talk about the book, to discuss the evils of the shipping industry. And they are real, but I think it’s important to note a big part of the modern world and many positive things about the modern world were made possible by the growth and growing sophistication of the shipping business.
Charles: Your book focuses – well before we go with the boat you talk about in the book and you frame everything around, Captain Phillips with Tom Hanks who wasn’t really Captain Phillips, but the real Captain Phillips, just share with us what was he doing?
They made a motion picture. What’s it called? It’s called Captain Phillips, right?
Matt: It’s called Captain Phillips.
Charles: Give us a quick synopsis of it and how accurate and true that story was.
Matt: That film was about a real incident which happened, I believe it was, in 2008. A vessel called the Maersk Alabama was hijacked by Somali pirates. They took control of the vessel, brought it to the Somali coast. Ultimately, there was a really dramatic rescue by U.S. Navy Seals who were able to kill the pirates, rescue the vessel, and save the day essentially.
It was pretty accurate. I think the events more or less, I’m told, are as the film depicted. You hardly had to sex them up. It was a pretty amazing story. But it was not typical. Piracy is a big problem. Currently one of the hot spots is West Africa, the Gulf of Guinea.
At the time it was all about the waters between Yemen and Somalia, the Gulf of Aden, where Somali pirates were taking ships hostage, bringing them to the Somali coast and holding them for ransom. Getting rescued by Navy Seals is something that happens pretty never, apart from the Maersk Alabama.
What would usually happen is the ship owners, the cargo owners or, more likely, their insurance companies would pay a ransom. That’s how they got back the ship and the crew. Where our book opens, which is in the Gulf of Aden in 2011, piracy was a huge problem.
There were attacks certainly every couple days. Not all successful, but many were. Success would mean a vessel being hijacked, taken to Somalia and held for ransom. This was a constant concern for the international shipping industry at the time because those waters were incredibly important.
If you want to get cargo from Asia to Europe, from the Mediterranean to the Indian Ocean, you need to go through the Suez Canal. To go through the Suez Canal you need to transit the Gulf of Aden between the Arabian peninsula in the north and the horn of Africa in the south. There was no way around it.
Charles: Why this specific area? Because of the lawlessness of these countries, pirates are able to act kid of brazenly.
Matt: The thing to know about pirates is they depend on a hospitable environment on land. So in the Johnny Depp Pirates of the Caribbean era there were ports throughout the Caribbean where pirates could have safe haven. One of the reasons we don’t have piracy in the Caribbean anymore or really in the Americas at all is because those lawless area no longer exist.
There’s nowhere for pirates to go where they won’t be pursued by law enforcement. The reason piracy thrived in Somalia and off the coast of Somalia is that Somalia has been a failed state for the better part of 30 years now. Without much of a government, certainly in large parts of the country, in an environment where pirates could operate from shore with impunity.
Those conditions provided the basis for piracy in the Gulf of Aden. And actually for pirates to get incredibly ambitious. Some of these attacks were happening 300, 400, 500 miles out to sea. Despite the fact these guys are in tiny little boats, mesh tank tops with rusty rifles, they were very good at their jobs and they did often succeed.
Charles: When we think of pirates – before we get into the book and before we get into this one specific case you talk about, it really opened up a whole world to me. You think of pirates and you think of the whole Johnny Depp type of thing. But what’s happening here – and I’m just remembering from Captain Phillips and from looking at your book and the pictures, it really had the same type of craft that Captain Phillips was in.
This orange type of lifeboat that was encased. So you have pirates in a speedboat with guns pull up beside a big, huge tanker, get on board by threatening the crew, by shooting, what have you. They get on board even though the ship might have barbwire or guards or what have you on it.
They come on board, commandeer the ship, take people hostage and then steer the ship to Somalia or whatever. It’s the cost of doing business for these insurance companies just to pay the ransom. It’s a pretty good bet you’re making a lot of money when you do.
It’s time versus money for these insurance companies and for the ship owners. You have a ship worth X million and you have to get goods here. These guys ask for a couple million dollars and it’s the cost of doing business. My question for you is this: You have a big tanker, how do these pirates get on the boat if the sailors on the boat are not complicit in some manner?
Matt: They do manage. It does happen. There are certain cases where the sailors are complicit. This book goes into that in some detail. But it’s just a question of the physical reality of it, which is there is a way to get on to a large ocean vessel. You have to first catch up to it.
The best thing you can do as a ship captain is to go really fast and hope you can outrun whoever is coming after you. There are also precautions you can take like stringing up barbwire along the decks, you can use firehoses to try to blast intruders off the hull, but pirates have had a lot of practice.
They use things like grappling hooks to haul themselves up the side of these vessels. Once they’re onboard, the game has totally changed. The big challenge is getting on board. Once you are onboard and you are armed and the crew for the most part is not because crews generally don’t carry weapons, although in recent years there has been some adoption of armed guards on ships.
Once you’re onboard and you have the guns and the crew doesn’t, you’re in a much stronger position as a pirate. The whole game is getting on board. After that, your odds improve substantially.
Charles: Great. So we got the background on that. Just reading your book gave me insight into the whole huge $38 billion industry. We didn’t even get into the insurance part. It’s a very lucrative business to be a pirate. With little downside, right?
Matt: It certainly can be. I think it’s probably more lucrative for the people who finance piracy than it is for the pirates themselves. I think if you are a mesh tank topped Somali pirate it’s probably a pretty hard life. But something that has come out in the various law enforcement investigations that have been undertaken over the years is this is a big business.
There are serious investors behind it who are funding pirate operations. The money then has to be laundered because that’s the most important thing about any criminal enterprise. There was certainly for a good long while a flow of pirate money into Dubai in particular.
Once it’s in Dubai it can move into the international financial system. Yeah, this was a good investment. That’s what kept it going for as long as it did go. And today it continues in different parts of the world.
Charles: Outstanding. We gave a great background as to the whole business, how it’s done. All these ships have to go out insured. So you have these insurance companies involved. They want to settle cases quick. They want to move on. You got owners. Perfect.
Now let’s get right to the meat of your book. July 2011 there’s an oil tanker traveling through the Gulf of Aden. It’s attacked and that sets the stage for some really nasty stuff. And it exposes a lot of really terrible things that go on. Pick it up from there, Matt.
Matt: The central event from the book – the event from which everything else departs – was what happened to an oil tanker called the Brillante Virtuoso. The Brillante, believe it or not, was not one of the largest oil tankers. It was still pretty big. 274 meters long, which is about the height of the Chrysler Building.
So it’s just absolutely gigantic, carrying cargo of fuel oil worth $100 million give or take. It is traveling through the Gulf of Aden on the way from Ukraine to China when it is attacked by pirates. In the course of this attack something unusual happens which is there’s an explosion and a fire.
I say unusual because if you think about the pirate business model we were just discussing, you’re trying to take something and hold it for ransom. You don’t want anything to happen that’s going to diminish the value of what you’ve taken. So if you’re a pirate, blowing up the ship is a bad idea.
Allowing a fire to get out of control is a bad idea. Nonetheless, that’s what happened. The ship stays afloat, it doesn’t sink. The oil doesn’t go up in flames, but it’s essentially a total loss. It’s a wreck. In financial terms, it’s a write-off.
Charles: Hang on a sec. It’s $100 million worth of fuel oil and the boat is insured for how much?
Matt: Between $70 million and $80 million.
Charles: So you’re looking at about $180 million payday here that someone has insured. If you have a crappy boat that’s not seaworthy and if you can scuttle that ship, you are going to make $180 million.
Matt: That’s pretty much the size of it. There is a fair bit of insurance fraud in the shipping industry. This is something that’s gone on since pretty much the dawn of time. Certainly the dawn of finance. It’s become more sophisticated and more ambitious over the years.
As you can imagine, when you have assets that are insured for huge amounts of money and, at sea, a lawless environment where it’s easy to get away with stuff because nobody can see it and the evidence might be at the bottom of the ocean. There are opportunities there.
Charles: I cut into your story. Forgive me. The boat is taken. It’s unique here in the situation that there’s an explosion on the ship which we’re starting to see doesn’t make that much sense. The ship is a total loss because now you have the salvage company come out and try to salvage the ship.
They get paid too. You don’t want $100 million worth of oil destroying the coastline. There’s another incentive there. So the crew is rescued. Who rescues the crew?
Matt: It was the U.S. Navy in this case. They were picked up by an American cruiser.
Charles: So an American cruiser interviews these people. I think they were mostly from the Philippines, right?
Matt: That’s right. All 26 were Filipino.
Charles: What’s the captain doing during this time?
Matt: The captain was held hostage by the pirates on the bridge. He was separated from the rest of the crew, as was the chief engineer. This becomes important later on. There are some allegations made – fairly credible allegations – as to what the captain and chief engineer might have been doing in that time.
Charles: So something smells a little bit rotten because you don’t have a total, 100% loss given these conditions. It just doesn’t make sense so far, right?
Matt: That’s right, it doesn’t make sense. What happens when there is a big marine accident is a lot of people get involved. This is a $180 million liability that lands in London at Lloyd’s, which I’m sure we’ll talk about. Lloyd’s is the center of an industry – the marine insurance industry – which employs many thousands of people all over the world.
This whole ecosystem snaps into movement when something like this happens. In this case, the big priority was to get somebody’s eyes on the ship. The Lloyd’s market needed someone to go check it out.
Charles: So that’s the equivalent if you have a claim on your house or your car an adjuster comes to size it up and tells the insurance company, “Look, I think this was fraud,” or “This guy really got his house destroyed. So Lloyd’s employs one particular guy whose name is?
Matt: David Mockett.
Charles: David Mockett. Huge guy. He’s 6’4” or 6’5”. Something like that. Big Englishman. He’s living in Yemen. He’s the go-to guy for these kinds of things. Honest, credible guy. He’s the adjuster if you will. I know he’s not, but let’s put it that way to make sense.
He’s the adjuster. We are Lloyd’s of London. We want to get eyes on that ship to make sure before we pay a nickel in claims if this is a real 100% loss. More or less do I have it right?
Matt: Exactly. They are called marine surveyors, but essentially what David is is someone who does insurance adjusting, just at massive scale. He did huge marine accidents.
Charles: So this guy goes out on a boat, he gets wired from Lloyd’s of London to go and check this out. He goes and checks this out. He looks at this boat and what does he see?
Matt: He sees a story that doesn’t make sense. He doesn’t have a positive theory of what happens. He doesn’t have an alternative explanation. He just knows that what he’s seeing and what he’s hearing about this apparent pirate attack and explosion doesn’t really stack up.
He’s suspicious and he shares those suspicions with people around him. Both in Yemen where he lived at the time and back in London.
Charles: If I remember right – and correct me if I’m wrong here – the explosion doesn’t make sense. The holes, the bullets, he doesn’t see anything that …
Matt: Things he was told would be there were not is basically the general statement.
Charles: So they are looking for these Filipino sailors who gave a story that is not matching to the Navy. Something is not matching up with what he is seeing with boots on the ground – boots on the water in this case.
Matt: Boots on the deck.
Charles: Now sets in play a whole bunch of characters in the background. This guy is upsetting the apple cart. From what I was learning about with Lloyd’s of London, these cases rarely get prosecuted because it’s much easier to pay them off than to say that you are doing fraud.
It destroys your whole brand in the shipping industry. Is that right?
Matt: Yeah. One of the things in researching for this book that really blew my mind was sketchy claims, claims that looked like they might be fraudulent, in marine insurance get paid out all the time. It’s a variation of the old line: If you owe the bank $1 million it’s your problem and if you own then $1 billion it’s their problem.
If you intentionally blow up your boat the insurance company is probably not going to pay you. But if you intentionally blow up a $100 million oil tanker they just might for a lot of reasons which we can get into. The incentives for them are generally to pay out at least partially.
Charles: They won’t call you a liar. They will make a settlement. The hazard to them is that no other shipping company is going to want to do business with them if they are not paying out claims.
Matt: Yeah, that’s one. Not good for business to accuse your biggest clients of fraud. Another thing – the more charitable explanation – is there is a really high bar in the English courts, which is where these things get adjudicated, to proving fraud. You could spend a huge amount of money on a legal case and lose anyway because that bar is so difficult to reach.
Charles: So it’s easier to just settle, pay them whatever they want. So this guy David Mockett goes, files his report and he’s starting to see something that doesn’t make sense. Pretty quickly he gets into his car one day and what happens?
Matt: July 20, 2011, he has been in contact with a number of people about his findings which are suspicious. He gets into his car outside his office in Aden, drives a very short distance – probably less than a minute – and is killed by a bomb that had been placed under the driver’s seat. Obviously intended only for him.
Charles: His wife is living now in England, right?
Matt: That’s right. Cynthia Mockett.
Charles: Something just seems totally off on this. From what I read, this guy was really well respected. Now only in the industry but in Yemen as well.
Matt: He was. He was a local celebrity. There weren’t a lot of ex-pats in Yemen at the time. Definitely not in this time when things are getting really unstable in the Arab Spring. Initially this was blamed on terrorism, which is kind of the obvious explanation at that time in that part of the world.
But as they looked into it further, it became clear to the people who looked into this case that there was something else going on.
Charles: Pick it up from there. What’s going on here?
Matt: What the insurers in London end up eventually accusing this ship owner of is attempting a gigantic fraud. One of the most audacious in the history of the industry. I won’t get too much into the details. The allegation is one that ultimately proves to be substantiated by legal proceedings in London.
This whole thing was cooked up in an attempt to defraud Lloyd’s of London of a great deal of money.
Charles: The guy behind this – what do they call him? Little Mario?
Matt: Super Mario. The owner of the Brillante is a Greek shipping tycoon named Mario Iliopoulos who owns a bunch of oil tankers, owns a big ferry line in Greece. He’s also a rally driver. He competes in rally races which are these off-road – not exactly off road, but these very high-speed road races in suped up cars.
He is ultimately accused by the insurers of being the mastermind of this fraud.
Charles: So he’s accused of this fraud. There’s a trial. At the trial he is a belligerent. He’s belligerent on the stand. To him, it’s totally alien. All the breadcrumbs lead to this being a fraud.
Matt: That’s right. Yet, he’s never prosecuted, which is really interesting. I think to the great discredit of law enforcement in the UK who would be the ones who would pursue this. He has never been charged. There has never been a serious criminal investigation of any of these events, including the murder of David Mockett.
There have been civil proceedings. Those civil proceedings did find that Iliopoulos was responsible for all of this.
Charles: So who’s the whistleblower in this? Who spills the beans on all this and gives everyone the inside of what was originally said when they were rescued by the U.S. Navy was all fabricated?
Matt: There were a few whistleblowers. Most interesting was a guy named Dimitrios Plakakis. He was a Greek sailor who ended up being involved with this attempt to destroy the Brillante Virtuoso. He later comes forward. He makes contact with these two private investigators who are working for the Lloyd’s of London market.
In a series of statements to the police and others, Plakakis lays the whole thing out. Those statements end up getting disclosed in court which provides explosive evidence of the scale of this fraud.
Charles: Just touch on a few of them. What was some of the fraud?
Matt: Essentially that this whole thing had been planned in advance. The pirates were fake pirates. They had been hired to perform a job. First of all, they were Somali. Everyone thought these were Somali pirates. These guys were Yemeni. They were, according to Plakakis, off-duty members of the Yemeni coast guard who had been paid to create a hoax pirate attack.
Similarly, Pakakis alleges that the salvage crews, the guys who tended to the ship after it was blown up, were all in on the whole thing, tipped off in advance. This statement that ends up getting disclosed, which I think is 60 or 70 pages, is unbelievably detailed. It’s kind of the skeleton key to the whole scam.
Charles: Then you have this one sailor in the Philippines. He’s a Christian guy and his conscience is bothering him. And he risks his life.
Matt: You are referring to a guy named Allan Marquez who was one of the sailors. He was actually the first sailor on the Brillante to see the pirates. He was on the deck when they came onboard. I made contact with him years afterward in 2017. So six years after these events.
He told me that he felt terrible about the fact he lied in the aftermath. He’d been told – he said – by Mario Iliopoulos that he needed to tell a certain story. Allan said he’s been threatened. Threatened with death. Death threats were made against his family as to what would happen if he didn’t tell the right story.
He said to me and later to others because he was interviewed as part of these legal proceedings that as a Christian he didn’t want to lie. He felt he had done something wrong. He wanted to set it right by telling the truth, which he did.
Charles: Now with all this we have a guy dead. We have David Mockett dead. His widow is in England demanding justice and there’s no justice to be found. The trial takes place and we see all the inner workings of Lloyd’s of London. How it’s more economical to settle the case than to bring it to court.
Why was this brought to court? Why wasn’t this settled outside?
Matt: There’s a few reasons for that. One is this was an unusually large amount of money. $180 million in total is a big ticket, even at Lloyd’s of London. Two was I think the death of David Mockett did have something to do with it. Although the lawyers on the insurance side would say it’s not relevant and totally separate.
Their arguing a civil insurance case. They’re not arguing a murder trial. I think that did have something to do with their decision to fight. Generally, the audacity of this was so extreme. In this case, the Lloyd’s market decided it was worth going to the mat over it.
Charles: Has anything changed in the 10 years or so that this happened where there’s more fraud, less fraud, more of these incidents, less of them?
Matt: In a word, no. This sort of thing still happens all the time. The reasons it still happens are because the shipping industry’s legal and financial infrastructure remains the same. One thing that enables a huge amount of that behavior is the fact lots and lots of ships are owned anonymously.
Even a vessel’s insurers at Lloyd’s don’t know who the ultimate vessel owner is. All they know is the name of the shell company that owns just that one ship. That means, for example, if you are a serial fraudster, the insurers you are dealing with may not even be able to draw lines between specific incidents and you.
All they know about are these shell companies. This plays out in other parts of the shipping world in other kinds of bad behavior. Anonymous ownership is a big problem. I think until that changes, until they are regulating shipping more intently, these kind of misdeeds are going to keep happening.
Charles: You would think with so much money at stake and how shipping is so vital to our economy and we actually have U.S. Navy men and women in this area risking their lives to protect sailors and ships, you would think that should be a priority for somebody, right?
Matt: Well, it’s not and for the same reasons. Because all those arguments work the other way. Shipping is incredibly good at getting cheap stuff to American consumers. The industry has argued successfully over the years that regulation, slowing things down, will be felt on the shelves at Walmart. It will be felt in the price tags at Walmart.
After 9/11 there was this brief moment where the Bush Administration had a moment of real concern when they realized any container coming into Port Liberty in Newark could have a dirty bomb in it for all we know. We need to scan every container. That took about five minutes before they realized that’s impossible, unless you want to gum up the entire retail supply chain.
The argument of the shipping industry is we do a great job getting stuff to consumers quickly and at a good price. If you regulate us, we won’t be able to do that anymore.
Charles: At the end of the day, Cynthia Mockett – Cynthia was her name, right?
Matt: Cynthia Mockett. That’s right.
Charles: So Cynthia’s husband is blown to pieces. His body is in a zillion parts after the bomb exploded. She never got a nickel, right?
Matt: That’s right. No compensation whatsoever. She remains, as you can imagine, very angry at the way she and her family has been treated.
Charles: I think you mentioned even his own life insurance policy didn’t even pay out or something to that effect.
Matt: That’s right.
Charles: Have you been in contact with her since?
Matt: Yes, Kit and I are in pretty frequent contact with her and some of the people who are helping her press her case, which she’s still trying to do. She’s pursuing this with the British government. Her member of Parliament asked a question in the House of Commons about it of the Home Secretary who runs law enforcement.
But it’s kind of a series of non-answers from the British government as to whether there will be a real investigation.
Charles: So not only does crime pay, in this case on a big scale crime pays enormously well with very little downside.
Matt: Yeah. It’s not the best moral of the story. You can make good money doing bad stuff and that’s why people do it.
Charles: Wow. I’m not advocating for anyone to be a pirate, but it seems the incentives are so large and the prosecution is slim to none. The insurance companies just want to move on. And you have the anonymity of shell companies. When I get a car they have a whole history of all my driving records for a zillion years back.
And if I ever tried however many claims to put in, it’s so automatic. There’s no way unless you change your identity that you are able to get the rate you think you should get based on your history. They put together a premium based on your history.
Here, it seems you are starting from ground zero every time. You could have terrible people continually getting insurance from these bankers and committing these atrocities.
Matt: Basically. That’s a pretty good summation of it. There’s an interesting contrast, if you want to look at another global industry, with the airline business. Everything to do with airplanes is unbelievably regulated. There is quite a lot of transparency, even around things like private jets.
It’s not always possible for the public to know who owns a private jet, but governments generally do. Aviation has had a real microscope put on it over the years, but shipping has totally escaped that.
Charles: Amazing. The coordination in the airline industry with countries is seamless. It’s amazing how everything works together for the safety of the passenger. A plane goes down in Madagascar and the FAA is all over that. It trails right back to the manufacturer of the aircraft and whole bunch of liability issues.
Here, I don’t want to say it, but I’m reading the book and saying, “Let’s buy a tanker, scuttle it, insure it for $50 million and settle for $20 million.”
Matt: You want to do the insuring before the scuttling. But yeah, it’s a good idea.
Charles: I read the book. The salvage companies knew exactly when to get there before the ship even had a problem.
Matt: Yeah and that’s something that does happen. I think everyone assumes that that goes on periodically, that salvage companies are tipped off and are able to get to the scenes of “accidents” with improbable speed.
Charles: By the way, the money there was big also. I think it was Poseidon that was the salvage.
Matt: Yes, they were one and there was another one.
Charles: I think it was $10 million or so. They wanted a fee.
Matt: Salvage work was $30 million.
Charles: $30 million!
Matt: Yes. The way salvage works is if you run a salvage crew you get paid a percentage of whatever value you save. A percentage is not fixed. It’s either you agree or it goes to arbitration. It could be 10%, 20%. So if you are talking about a $100 million liability, it’s pretty good money.
Charles: In this case it was the oil and the environmental hazard that would have had. Wow. When did this book come out?
Matt: This book was published in the U.S. in early May.
Charles: Have you heard from anyone in the U.S. legislature or any politicians of any sort about this?
Matt: No. Not yet. I certainly hope we will eventually. There’s a lot of other things on the agenda right now, but I do hope this does become a priority for politicians in the U.S. and elsewhere at some point.
Charles: I really hope so because it’s absolutely amazing the human cost to getting your iPhone delivered by boat and getting it at a cheaper price than if it was flown here.
Matt: Exactly. This is an industry that we all have the luxury of never thinking about. We don’t think about who get hurt by it, but those people are real. These misdeeds and crimes in some cases are real. I hope this book causes some people to pay attention.
Charles: What’s interesting to me is a few years ago Walmart and the major big boxes that were buying goods overseas made the manufacturers have sweatshop laws to make sure the factories didn’t employ people. They made them leave certain countries, certain areas.
Here, no one really cares once you get that stuff on the boat what happens to those poor sailors.
Matt: It’s amazing. I had someone who worked in the ESG space saying that to me. Big retailers spend huge amounts of time and money looking into the factories where their stuff comes from because no one wants to be supporting slave labor or anything like that.
But the steps in between are total black box for them and they haven’t even thought to look into that. It’s kind of crazy.
Charles: Amazing. Folks, the name of the book is Dead in the Water: A True Story of Hijacking, Murder and a Global Maritime Conspiracy by Matthew Campbell and his co-author Kit Chellel. Really worth reading. I knew nothing about tankers. You get a great education. By the end of the book, I can’t believe it.
It’s a great screenplay. Get that sold. I think it will make it.
Matt: We do hope this will be probably on the small screen at some point.
Charles: It makes an exciting story. And an unjust one also. Crime pays and it pays big. Matt, great job shedding light on an area which 99% of consumers don’t even think about. At least they’ll start thinking.
Matt: Indeed. Thank you so much.
Charles: My pleasure. Thanks again.
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