Prepare and protect – kidnap and ransom in the energy industry

3 November 2013 (Last Updated November 3rd, 2013 18:30)

In the last year, incidences of mass kidnappings in Algeria and Nigeria dominated the headlines. But the problem of kidnapping is far more widespread than is reported, especially in the global power industry, says kidnap insurance broker Jenny Carter-Vaughan. She explains how to safeguard against kidnapping, where the danger hotspots are and what the protocol is when a kidnap occurs.

Prepare and protect – kidnap and ransom in the energy industry

Prepare and protect - kidnap and ransom in the energy industry

The In Amenas terrorist attack in January 2013 saw Al Qaeda terrorists storm the Tigantourine gas facility in Algeria and hold around 800 staff hostage. The shocking events gripped the world until its bloody end four days later. By then at least 39 foreign hostages were dead, as well as an Algerian security guard and 29 militants.

Although an extreme and rare attack, In Amenas highlighted the growing dangers oil and gas and mining personnel face when working in remote locations in very poor countries, which are often bordered by volatile regimes and political unrest. It also showed, very clearly, that money isn't the only motive for kidnapping of foreign workers - publicity and a political message are equal instigators.

This year the president and managing director of Alstom India, Rathin Basu, was kidnapped in Noida, India. He was eventually returned safely and his kidnappers were detained. Canadian Gernot Wober was released in August after seven months, after being kidnapped by Colombia's second largest rebel group, the ELN.

The group kidnapped Wober to demand Toronto-based Braeval Mining Corp drop plans to prospect for gold in northern Colombia. There have also been reports of several contractor staff being kidnapped in the Niger Delta in Nigeria, where security alerts and warnings have been issued to employees.

However, these reported cases of kidnap are just the tip of the iceberg; the crime happens far more often than the press ever get wind of, says Jenny Carter-Vaughan, founder of UK-based Expert Insurance Group, which specialises in kidnap and ransom insurance cover.

Heidi Vella: In which areas of the world is kidnapping a risk?

Jenny Carter-Vaughan: The main areas are the Middle East, Africa and South America. The places that make the news with this are places like Nigeria, off the coast of Somalia, areas around the Caribbean, Venezuela and Brazil and the oil states.

There has been quite a large explosion in this type of crime around the countries surrounding Syria and Egypt. This is largely because of the internal troubles within those countries; it has attracted certain types to the area.

And possibly certain groups in Syria, for example, are trying to raise the profile of what it is they are doing, so they may kidnap someone so they get onto the news. It isn't always about money. Sometimes it is about publicity and sometimes it's politically motivated.

HV: Is it only Westerners abroad who are mostly at risk?

JC-V: We cover everyone. Actually, people within this country [UK] are at risk. As a westerner you are more likely to be at risk where you stand out; if you are in the Middle East you are perceived as having money just because you are from the West, because you are often far richer locally than the people where you are travelling, but you could just as easily have someone who is heading up one of the UK power companies be at risk just because they have access to power networks. Al Qaeda don't just operate abroad, they operate here [in the UK] too. Perpetrating people who head up power companies in the UK would be a good market for them.

HV: Which sector of the power industry is most risk?

"Although an extreme and rare attack, In Amenas highlighted the growing dangers oil and gas and mining personnel face."

JC-V: It's equal really. It's really about where these places are. If you think about it all of the places where power is generated they tend to be some of the remote places in the world. You are exposed, they are hostile environments mostly. And the thing is, what you're doing quite often is going to upset the local community, because it involves pollution, damage to the environment locally - so that can actually upset locals and if locals get upset, they sometimes then start to co-operate with dangerous terrorists.

Even in South America, [if] you've got a geologist who is going to go there to look at soil samples or whatever, you're going to a remote place where you are at risk, you are perceived to have money, you're working in an industry where there is a lot of money generated - so you are a valuable resource or you are perceived to be a valuable resource. The company you are working for is perceived to have a bottomless pit financially and will not want their own reputation damaged by having an employee kidnapped or potentially killed or injured.

HV: Does kidnapping happen a lot more often than gets reported?

JC-V: Yes. When people get involved in these instances and they are a western company, the last thing they want is for the information to get out into the press. Apart from anything else, if they do pay off the kidnappers, they then become an enhanced target. If you end up with a reputation for paying kidnappers, you then obviously move up the list, your people are much more likely to be targeted.

HV: How often are kidnappers paid the ransom they request?

JC-V: I would prefer not say how often kidnappers are paid. The interesting thing is, depending on where you are in the world and depending on who you are dealing with, you will be looking at different levels of ransom. For example, if you are involved in a kidnap where Al Qaeda are involved, you're looking at a significant amount of ransom compared to, for example, a South American kidnapping where you could be talking about a few hundred pounds when it comes down to it.

"Apart from anything else, if they do pay off the kidnappers, they then become an enhanced target."

Al Qaeda and that type of terrorist will demand a high level of ransom and will be inclined to stick to the ransom demand. Actually, quite often it is not in their interest to let that person go, from their point of view what is more interesting is the high profile they generate within the world press and then actually injury, killing etc is more use to them politically than the funds may be.

If you have got someone who is kidnapped within the Middle East, for example, and they are kidnapped by locals, you want to get them out quickly before they have been passed up. Victims get passed up the chain from local kidnappers to people who are more experienced in crime and they can potentially pass the kidnap victim up to an Al Qaeda-based cell. When dealing with kidnappers get them out as quickly as possible within the local environment, because you might end up paying a couple of hundred pounds to get them out before they get sold on. Once they start to get into Al Qaeda type situations it is difficult to pull them out because it is not necessarily useful for them to let them go. It is more useful to use the publicity.

HV: Once a kidnap has occurred how does the insurance work?

JC-V: This is one of the very important things about planning before you go, you need to know that person has disappeared so you can react and get them out very quickly. The first thing is getting a local negotiator in who is an expert, probably someone who is already in the country and knows the locals, so can find out what is going on and who is responsible using local connections and things like that.

There will then be a negotiation and quite often these kidnappers will demand very, very high ransoms to start off with and what they will actually get paid is in proportion significantly less. You often read about very high ransoms being demanded, a million pounds for example, in South America, but typically they then settle for thousands rather than millions as it were.

HV: Is there a growing demand for kidnap and ransom insurance?

JC-V: People are a lot more aware of the existence of the product and also the need for the product. Predominately, the rise in need for it is partly because people are now aware the product exists. But particularly in the power section things like the denationalisation of electricity companies [means] we see a lot more people going out as self-employed and being consultants. If they work for a major power company, the company would cover their staff [with kidnap insurance] as part of their job benefit.

We have got people now who aren't covered by a company as they're working as contractors and therefore are looking to cover themselves individually. This sector has risen exponentially. Big companies have always bought it and they continue to buy it.

HV: Can you names any companies you've sold insurance cover to?

JC-V: No. There will not be any companies out there that will admit they have got the cover because in actual fact it would be breaching their insurance policy terms and conditions. Once you admit you have got it, you are holding yourself open, waving a red flag saying 'please come and kidnap me, we have the money to pay for it, it is fine'.

Kidnap insurance is interesting, once it's issued they have code names, they don't necessarily have the name of the client any more. Suddenly you have a policy called 'pen knife', for example, so you call up and say 'it's pen knife' here.

HV: Does the insurance pay the ransom?

JC-V: This is difficult because obviously paying ransoms and negotiating with terrorists is in some places illegal and it is certainly frowned upon. Therefore, what causes problems is the money has to be found by the victims' families or employers first and then claimed back from the insurance company. So when you actually try and buy insurance, and this is the difficulty for individuals and small companies, you have to prove you have some sort of assets that, in the event of a kidnap, you have enough money to actually meet the ransom demand that may be made and the sum for which you are looking to cover, which can be quite difficult.

So, essentially - yes the insurance company pays the ransom if there is a claim made against them. Some insurance policies include things like, for example, if the ransom money is stolen, which it can be, and the people you are trying to get it to don't get it.

HV: What happens in countries where it is illegal to negotiate with terrorists?

JC-V: I'll leave you to draw your own conclusions on that one. At the end of the day these people are terrorists they are on the wanted list, consorting with criminals wherever you are is not necessarily looked upon favourably. [That] Doesn't mean to say it doesn't go on though.

HV: Would doing this devoid their insurance?

JC-V: Yes, yes. At the end of the day if this type of insurance didn't pay out people wouldn't buy it and people do buy it.

HV: What support for families of kidnap victims does insurance provide?

"Al Qaeda and that type of terrorist will demand a high level of ransom and will be inclined to stick to the ransom demand."

JC-V: That's actually quite important, because the person who has just been kidnapped is in a position whereby they may not be exactly happy about what is going on but they have some experience of it. Whereas the family at home are a long way away, quite often, and in actual fact they aren't in control at all. The authorities will be involved, the negotiator will be away from where they are, and they will have no control over the incident itself. They are almost as much victims as the person kidnapped. So most kidnapping policies will provide counselling to the individual, family members, friends, even colleagues of the people who have been kidnapped, because it can be very, very traumatic.

Even when you have got someone who has been released from a kidnap the chances are they will need significant therapy when they come home. They may not be able to deal with what has happened to them. kidnap insurance is a kind of total care package for the kidnapped victims and their families and employees.

HV: How much are kidnap policies worth?

JC-V: It depends on where you're going, what you're going to do while you are there. Obviously some countries you could go to and actually you are relatively risk free while you're there, but you might be in high risk areas of the country. It depends what your security risk is when you get out there, so from the point of view - are you actually using proper security staff? Whether or not you are known figure of the industry, so if you are a particular expert in the sector and people know who you are, you are going to be more at risk and therefore have a more expensive premium than someone who is not really that well known.

You can buy a policy for as little as £500 but then we also sell policies that are significantly higher than that in premium. It depends on assets that you have that are deemed to be of a high value. So, someone who is a chief executive of a major oil company is going to be deemed to be more of a risk than Joe Bloggs who is an engineer. It's about who you are, what you are and what you're doing.

HV: What kind of things can be done to minimise the risk of being kidnapped?

JC-V: There are quite a lot of things you can do when abroad to be aware of the risk; that is the main thing really, being aware of your surroundings and planning before you go. Simple things like if you are going to a country where there is a [political] problem get a photograph or a copy of a photograph of the person who is going to meet you, because then you can identify them, otherwise anyone could come and meet you.

"So most kidnapping policies will provide counselling to the individual, family members, friends, even colleagues."

It's about making arrangements, making sure you have really thought things through; what are you going to do when you get there? What are the arrangements? How are you going to travel about when you get there? Which type of firms are you going to use for security?

It's about using a trusted firm rather than ones you just pick when you get there, because you want people who have got a good reputation, who haven't necessarily got a corrupt relationship with any of the locals, for example. The other thing of course about planning is it's about having a plan B and a plan C; if this goes wrong where do you meet?

Where do you go? How do you get out of it? What is your plan B? Because things do go wrong. Sometimes a car you're due to meet might end up having an accident on the way. What happens if that person doesn't turn up - what do you do at that point? What's the telephone number for the office for the people you are meeting, the people you can trust?

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