This new technology presents a new risk of fraud.  For many years criminals have been stealing credit cards, cloning them or applying for cards in a false name but now they can potentially commit the crime just by walking past an individual.  The security gaps are being dealt with, and the banks will no doubt take the steps needed to protect their customers with using the new technology.

However, it important that everybody is aware of fraud and how it can might arise.

So should this come as a surprise, why has Al-Qaeda joined with Al-Shebaab and what are the implications for regional maritime security as a result of this union…?

Al-Quada’s Maritime Interest…

Al Qaeda’s interest in maritime operations is long-standing and goes back to 2000 when it launched an attack on the USS Cole in Yemen which killed 17 American sailors. This attack was seen by Al-Qaeda as a failure.  However, their long-term maritime interest continued, and as a result it sent a team to meet with Sri Lanka’s now defeated terrorist organisation, The Liberation Tamil Tigers of Elaam (LTTE), in order to examine how to develop their expertise in maritime combat operations.

The LTTE had developed a sophisticated maritime combat capability in the form of The Sea Tigers.  It is understood from sources in Sri Lanka’a military that the discussions were brief and inconclusive, and as a result Al-Qaeda decided to temporarily shelve the idea of maritime terrorism, and instead focus its combat capabilities against the United States and its allies on land, particularly in Afghanistan and Iraq.

However, the interest in the maritime theatre was there and led to Captain Pelkofski (Joint Operations Directorate at U.S. Fleet Forces Command), to write,  ‘…With only rare dramatic bursts, the maritime environment has remained relatively calm in the Global War on Terrorism (GWOT), but a sustained, destructive storm churns over the horizon.  Despite the inherent challenges, Al-Qaeda can attack, has attacked, and will again attack maritime targets.  Indications point to an acceleration of the pace of maritime terrorism, heralding a coming campaign. The propensity of Al-Qaeda for patient and intricate preparation augurs a future sustained maritime terrorism campaign, rather than a continued irregular pattern of attacks…’ (27^th December 2005)

Post 2005, it became increasingly apparent to Al-Qaeda and other terrorist groups, (and to the state actors), that conventional navies are not trained to think and operate in an unconventional manner.

Furthermore, conventional navy assets are frequently not suited to countering unconventional threats from terrorist groups whose strength lies in the size and speed of their vessels, their ability to merge with the surroundings and their capability for stealth action.

The maritime environment was perfect for Al-Qaeda and it sought to develop this expertise as rapidly as possible…  they found it so with the Pirates of Somalia, operating under the protection of Al-Shebaab.

Al-Qaeda understood that combating terrorism requires a high preponderance of strength and whereas conventional military operations require a force ratio of 1:3 in superiority, counter-insurgency operations results in a force ratio typically of 1:20.  In the maritime environment this is especially true because the theatre of operations are vast, navies are on patrol 24/7 and the forces are deployed over a wide area to secure and keep key routes clear, and to provide escorts for movement.  On the other hand, it could select the time and place of the attack, knowing that evidence of any such planned attack could be destroyed should it receive advance intelligence of a naval patrol.

Al-Qaeda appreciates that reaction times by government forces have to be short and therefore mobility (via air), superior technology and firepower, is essential to overcome deficiencies in numbers.

Additionally, the requirement for such numbers of resources creates problems, particularly with the cost of such operations, command and control and the maintenance of the political will to pursue the use of military forces to neutralise terrorist capabilities.

 Why has the union occurred…?

Strategically, Somalia effectively opens up another front for Al-Qaeda, at great cost to the UN and NATO and it has no form of effective independent government.

Expanding operations is essential for the long-term survival of both groups, as it drains valuable security resources for those involved in conducting security taskings.  Counter-insurgency operations (and especially maritime operations) place regular forces at a distinct disadvantage.  Insurgents do not answer to the law, believing their cause and ideology gives them a right to operate outside of normal ethics and morality.  National or coalition forces must act to the highest standards and within the rule of law and failure to do so presents terrorists with opportunities they are effectively able to exploit.

Additionally, maritime operations require a high standard of junior leadership and patience in a mentally fatiguing and tedious environment where conventional fighters are trained to think not in the abstract but in black and white.

Financially, both groups have built up extensive assets and funds from trafficking arms, narcotics and people, and of course piracy.  These two groups combined deliver very significant resources whereby the sum of the parts is greater than the whole.

Operationally, Al-Qaeda brings to Al-Shebaab an eye for detail and good tactical planning not seen before in the theatre. There have been numerous examples of Al-Qaeda demonstrating successes against high profile and high security targets around the world.

In effect the two groups officially joining forces, have qualitatively and quantitatively enhanced their respective capabilities in the East African theatre as well as their requirements such as manpower, weapons systems and firepower.

What are the Implications…?

The impact of this union may not be felt immediately or in the short-term by business, ship-owners and operators etc.  We shall see elevated risk levels, the status quo continuing and the associated costs.  This will exist for some time to come as the prospect of immediately defeating Al-Shebaab becomes more distant.

It will mean significantly increased military activity and instability in the region.  UN and other forces in support for the Transitional Federal Government (TFG) will have to become more focused in destroying Al-Shebaab.

Conversely Al-Qaeda and Al-Shebaab will leverage their effective psychological warfare capability, capable of capturing the youth, often in their formative years and indoctrinating them to produce dedicated fighters.   These fighters may well become engaged in other territories seeking dedicated fighters, such as Sudan, which has declared war on the South.

The ICoC is a multi-stakeholder initiative convened by the Swiss government. It aims to set private security industry principles and standards based on international human rights and humanitarian law, as well as to improve accountability of the industry by establishing an external independent oversight mechanism.

By signing the ICoC, Haymarket publicly commits to operating in accordance with the Code and to work with relevant stakeholder to establish this mechanism and related standards by the middle of 2012.

The article also states Senior Executives were made aware of the alleged bribery but failed to take appropriate action. The article states a previous internal investigation uncovered evidence of US $24 million in suspected bribery payments, however, the company does not appear to have acted and the investigation was closed down.

In the UK, the Bribery Act is now in place and organisations need to consider a number of issues in relation to this and carrying out business overseas.  It is essential that training on the Bribery Act is undertaken, which includes an awareness of the risks in operating overseas and the control measures which must be put in place to mitigate against the risk.  This can be delivered as a bespoke package, and if required can include aspects of physical and technical security for working in a hostile environment.

Haymarket, with its well established international connections, is well placed to carry out due diligence on international business partnerships being entered into. This would highlight any “red flags” and further demonstrate steps being taken to prevent bribery.

The Counter Fraud Practitioner’s Handbook, published by Gower in March 2012 is an essential reference for public and private sector fraud and security specialists seeking to learn from the skills and experiences of specialist colleagues in other sectors. Written by and for practitioners, it is a comprehensive handbook that deals with the knowledge, detail and the craft that underpins all effective anti-fraud work.

In this well publicised case, the fraudsters are reported to have sent a letter to the ODA, ostensibly from one of its major suppliers, inviting the ODA to change the bank account details of the supplier. The ODA duly obliged and proceeded to transfer a planned payment of £2.3m into the fraudsters account. The fraudsters also tried to carry out similar frauds involving other suppliers to the ODA – some £6m in total.

Fortunately, the fraud came to light pretty quickly and the ODA could call upon the resources of Operation Podium, the Metropolitan Police’s dedicated response to serious and organised crime in matters affecting the forthcoming London Olympics. Most of the money was recovered and the perpetrators were bought to book.

However, other victims of similar frauds may not be so lucky. Sometimes the Police don’t have the resources necessary to carry out an effective investigation or the fraud is discovered long after both the money and the criminals have disappeared.

Haymarket has investigated similar frauds in the past; one particular case springs to mind where £90,000 was transferred to a supplier’s ‘new’ bank account and the organisation concerned had no idea until the real supplier started to chase its unpaid invoice. Haymarket’s subsequent investigation identified three other organisations that had lost even larger amounts to the same fraudsters. Some, but by no means all of the stolen money was recovered.

In all the cases, the frauds could have been prevented by a few simple controls and raised staff awareness. Some organisations are resistant to having independent companies testing their controls and procedures or giving their frontline staff the requisite training. However, Haymarket’s long and varied experience in both fraud prevention and investigation provides ample evidence that addressing these simple issues before a fraudster strikes is always cheaper and less disruptive to business than afterwards.

1. Employee investigations are delicate situations, and invariably companies are not equipped to carry out the task in-house.
2. The power of computer forensics, and that it must be undertaken ensuring all relevant procedures are followed in order that potential litigation is not compromised.
3. If the firm is FSA approved, the regulator must be informed.  The Financial Services & Markets Act of 2000 (Section 166) states that the FSA can request a Skilled Persons Report is submitted to them.  The report must come from an external consultancy with the experience and expertise to carry out the investigation.
4. Firms must have the correct safeguards on their intellectual property, especially if employees are able to access their personal email accounts.  Theft of information is easily identified through computer forensics.

Finally, it is worth mentioning that in situations where an employer has lost trust of an employee and suspects them of conspiring to potentially defraud the company, these types of actions may be detectable from the very start with employment screening.

Due before US Congress on 23 April, the Act has come under fire from internet privacy advocates fearful that it will target ordinary file sharers as opposed to illicit hackers. In criticism of its vague language, The Electronic Frontier Foundation argues that the Act “leaves the door wide open for abuse”, and could even allow ISPs to monitor communications for intellectual property infringement.

Aside from Facebook, both Intel and Microsoft are among the 800 companies so far in approval of the bill.

Reassuring its 800 million plus users that it will continue to safeguard their personal information, Facebook argue that the Act would impose no new obligations to share information with anyone.

The considerations for German ship-owners, operating in a legal ‘grey area’ remain the same as for others.  These are operational and commercial.

The current BMP 4 techniques which are advocated, whilst effective in part, are not sufficient to mitigate the threat and German companies are finding it is cheaper to use armed guards on board a vessel, than to potentially pay ransoms and the higher insurance premiums which are being demanded.

The German government has finally realised it faces stark choices.  Promulgate new legislation to protect ship-owners or see tax revenues migrate as ship-owners flag out, ransom payments are made to pirates and terrorists and with that the potential adverse media coverage.

Germany has little choice but to join other governments in delivering this policy. The issue is why it has taken so long, and at such great cost.

The couple produced forged documents claiming they owned a forty-two room motel and against this they proceeded to obtain a US $2.3 million loan.  At the same time they also obtained loans against an apartment block.  The couple set up a number of shell companies and used these as the vehicles to buy and resell properties to various investors.  These investments ranged from US $15,000 to US $ 75,000, and one person is claiming to have lost US $4 million.  Investigations indicate the couple were potentially a front for organised crime.

It is believed these front companies were the vehicle to commit one of the largest property frauds of the decade in Florida.  It is suspected over four hundred people, four banks and three other lending organisations where taken for nearly US $100 million.  A number of investors are actively trying to pursue the assets through the civil courts.

It is surprising how often this type of fraud occurs, and when making these types of investments Haymarket always recommends that extensive due diligence is carried out on the company.  If this had occurred the company would have alerted potential investors to a number of “red flags”.

Haymarket is well placed to carry out due diligence for clients. Where an individual or organisation is the victim of fraud, Haymarket is equally experienced in international asset tracing and able to deliver evidence for recoveries to occur.