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K&R: What You Need to Know

Best practices when one of yours goes missing

RIMS Canada had a touch of danger and paranoia to it this year, mostly because it was held in Winnipeg, often touted these days as the “murder capital of Canada.” And truth to be told, even a local boy like yours truly doesn’t feel too safe straying above Portage and Main. Amid sessions on active shooters and abuse claims, delegates to the Radisson were apprehensive as they navigated around clusters of supposedly “aggressive” street people. In truth, you’re not likely to get nabbed off Galt Avenue—you would simply get beat up. Or stabbed. Or shot. Not very comforting to think about, but there it is.

So with the ‘Peg feeling like a risky foreign locale and grisly beheadings on the news, it’s no wonder there was a good turnout for the session on Kidnap/ Ransom and Extortion Risk.

And Dwight Kartchner, a response consultant for Control Risks, had a showstopper of a scenario for his audience. “You’re the corporate crisis management team,” says Kartchner “You have a guy kidnapped down in Bolivia. We have to make a decision. Are we going to pay a corporate ransom? In other words, do we claim ownership?”

Read: U.K. to Ban Ransom Reimbursement by Insurers

In this particular “what if,” there’s a $5-million demand on the executive’s head, but if you shell out $2 million within a couple of days, the kidnappers will let the guy go.

“Let’s say that you negotiate it for 30 days down to $500,000 and they let him go, or you just tighten it up, and it takes three months, and you get him out for $10,000. Which one would you do? Two million, two days, he’s back; $500,000, 30 days, he’s back; or two three months for $10,000. They just said forget it, you can go home. What would you do? And more importantly, why?”

No one bothers to answer him. We’re beyond the typical conference crickets where nobody wants to look like an idiot. None of us can really offer an informed reply. Kartchner clearly knows this. He’s expected it. “And the silence, I get this a lot, when I’m sitting there with the crisis management team. A lot of you are thinking, well, we need to do the right thing, don’t we? We need to get the guy back. We do feel some sort of duty of care responsibility.”

And so he puts it to us a different way: Would you pay $10 million in your widget assembly plant in northern Mexico to get him back, putting your entire operations at risk, fully aware that you’ll get hit on a regular basis if you’re known for paying a $10 million ransom, or even a million bucks?

As it happens, Kartchner has worked before on this particular fiscal Kobayashi Maru. A worker for an NGO in Nigeria was snatched. “We had the discussion. If we pay a ransom, pretty much we’re going to have to leave the country, because every knucklehead there is going to come grabbing one of our workers.”

The client, wanting to be honourable, paid and paid big. The kidnappers “took the money and they said, ‘Hey, nice down payment, we want more.’ But we had a deal. ‘Well, there’s a new deal. We’re kidnappers.’ We finally got the guy back—euphoria. Everybody is thrilled. The company is thrilled, we did the right thing, finally got him back. Two months later, his attorney called, saying we want $10 million because you didn’t exercise best K & R practices in paying too much too quickly. If you had been tough, this would have been resolved a lot earlier. Instead of trying to do the right thing you put my guy in even greater danger.

Read: Why Companies Operating Abroad Need to Consider K&R

“How screwed up is that?”

It’s hard to tell. The top companies that work on K&R have been notoriously tight-lipped about the operational aspects of their business. In a recent article, The Guardian noted “the industry remains extremely opaque. It is where governments, the world’s biggest corporations and nimblest insurance companies interact with known criminals and killers.” Governments can posture that they don’t negotiate with terrorists (or kidnappers). Fortune 500 companies will talk to them through responder firms, but as the newspaper observed, they’re not particularly chatty about this ugly business in public.

Christopher Arehart, an assistant vice-president specializing in crime and K&R for Chubb, says that “from an underwriting perspective, we focus on a few key areas. First, nature of business [of the client]. What do they do? Really basic   understanding [of ] what type of business they’re in. Secondly, we look at the size and relative scope of that business. Do they have employees, either stationed overseas all the time in local subsidiaries, or are they primarily an exporter… say, a Canadian organization, and they’re travelling overseas to facilitate contracts, et cetera.?… In our perception, the vast majority of the risk is where an organization has stationed its employees, be they expatriates or local nationals.”

“I have seen on more than one occasion where they will blow out a gang of 20 kidnappers, kill every single one of them, and the client is killed in the crossfire. Now, was that a successful day for law enforcement? One hundred percent… How about us? We had an absolutely horrible day.”

So say you have an incident. First, you have to be sure that someone’s been actually taken. In fact, says Dwight Kartchner, “many times when an incident occurs, you as the client will really have no idea what has happened, or you will have so little information that you’re not even sure if there has even been a kidnapping.” More than 48 hours pass, and “the guy does not show up in a hotel in Shanghai.” But there could be a gazillion reasons for your exec to go missing. Maybe it’s a flight issue. Maybe he’s on a bender. Maybe there’s a family emergency. Kartchner once had to dramatically cut short a presentation because he got a call over a possible kidnapping and had to rush off to the airport.

Slap him on the face a couple of times

Assuming it’s the real deal, the responder companies all have their “our brand is best” stats. Kartchner told his audience in Winnipeg that “if the case is handled properly, there’s about a 98 percent chance if we’re involved, that you’ll come back alive.” The Ackerman Group claims to have handled 300 cases, out of which only three ended in disaster. In one, says Mike Ackerman, the company’s CEO, “we had a heart attack, [in another] we had an individual who was wounded in the assault phase and bled out, and we had a situation where local police stumbled on the safe house where the hostage was being held and went in shooting, killed the hostage.”

Ackerman, however, points out that many insurance companies will actually lock you into using their specific responder firm. For looking into who is the most qualified responder, he suggests you ask: “Is the company experienced in areas where you’re going to be operating? In other words, they may have a lot of experience in Mexico, but you’re operating in Nigeria. Have they ever done cases in Nigeria? And the other thing that you want to look for is how hands-on are they?

“Some of our competitors cast themselves as advisors. And you know, they’ll basically walk you through the process, but they won’t handle money, they won’t protect money… We basically will do it all. We’ll do the negotiation, or if we have to work through an intermediary, we’ll train that intermediary, we’ll move money around.” He says his people prefer not to use go-between “fixers,” as they can be unreliable, and they use tribal intermediaries only when they have to.

Read: Why Kidnap & Ransom Insurance Really Matters

Kartchner and Control Risks take a different view. “We do not deliver ransom,” he says flatly. They “don’t do that nonsense anymore… There comes a point where a whole lot of money is stashed into a briefcase, and is delivered winding through some mountain somewhere. That is true. The question is who delivers it? By and large, it’s a person that is not ‘kidnapable.’ Someone who does not represent money.” Kartchner says his firm will work with a client to decide who that should be—a long-term employee or maybe a family cousin.

But no, he says, the firm won’t deliver any messages or cash. “And the client says, ‘Well, why don’t you do it, you have all the training in the world.’ And that’s true. But many times it’s not so much the words that you’re saying to the kidnappers as who’s saying them.” The involvement of a company representative is a big tip-off that the company is interested, it’s invested. “So that $50,000 demand very well might flip to $2 million by tomorrow.”

Which is not to say they send in the amateur unprepared. “Everybody else has the luxury of going off and doing their things, and we meet every morning at 9:00, he’s there as we stare at the cell phone and wait for the call to come in. We will train over and over again. It is not his or her job to think. It is simply to deliver a message. So when the threats come in, and they’re nasty as can be, the worst thing you can probably hear from a kidnapper, we’ve heard it literally thousands of times.

“And sometimes the communicator will get rather flustered… There have been times that the threat will come in, I’ll be next to him, and I’m listening in, and I turn around, and he fainted dead away. Let’s get to work. Slap him on the face a couple times, and he delivers the message.”

Oddly enough, it doesn’t sound like the C-suite back at the client company has trouble with jangled nerves. Mike Ackerman says CEOs “don’t have trouble making decisions.” Just as his firm sends someone to the scene of the kidnapping, so they also dispatch someone to the corporate headquarters, and “I’ve run into one or two oddball situations where CEOs were Hamlet-like, or tried to cover their ass. Not often though, not often. And the couple cases I’m thinking of, they didn’t last very long as CEOs.”

Kartchner says that out of the Fortune 500 companies he’s worked with, “a lot of them have no plan whatsoever. It seems like they’re too big, too much bureaucracy. And I have seen very small companies do a much better job.”

Companies, he says, need to know if they’ve got a crisis management team in place, and if so, do they “actually have a clue who would be communicating, if it were necessary, with the kidnappers?” Who will work with family? How will they respond to the media? “No comment” isn’t enough. The abduction may happen in a country where you’re not allowed to pay ransoms. “Now what do we do? The wellbeing of the victim is in your hands and your legal team is saying, ‘I don’t think we can pay.’ Well then what do we do?”

“…They may have a lot of experience in Mexico, but you’re operating in Nigeria. Have they ever done cases in Nigeria? And the other thing that you want to look for is, how hands-on are they?”

Liam Neeson is not coming for you

And get right out of your head those cool scenarios from movies like Taken. No one does rescue missions—at least no one admits to doing rescue missions. Christopher Arehart says he often runs into the misconception that “the insurers provide individuals that go swashbuckling in and rescue damsels in distress, that we are hiring private people that come in with guns blazing and try to take people back from their captors. Nothing could be further from the truth.”

To Kartchner, “that’s a fairly good way of getting your guy killed.” Given that a rescue would put the victim at risk, his firm would rather resolve things through negotiations. “Plus, who is usually doing the rescuing? Law enforcement… I have seen on more than one occasion where they will blow out a gang of 20 kidnappers, kill every single one of them, and the client is killed in the crossfire. Now, was that a successful day for law enforcement? One hundred percent. They eliminated the scourge of that city. How about us? We had an absolutely horrible day.”

Mike Ackerman has worked on cases in which kidnappers have killed victims, but acknowledges candidly that ISIS is a “new dimension in that they’ve apparently made ultra high demands and then killed the hostages when the demands weren’t met. I mean it hasn’t gotten them anywhere yet… Six months from now ISIS needs money, their other financing sources have dried up, maybe they become more reasonable.”

While there have been much publicized cases of foreign reporters and aid workers held for months in parts of the Middle East, abductions can often run far shorter, and Kartchner says “in Latin America, cases are not going on for three or four months. We’re seeing more of a month or less.” Every day, after all, is a risk to a kidnapper as much as to the victim. He’s had clients ask, “If you get the chance to escape, should you take it?”

“That’s a very delicate question,” says Kartchner. “You would have to make that determination. By and large we say, stay alive, and we’ll help you get out of there.” There’s even a category of presumed released, because “there are situations where we’ll get the guy back, and within 24 hours he’s in San Antonio. He’s out of there so fast nobody knows that he was actually released and we have him out of the country.”

Read: In Harm’s Way

If you’re a Canadian, it’s hard to tell if you stand a better chance with the responder. Speaking to Maclean’s last year, K&R expert John Chase of AKE was withering about the Harper government as he worked on the infamous case of Amanda Lindhout’s kidnapping in Somalia. He says Ottawa’s attitude amounted to “We can’t tell you anything, we’re not going to share anything with you.” On the other hand, Canadian diplomat Robert Fowler praised our officials for how they conducted themselves in the negotiations for his release in Niger.

When I called Foreign Affairs to ask about its policies, it responded to my questions with an email full of bullet points, including: “Canada’s approach to combatting kidnapping for ransom follows firm principles such as no major concessions (i.e. no policy changes,

no prisoner exchanges, no immunity from prosecution) and no payment of ransom.” Uh-huh. When a Canadian gets taken, however, it’s often difficult to tell just what Ottawa does and how well it does it—if the Harper regime likes to cast itself as “open for business,” it’s not open about this.

Spare a moment of sympathy then for Americans. As this story was being finished, the U.S. State Department updated its “Worldwide Caution” for its native sons. While it thinks Europe’s risk of a terrorist attack is up, it reminds people of the “numerous” kidnappings of journalists and aid workers in North Africa and the Middle East. Go south, you hit Nigeria with Boko Harem and if you try the northeast African countries that have been less in the news, you have Al-Qaida in the Islamic Maghreb— the extremist group that got booted out of Mail when French and African peacekeepers stepped in there. They’ve “claimed responsibility for kidnappings, attempted kidnappings, and the murder of several Westerners throughout the region, including southern Algeria.” Okay, how about Asia? Washington warns, “There is a risk of travel to the southern Philippines, specifically related to kidnapping threats in the Sulu Archipelago…” Not just in the coastal and island resorts, but “criminal or terrorist bands may attempt to intercept boats ferrying tourists in the area.”

So. There you go. Pretty much the entire world is a scary place for Americans. We’re far from the most common targets, but Canadian business is increasingly making itself felt far from home. As time goes on, we may discover we’re in demand in ways we could never imagine and which we want to avoid. ___________________________________________________________________________
Copyright 2014 Rogers Publishing Ltd. This article first appeared in the November 2014 edition of Corporate Risk Canada magazine

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