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RENEE MONTAGNE, host:

And now we're going to get an update on the Pirates of Somalia, in particular what they're doing with all that ransom money. President Obama signed an executive order last month directing the U.S. Treasury to freeze the assets of individuals with suspected links to piracy off Somalia's coast.

The pirates, meanwhile, seem to be doing better than ever. They raked in an estimated $90 million last year. And yesterday they seized a tanker off the coast of East Africa.

Nick Wadhams follows the money trail across the border into Kenya.

(Soundbite of song, "Somalia")

K'NAAN (Rapper): (Rapping) She got a gun, but could have been a model or physician. So what you know about the pirates terrorize the ocean?

NICK WADHAMS: Piracy in Somalia has become such a problem and such a part of the popular culture that Somali rapper K'naan riffs about it in "Somalia," a song about how low his country has fallen.

In neighboring Kenya, songs like this drift through the market stalls in Nairobi's Eastleigh neighborhood, where many Somali immigrants live.

Ordinary Somalis without jobs see the pirate trade as a way to put food on the table, and piracy shows no sign of slowing down if you judge by Nairobi.

(Soundbite of banging)

WADHAMS: And that leads to another common sound in the neighborhood. New buildings are going up in Eastleigh. A broker who identifies himself as Willy gives me a tour of the buildings that he says are being built with piracy money. He got his start forging documents for illegal Somali immigrants years ago. Now, he says, he helps pirates buy property.

WILLY (Real estate broker): I have friends, most are agents whom I operate with. They tell me this is piracy money, Willy. Take the advantage of the situation, man. This money is her. You can always make some profits out of it.

WADHAMS: Kenya is seen as a good place for the pirates because it is a relatively stable country. Yet, at the same time, its legal system is lax and corruption is high. That means that it's easy to bring illicit money in and out of the country without much notice.

(Soundbite of crowd chatter, squeaking sound)

WADHAMS: Behind two sets of massive steel doors is a room tucked in the back of an inconspicuous shopping center in Eastleigh. This is a business that runs the informal money transfer system known as hawala.

The hawala operators pay no taxes and don't need to provide records of their transactions. This, experts say, is how pirates launder their ransom money out of Somalia. The owners are secretive and don't want to talk. They won't even let a foreigner use the service.

Unidentified Man #1: (unintelligible)

WADHAMS: Hey, I'm sending - can I send some money?

Unidentified Man #1: No. Just go to the bureau.

WADHAMS: Piracy has become a sophisticated business. Pirates say the operations are now run by a small group of warlords and financiers based around the world. The men who do the dirty work only get a tiny piece of those multimillion-dollar ransoms.

Unidentified Man #2: (Singing in foreign language)

WADHAMS: It's noontime prayer at Eastleigh's al-Hadiya Mosque, said to be the home base for Somali extremists in Nairobi. New evidence has emerged that the piracy trade has become so profitable and so refined that extremists, such as the al-Shabab militia, are getting in on the action.

One pirate who says he is a member of the al-Shabab militia says the tales of big ransoms were alluring for extremists, just like anyone else.

Unidentified Man #3: (Through translator) They believe that there is no government in Somalia, so they use piracy money to buy the firearms. They buy property so that even if things go bad in Somalia, they have property where they can get money from.

WADHAMS: I meet a former pirate name Ahmad in the parking lot of a Nairobi mall. He tells me that with the rise of the piracy warlords, the trade no longer holds much appeal for the little guy.

AHMAD: (Through translator) There are some people who benefit, and those are the big fish, the guys who lead us: the people who invest in the equipment, the boat, those things. We small timers are used as foot soldiers. We remain in hardship. Whether we die or not, they don't care.

WADHAMS: Ahmad and the other pirates now come to Nairobi, not looking for riches, but for asylum. The piracy trade has become too efficient and too cut-throat even for them.

For NPR News, this is Nick Wadhams, in Nairobi.

MONTAGNE: This is NPR News.

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