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Companies must come clean on conflict minerals lawsuit

10th December 2012

On 22 August 2012 the Securities and Exchange Commission (SEC) published the final rule for Section 1502 of the Dodd-Frank Act.

The provision aims to prevent the trade in tin, tantalum, tungsten and gold from fuelling conflict and human rights abuses in eastern Democratic Republic of Congo (DRC). It requires companies listed with the SEC to establish if the minerals in their products are sourced from the DRC or adjoining countries and, if so, to carry out supply chain due diligence to determine whether their mineral purchases are funding armed groups in eastern DRC. The rule was promulgated after a robust comment period in which the SEC reviewed submissions from industry associations, companies, investor groups, non-profit organizations and groups from the DRC.

In October 2012, despite the concessions made by the SEC to industry in the rule, the Chamber of Commerce, the National Association of Manufacturers (NAM) and the Business Roundtable filed a lawsuit against the SEC over the final rule for Section 1502. In their petition, the industry associations request that the rule “be modified or set aside in whole or in part.”

The decision by the Chamber, NAM and the Roundtable to file the suit is deeply regrettable. The humanitarian situation in the Congolese provinces of North and South Kivu, which the statute seeks to address, is urgent and necessitates immediate and comprehensive implementation by companies. Industry lobbying to water down the provision contributed substantially to the SEC’s sixteen month delay in issuing the final rule and has led to disruption in the minerals trade in eastern DRC. The lawsuit risks further undermining efforts to establish conflict-free supply chains from the region – efforts which are all the more critical in light of the M23 rebel group’s recent takeover of eastern DRC’s major mineral trading hub, Goma.

Some companies, many of which are involved with the Multi Stakeholder Group [1], have expressed support for Section 1502. Others, along with their industry associations, have pushed hard to weaken the rule and delay implementation.

The following companies are members of the US Chamber of Commerce, NAM or the Business Roundtable, and have lobbied the SEC on the content of the final rule. It is important for these companies to make clear exactly what their position is on the current legal threat to the conflict minerals provision:

Global Witness calls on the companies listed above to:

- Issue a public statement clearly outlining the company’s position in relation to the lawsuit, and

- Encourage the Chamber of Commerce, NAM and the Business Roundtable to immediately withdraw their suit over Section 1502.

Companies that support the lawsuit – directly or indirectly – risk sending the message that they are prioritizing profits over the welfare of the people in the DRC.

[1] The Multi Stakeholder Group is comprised of NGOs, investors, industry associations and companies who came together in 2009 to work toward ending the trade in conflict minerals.