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Companies protect profits over people as fighting escalates in eastern DRC

29th November 2012

For immediate release

Legal action by the U.S. Chamber of Commerce threatens to protect business practices that are fuelling bloodshed in Africa.

Global Witness today condemned recent legal action by the U.S. Chamber of Commerce (the Chamber), National Association of Manufacturers (NAM) and the Business Roundtable to derail a law which seeks to curb violence in the eastern Democratic Republic of Congo (DRC).

On 21 November 2012 the industry groups submitted legal arguments to the DC Court of Appeals as part of the suit they filed against the Securities and Exchange Commission (SEC) on 19 October 2012 against Section 1502 of the Dodd-Frank Act. The grounds put forward for the lawsuit are largely a rehashing of baseless arguments made by industry during the SEC’s extensive comment period in the lead up to the rule’s final release on 22 August 2012.

“It is clear to us that the industry’s legal attack of the rule is designed to protect profits over the lives of the people in the DRC. The industry’s claim that the rule is too burdensome does not hold up to scrutiny,” said Jana Morgan, Assistant Policy Advisor at Global Witness. “Many companies have already begun implementation and are participating in industry-led schemes to determine the source of the minerals in their products.”

The industry associations claim that the due diligence required by the SEC for companies to determine if their mineral purchases are funding armed groups is ‘onerous’. However, companies are already taking steps to implement the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. The OECD Guidance is endorsed by a broad group of stake-holders including companies, governments, NGOs, and has been adopted by the Congolese government as a legal requirement. The SEC has referenced the OECD’s due diligence framework as the standard companies are expected to meet in implementing Section 1502.

Aggressive industry lobbying led to a sixteen month delay in the SEC issuing the final rule and contributed to a downturn in the minerals trade in eastern DRC. This lawsuit risks causing further disruptions to the trade and may hamper efforts already underway to establish conflict-free supply chains in the region. As violence escalates in mineral rich areas between government forces and the M23 rebel group, it is critical that Section 1502 be swiftly implemented so that it can finally begin to contribute to the intended effect of reducing violence.

“The need for immediate implementation of Section 1502 is clear. With nearly half a million people displaced due to this insurgency and violence on the rise, this ‘business as usual’ mentality is costing lives,” said Simon Taylor, Founding Director of Global Witness. “It is imperative that companies in leadership positions within these associations, such as Boeing, Honeywell and Caterpillar use their influence to end this damaging suit.”

Global Witness calls on companies that are part of these industry groups to issue public statements making clear that they are not formally backing the lawsuit. Failure to publish a definitive position on this issue will indicate support for the lawsuit and risks sending the message that these companies are prioritizing profits over the welfare of the people in the DRC.

/ Ends

Note to Editor:

1) The M23 rebel group, formed in April this year, recently took control of the town of Goma, a major mineral trading hub in eastern DRC. The M23 is made up of mostly former CNDP rebels who, prior to joining the Congolese national army following a 2009 peace agreement, amassed millions of dollars through illegal control of the minerals trade. Global Witness investigations in October 2012 revealed that the M23 control several mining areas in the territories north of Goma. For more information, see our 20 November 2012 press release – Civilians caught in crossfire as M23 rebels take Goma.

Contact:

Jana Morgan, Washington, DC – jmorgan@globalwitness.org, +1 703 795 8542 Annie Dunnebacke, London – adunnebacke@globalwitness.org, +44 7912 517 127