Blog / 9 Dec 2014

Do U.S. corporations have a constitutional right to conceal information about conflict minerals?

Yesterday was a big day. A U.S. Court of Appeals is considering whether corporations have a constitutional right to hide information about whether their products contain conflict minerals. We have submitted our argument, which can be summarized in three words: No, they don’t.

Let’s step back a bit. The case being heard in the District of Columbia Circuit pits powerful industry lobbyists against the U.S. regulator, the Securities and Exchange Commission (SEC), and human rights organization Amnesty International. The Executive Director of Amnesty International USA called the initial legal challenge “nothing but a crass effort by industry groups to put profits ahead of principles”.

The appeal stems from an industry legal challenge to a landmark U.S. law from 2010 (the conflict minerals provision of the Dodd Frank Act), which requires U.S. listed companies to investigate and disclose whether their products contain minerals that help fund armed groups in mineral-rich countries in central Africa. It was designed to curb funding to armed groups who have profited from the sale of minerals in the Democratic Republic of Congo ’s (DRC) bloody two-decade long crisis.

Industry groups claim that disclosing the use of conflict minerals in their products breaches the corporations’ rights under the First Amendment of the U.S. Constitution, which guarantees freedom of speech.

Yesterday, Global Witness, joined by the advocacy group Free Speech for People -  that was set up to “make it clear that corporations are not people with constitutional rights” – filed an amicus brief in the U.S. Court of Appeals for the District of Columbia Circuit. We made the case that the industry arguments are wrong.  Let us explain why.

U.S. Corporations

The industry’s argument would threaten many well-established transparency laws that help ensure markets operate fairly and efficiently. Here are just two examples: Companies are routinely required to inform investors about risk in individual businesses. They also have to warn consumers about the safety or health hazards of individual products, like cars or tobacco.

Earlier this year, the same court threw out a similar legal challenge by American meat industry that disclosing the country of origin of their meat products would be a violation of free speech.  It was decided the companies did have to disclose where they got their meat from.

In the conflict minerals case, the industry groups persist in an aggressive campaign against the law, misrepresenting it as one which requires them to disclose “controversial” opinions. In fact, Congress clearly defined the “DRC conflict-free” disclosure in a factual and uncontroversial manner. They said it meant “not contain[ing] minerals that directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo or an adjoining country.”

Industry has not disputed the factual accuracy of these disclosures.. Whatever controversy may be caused by the companies’ reports, it does not alter the facts themselves: minerals in products either did or did not benefit armed groups in the Congo. This information is critical for both consumers and investors.

Let’s be clear about what is at stake. If properly implemented, Section 1502 could help prevent some of the world’s worst human rights abusers from using illegal proceeds from eastern Congo’s minerals trade to fund violence. Companies can and should buy minerals responsibly from eastern Congo, and Section 1502 helps them to do that. This provision has already catalyzed reforms of the minerals trade in the Great Lakes region and has prompted companies to carry out supply chain due diligence and source minerals more responsibly.

The case comes down to whether corporations will succeed in convincing the court that they are people whose free speech rights are being violated. If they succeed, let’s be very clear about the consequences:  this posture would undermine a law designed to alleviate the very real suffering of actual people living in central Africa.

The DC Circuit court should reject the industry’s absurd arguments in this case. They do not stand up to scrutiny and too much is at stake.