Painting by Cheri Samba

Lokuta eyaka na ascenseur, kasi vérité eyei na escalier mpe ekomi. Lies come up in the elevator; the truth takes the stairs but gets here eventually. - Koffi Olomide

Ésthetique eboma vélo. Aesthetics will kill a bicycle. - Felix Wazekwa

Thursday, July 29, 2010

So what does the conflict minerals bill actually say?

It seems to be that there has been an awful lot of debate of late about the "conflict minerals bill" - known on the streets as "Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act: Conflict Minerals" - without much mention of what it will actually do. Allow Congo Siasa to edify.

This is what it calls for:

1. Reporting
  • Within 270 days (i.e. by April 2011), the Securities and Exchange Commission has to publish regulations requiring companies to report annually whether they are using minerals from the Congo and what they have done to conduct due diligence on the source of minerals and the chain of custody;
  • They then have to commission a private audit of this report that lives up the standards of the US Comptroller General;
  • The purpose of the report is to ascertain whether they are trading in minerals that have benefited armed groups, either because the groups controls the mines, taxes the minerals along the transport routes, controls the trading houses or benefits in any other way from the trade;
  • Armed groups are not just rebel groups and militias, but also any units that are guilty of widespread human rights abuses;
  • These reports then become available on the Internet to the public;
2. Strategy

  • Within 180 days, the Secretary of State, in consultation with USAID, must submit a strategy to Congress on how to deal with the linkages between armed groups, human rights abuses, conflict minerals and the minerals trade;
  • This strategy must support efforts by the Congolese government and UN Group of Experts to monitor and prevent the financing of armed groups through the minerals trade;
  • It must also help strengthen institutions involved in the management of this trade so as to make cross-border trade more transparent and legitimate;
  • It should provide guidance to private companies on how to conduct due diligence;
  • And propose punitive measures for those entities found to be trading in conflict minerals;
3. Map

  • Within 180 days, the Secretary of State shall (in according with the UN GoE report) produce a map of mineral rich zones and areas under the control of armed groups and make it available to the public;
  • The map must be updated every 6 months;

4. Sexual Violence

  • The Comptroller General of the US must submit a report within one year on the rate of sexual violence in the eastern Congo and adjoining countries;
5. Reports

  • After two years, the Comptroller General must report back to Congress on how effective these measures were and what challenges they posed.

Some comments:

  • It responds to the need express by both Laura Seay and Harrison Mitchell have argued on the comments section here that we need better governance and stronger institutions - in a best case scenario, the Act will result in investment in the Congolese regulatory institutions in the Kivus;
  • As Friends of the Congo have argued here, these are just Congress' demands. How the SEC, State Department and the Comptroller General execute these requirements is a different matter altogether;
  • Most importantly: They only ask for companies to say what they have been doing to conduct due diligence - they don't say at what point a company would be sanctioned (I guess the State Dept strategy should outline that) and what the consequences of trading in "conflict minerals" would be. In other words, we are likely to get an awful lot of information about what the supply chains look like, but there is no legal consequence to trading in conflict minerals;
  • A map that is updated once every 6 months will not be that useful - these arrangements need to be more flexible, as the situation on the ground can change very rapidly.
That is what my novice eye can make of the bill. If you want to have a look yourself, here it is (scroll all the way to the end).

8 comments:

Bailey said...

Overall, I also (grudgingly) support the Bill. While I hate to be finicky, the details do matter. Some clarifications:

• The bill requires disclosure of minerals (tin, tantalum, tungsten and gold) from the Congo or "adjoining countries", thus having potential ramifications for all of central Africa (yes, yes, even large-scale industrial mining in Tanzania, Zambia, Angola...). It also allows for the Secretary of State to determine additional "conflict minerals" to be added to the list without any legislative oversight. (However, as we all know, the State Dept has received such hell for this – in Kinshasa and elsewhere - that any future designation is unlikely.)

• It is unclear to whom the bill would actually apply: those "persons" required to disclose annual reports under S. 13 of SEC 1934 AND where "conflict minerals are necessary to the functionality or production of a product manufactured by such person". Does this mean only those companies involved in, and downstream from, manufacturing?

• The Secretary of State only has to outline a plan to provide due diligence guidance to companies, not provide guidance itself.

As you noted, the Bill does not say what due diligence actually means. It is unlikely that the SEC would want to define this in any specific manner (to avoid potential conflict with other SEC conceptions of due diligence and to reduce the oversight burden). It is likely however that OECD and UNGoE conceptions of due diligence will be determined as "reliable" and noted in preambular language to the SEC regulations, as these will most likely become the

Bayless (Billy) Parsley said...

Jason,

Any idea on who exactly is going to be in charge of putting these maps together?

倪致念 said...

融會貫通的智慧,永遠不會被遺忘。..................................................

Vanessa Carmichael said...

ACLU of Southern California Director, Roman Ripston spoke on the new law at The Huffington Post on July 27th. She veers off of the new law and goes on to talk about The International Violence Against Women Act. (http://www.huffingtonpost.com/ramona-ripston/take-action-on-ivawa-now_b_660725.html)

If you want to shine more light on the conflict in the Congo and raise more awareness of the struggle of there and the accomplishments of this new law, perhaps Mr. Stearns or someone else here should write an article on the Huffington Post--or a series of articles on the Huffington Post that are palatable to regular folks.

The Dodd-Frank law in my eyes is a monumental step forward. Is there work left to be done? By all means but at least our government acknowledges that there is a direct correlation between our trade/financial regulation policies and conflict in the developing world. What those in power need is an informed electorate to keep the pressure on our government to legislate more responsibly and strategically to give people in the developing world a fighting chance. And THAT is where you guys come in. You need to speak more to people. I find the Huffington Post is a great place to start.

Vanessa Carmichael said...

And can someone please explain why the Dodd-Frank law concerns the Congo specifically? How did that come about? Who got that done? And why just the Congo and not any developing nation?

texasinafrica said...

Jason, can you give more reasons to support the optimistic view that this will result in a "best-case scenario" of investment in Congolese regulatory institutions? Correct me if I'm wrong, but the law doesn't provide any money to do so.

texasinafrica said...

Bayless, the State Department has actually put out a call for proposals for the mapping and sexual violence provisions. They did so in late June; closing date is Wednesday.

Jason Stearns said...

Laura -

Nope, that is a best-case scenario, but here's what the bill says the State Dept's strategy should include:

"Develop stronger governance and economic institutions that can facilitate and improve transparency in the cross-border trade involving the natural resources of the Democratic Republic of the Congo to reduce exploitation by armed groups and promote local and regional development."

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