GAO Report Indicates Ineffectiveness of Conflict Minerals Disclosure Rule in Reducing Violence in DRC

The US Government Accountability Office (GAO) revealed that the conflict minerals disclosure rule enacted by the SEC in 2012 has not effectively reduced violence in the DRC. The report suggests that the rule may even be linked to increased violence in small-scale mining areas. Various industry initiatives have emerged to enhance transparency, but substantial issues remain regarding armed group financing and regional governance instabilities.

On Monday, the United States Government Accountability Office (GAO) published a report concluding that the conflict minerals disclosure rule established by the Securities and Exchange Commission (SEC) in 2012 has not resulted in a measurable reduction of violence in the Democratic Republic of Congo (DRC). The investigation revealed a lack of substantial evidence indicating that the rule has contributed to decreasing violence levels in the eastern regions of the DRC, which are notorious for the presence of multiple mines and armed factions. Furthermore, the report suggests that the disclosure rule may be related to an increase in violence, especially in regions with informal and small-scale gold mining operations. This rise in conflict may stem from armed groups competing for control over gold mines, given gold’s high portability and lower traceability compared to other conflict minerals. The GAO report further asserts that the rule did not affect violence levels in neighboring countries. Experts emphasize that armed groups in the DRC have diverse funding sources beyond conflict minerals, highlighting the influence of external factors and governance challenges in sustaining regional conflicts. Despite the findings surrounding the SEC rule’s inefficacy, there have been improvements in transparency within the mineral supply chain due to various industry initiatives. A notable instance includes an advisory from an industry association that alerted smelters within its assurance program regarding the potential risks posed by armed groups to mineral supply chains originating from the DRC and Rwanda. Enacted on August 22, 2012, under Section 1502 of the Dodd-Frank Act, the SEC’s conflict minerals disclosure rule mandates companies to report the use of conflict minerals sourced from the DRC or its neighboring countries. Effective from November 13, 2012, the rule amended the Securities Exchange Act of 1934, introducing Section 13(p). This section requires certain corporations to conduct due diligence on their conflict mineral sourcing and apply for a Conflict Minerals Report if they utilize minerals essential to their production. Currently, the term ‘conflict minerals’ encompasses tantalum, tin, tungsten, and gold, all of which are extracted from various global regions and have been implicated in financing violent acts, including killings and human rights violations in conflict areas such as the DRC. Over the years, both voluntary and regulatory measures have been instituted to promote responsible mineral sourcing and reduce financial support for human rights abuses tied to mineral extraction. Notably, the Organisation for Economic Co-operation and Development (OECD) released guidelines in 2011 aimed at establishing due diligence protocols for responsible mineral supply chains originating from conflict regions. These guidelines have gained significant international recognition and have been referenced in subsequent US legislation regarding conflict minerals.

The term ‘conflict minerals’ refers to minerals extracted in conflict zones which may be associated with human rights atrocities and funding of armed groups. The DRC has been at the center of this issue due to its rich mineral reserves and ongoing violence, leading to the establishment of regulations aimed at curbing the trade in these minerals. The SEC’s disclosure rule was intended to hold companies accountable for their mineral sourcing practices by enhancing transparency and reducing the financing of violence through responsible sourcing. Despite such measures, increasing violence and persistent conflict in the DRC raises questions about the effectiveness of regulatory frameworks aimed at addressing human rights abuses linked to mineral extraction.

In conclusion, the GAO’s report underscores the inadequacy of the SEC’s conflict minerals disclosure rule in mitigating violence in the Democratic Republic of Congo. While industry initiatives may have improved supply chain transparency, the multifaceted dynamics of armed group financing and regional governance issues necessitate a more robust and comprehensive approach to effectively address the complexities associated with conflict minerals. It remains clear that mere regulatory compliance is insufficient to resolve the underlying causes of violence in the DRC.

Original Source: www.jurist.org