Mind the Mines: CSR and Government in the Case of DRC Conflict Minerals
Gopal Kumar
Abstract:CSR is by no means a go-to solution for human rights abuses. This paper examines the mineral trade in the Democratic Republic of the Congo (DRC) with a focus on the effect of Section 1502 of the Dodd-Frank Act on this trade. U.S. firms who outsource to DRC mines for metals like tin, tantalum, and tungsten risk the incorporation of human rights abuse into their supply chain. Section 1502 of Dodd-Frank represents a U.S. corporate governance effort to do something about this inclusion. The complexities behind the issue are outlined and contextualized from recent DRC history through the aftermath of Dodd-Frank 1502. An empirical financial assessment is then given, followed by a theoretical framework that posits Public-Private Partnerships as a possible solution.
If a corporation wishes to act against human rights abuses, it might do so through CSR, but what does a government have to say about how the corporation invests and acts? This government may not even be one under which the corporation operates if the corporation is a transnational corporation (TNC) or a multinational corporation (MNC). The case of the Democratic Republic of the Congo (DRC) conflict minerals trade in the past decade presents an intersection between the DRC government, the U.S. government, DRC firms, and U.S. firms that reveals that the financial responsibilities of government and corporate entities are linked by the effect these entities have on people.
Context
Presently, the Democratic Republic of Congo (DRC) is experiencing violent military occupation and political instability, which may spread to neighboring Uganda, Rwanda, or Burundi (Violence in the Democratic Republic of Congo). Tied to these concerns are the vast resources of the Great Lakes region over which military forces are fighting for control to generate revenue to finance their activities involving human rights abuses. Tungsten, Tantalum, Tin, and Gold (known as 3TG) are mined in militarily occupied zones and sold internationally, making up much of the DRCs Gross Domestic Product (GDP). DRC violence is the result of a complicated history that includes international economic controversy on minerals from the region. As such, an assessment of the economics and ethics of dealings with the DRC requires a basis for analysis of the larger issues involved. One basis is the miners of the region.
In their literature review, Cuvelier et al. present a view of these miners from northern Katanga, South Kivu, and North Kivu. The authors discuss the effects of U.S. involvement in the region through Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank 1502). Years later, Emerson in his empirical study supports the claim that Dodd-Frank 1502 is ineffective legislation, noting prominently the consequences of the act. This prompts a revisiting of earlier work by Seay and Narine, which examine two different consequentialist arguments concerning Dodd-Frank 1502. In the context of the empirical evidence and ethical argument, a new solution involving Public-Private Partnerships (PPPs) is addressed. The current problem in the DRC arises from the conflict between U.S. firms, the U.S. government, DRC firms, and the DRC government. The unacceptable consequence is violence, and its solution arises from the recognition of moral ties between these four entities.
History
3TG are used in the production of electronics and are often sourced from the DRC, which has experienced conflict in its 3TG mines since 1994 (Violence in the Democratic Republic of Congo). International firms, especially U.S. firms bought 3TG from DRC firms and used them in electronics. As part of a wave of ethical consumerism in the early 2000s, movements such as the Enough Project became prominent and began lobbying high U.S. officials to take a stand on the sourcing of these minerals. In 2010 – as part of the Dodd-Frank Act, Section 1502 was passed – stating that a U.S. firm, if it suspects a DRC firm of unethically sourcing minerals, is to file a report with the SEC (Emerson, 11). Filing a report is a costly endeavor that end up costing firms as much as $7.3 billion extra per year overall, according to a study sponsored by U.S. Senator Dick Durbin (D). The Act took effect one year later, but Section 1502 did not take effect until 2012. Yet, Joseph Kabila, the President of the DRC who had won the electoral runoff in 2011 for the DRC had installed a six-month-long ban on mining in the DRC. Later, in 2015, there were protests against Kabila, attacking his legitimacy as president (DR Congo country profile). In 2017, the U.S. Congress considered a replacement to Dodd-Frank – the Financial Choice Act – which contained a proposal to eliminate the Due Diligence procedure mandated by Section 1502. The Bill passed the U.S. House in June 2017 (H.R.10 – Financial CHOICE Act of 2017)but the U.S. Senate failed to act on it.
