In a prepared "Statement for the Record for the Subcommittee on Africa and Global Health Policy, Committee on Foreign Relations" Government Accountability Office ("GAO") Director of International Affairs and Trade Kimberly Gianopoulos described (i) company disclosures filed with the SEC in 2015 in response to the conflict minerals rule, and (ii) actions taken by the Department of Commerce ("Commerce") regarding its conflict minerals-related requirements. The GAO analysis of 2015 SEC filings determined among other things, that:

  • although corporate issuers generally were more informed about conflict mineral supply chains than before, the issuers continued to face challenges when determining the origins of conflict minerals; and
  • even though Commerce has provided lists of known conflict minerals processing facilities, it has not yet made plans to assess audits of conflict mineral filings.

Director Gianopoulos stated that the Department of Commerce concurred with an August 2016 GAO report recommendation (see previous coverage) that it establish an audit plan for conflict mineral filings.

Commentary / Steven Lofchie

Anyone reading this report might be puzzled over what the United States hopes to accomplish with the conflicts minerals rule disclosure requirements. More than half of all issuers report that they do not have the information necessary to make the disclosures. Of the companies that are able to determine whether the minerals that they use are from conflict zones, 60 percent report that they are using minerals from such zones. This leaves only 20 percent that report that they do not use minerals from conflict zones. There is really no way to determine if these reports are accurate (even assuming that they are made in good faith) and the government does not attempt to audit these reports.

If the United States wishes to help civilians in the Democratic Republic of Congo, and in various surrounding countries – which is the intent of the conflict minerals rules – there simply must be a more effective way. The rule has proven to be totally irrelevant to anything happening in the real world, except that – according to the GAO report – the rule has "increased awareness" of events in the Congo (page 2). The government could have obtained even more increased awareness, at a much lower price, by running a one-minute advertisement during the Super Bowl. Good intentions do not necessarily produce good results, or even any results.

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