November 29, 2010
Re: Public Comments on SEC Regulatory Initiatives under the Dodd-Frank Act - Sec. 1502, Specialized Disclosures on Conflict Minerals
Dear Chairman Schapiro,
Thank you for accepting public comment on the DRC Conflict Minerals law. If properly implemented, the law has great potential to change the dynamics of the conflict that has plagued eastern DRC for too long. We certainly understand that ending the conflict is the responsibility of the Congolese government, but the United States must do its part to lessen the economic advantage of continuing the conflict. We can do this by refusing to trade in minerals that are funding the militias that perpetuate the fighting.
I am writing on behalf of Open Square Foundation that has been funding research and relief work in North and South Kivu in the Democratic Republic of the Congo (DRC) for several years. Since 2008, we have provided $2 million in grants to the International Rescue Committee for its gender-based violence work in North and South Kivu and smaller grants totaling about $300,000 to Free the Slaves for its research into the presence of slavery in the mines. We have also provided funding for the Enough Project, Genocide Intervention Network and V-Day for their U.S.-based public awareness campaigns about rape in the DRC. We are also considering funding for Human Rights Watch. Our interest in ending rape in DRC is deep.
The new DRC Conflict Minerals law requires companies to disclose "due diligence on the source" of conflict minerals originating in the DRC. 15 U.S.C. 78m (p)(1)(A)(i). Due diligence on the source of these minerals must be defined to include a description of efforts to monitor the source of the supply chain for forms of modern slavery and other extreme violations of human rights.
The law provides additional guidance on the meaning of "due diligence on the source" in Sec. 1502(c)(1)(B)(ii), clarifying that due diligence does not simply require the production of written documentation of the chain of custody. Companies affected by the law must understand how their products contribute to conflict and human rights violations, including rape as well as slavery, at the source for the minerals. To wit, the State Department is required to provide guidance to companies "seeking to exercise due diligence on and formalize the origin and chain of custody of conflict minerals used in their products and on their suppliers to ensure that conflict minerals used in the products of such suppliers do not directly or indirectly finance armed conflict or result in labor or human rights violations [emphasis added]".
Companies may monitor for slavery and human rights violations directly, or they may require it of their intermediary suppliers who are closer to the source. While we have heard objections from companies that this would be difficult for them to carry out, Congolese human rights organizations regularly perform this type of monitoring. It is not cost-prohibitive, and further, the costs of due diligence efforts may be spread across the supply chain and also partially passed on to consumers.
Free the Slaves and Congolese human rights organizations have documented multiple forms of modern slavery in mining areas of North Kivu, eastern Congo. These abuses include forced labor and debt bondage connected directly to miners' work, as well as the use of child soldiers, the abuse of children in prostitution, and sexual slavery. Regulations implementing the DRC Conflict Minerals Act must accomplish the purpose of this legislation to create real change. We urge to ensure compliance with both the letter and spirit of the new law, so that the people of eastern DRC can live lives free of violence, so that the rape stops, so that children are free and the young boys are no longer conscripted illegally into the militias engaging in the conflict.
Respectfully yours,
Dick Matgen
Dick Matgen, Executive Director
Open Square Foundation
660 4th St. #142
San Francisco, CA 94107