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Leaked White House order may allow U.S. companies to sell conflict minerals

Global Witness said the action 'could actually undermine U.S. national security.'


Dell Cameron


Published Feb 8, 2017   Updated Feb 8, 2017, 4:36 pm CST

A draft copy of a presidential memorandum, which could soon be signed by President Donald Trump, may open the door for American companies to sell minerals taken from conflict zones, citing the “national security interest of the United States.”

Reuters reported exclusively on Wednesday that the White House was preparing an executive action to target the 2010 Dodd-Frank law—specifically portions that require companies to disclose whether their products contain “conflict minerals,” the name given to resources extracted from war zones. “Blood diamonds,” for instance, are commonly mined from conflict zones and sold internationally, with the proceeds fueling the war itself.

Many common conflict minerals—gold, cobalt, and tungsten, among others—are mined in the Democratic Republic of Congo (DRC), where profits from their extraction go to armed groups, who routinely employ rape and violence to control workers.

A draft copy of the order leaked from within the White House was provided to the Daily Dot on Wednesday.

Global Witness, an international NGO with a focus on natural resource exploitation, called the White House plan “a gift to predatory armed groups seeking to profit from Congo’s minerals as well as a gift to companies wanting to do business with the criminal and the corrupt.”

“This law helps stop US companies funding conflict and human rights abuses in the Democratic Republic of Congo and surrounding countries,” Global Witness continued, referring to portions of the Dodd-Frank act which would be suspended by the draft order. “Suspending it will benefit secretive and corrupt business practices. Responsible business practices are starting to spread in eastern Congo. This action could reverse that progress.”

Global Witness said the action, if taken by the White House, would be tantamount to an “abuse of power,” and that suspending Dodd-Frank “could actually undermine U.S. national security.”

The first section of the memorandum instructs the Securities and Exchange Commission to suspend for two years “all … reporting and disclosure requirements” that force companies to report whether materials used in their products originated from the DRC or its adjoining territories, as is required under Section 1502 of Dodd-Frank.

The second section of the presidential memoranda instructs the SEC to waive enforcement of the Conflicts Mining Rule, officially known as Section 13p-1 of the Exchange Act and part of Dodd-Frank, which requires companies to report if any “conflict materials” are necessary for the production of their products or in their functionality. The order maintains that this requirement poses a threat to national security.

Finally, the order requests the secretaries of state and treasury to craft plans for “addressing human rights violations and funding of armed groups in the Democratic Republic of the Congo or an adjoining country.”

“The plan could include targeting persons and entities engaged in violations of law and negative human rights impacts,” as defined by Section 13 of the Exchange Act, the order says. Trump has asked the secretaries to provide his office with a plan within 180 days.

The White House did not immediately respond to a request for comment.

Below is a full copy of the leaked draft order: 

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*First Published: Feb 8, 2017, 4:24 pm CST