Conflict Minerals Reporting – DRC Sanctions

Conflict Minerals Reporting – DRC Sanctions

On July 8th, 2014 President Obama issued a new Executive Order (E.O.) pertaining to the Democratic Republic of the Congo (DRC). This new E.O. amends E.O. 13413 of October 27, 2006. It expands sanctions criteria (read removes exceptions and broadens scope) with the goal of allowing the US to take additional steps, as per the Fact Sheet, “in light of the continued threat to the peace, security, and stability of the Democratic Republic of the Congo (DRC)”.

If anyone out there has managed to miss all the hubbub around the DRC and Conflict Minerals, I encourage you to review all of our blog posts as well as our webinars on this topic. For the rest of the world, in hearing about this E.O., the immediate questions that sprang to mind were:

How does this affect my Conflict Minerals Program?

And more particularly, my Conflict Minerals Reporting?

Simply put, in a scenario where a company is found to be supporting the conflict in the DRC (and under the Conflict Minerals rule the products would then be considered Not DRC Conflict Free (let’s leave the litigations on this statement to the side for the sake of this discussion)) this will mean a Sanctions Violation can be levied. All US persons and companies including privately held companies and US subsidiaries of international companies are in scope of these sanctions. The Fact Sheet on the E.O. provides the list of criteria added that can be used to sanction persons responsible, directly or indirectly, for conduct. The E.O. itself can be found here.

OFAC does enforce some significant penalties for Sanctions Violations and so this definitely adds more weight to the need to resolve the conflict in the DRC.

Let’s get back to those questions that sprang to mind:

How does this affect my Conflict Minerals (CM) Program?

Directly, it does not, however it can most definitely serve as leverage with any private companies or US subsidiairies who may be refusing to provide information to you on the basis they are out of scope of the Conflict Minerals Rule. They are under the scope of these sanctions and will want to find out the realities in their supply chain in regards to the DRC.

IF it is discovered and confirmed in your CM Program that you do support conflict in the DRC, you will need to take corrective actions to cease this. In any decent CM Program, it was already vital to take these corrective actions. If a company was planning on not taking any actions to cease support of the conflict in the DRC then their filing would attract A LOT of attention. (and not the good kind!)

How does this affect my conflict minerals reporting?

Again, directly it does not. If you discover that you are supporting conflict in the DRC and your filing is truthful; you would be including this discovery as well as your corrective actions.

With this E.O., the US is communicating it is serious about improving the situation in the DRC.

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