DRC "conflict free" phone labelling: 1st amendment ruling says firms can hide involvement

[muriel_volestrangler]

What price a mobile phone? Pursuant to the Dodd-Frank Act, passed after the 2008 crash, the US Securities and Exchange Commission set 2 June 2014 as the deadline for mining companies to report the provenance of minerals they put on commodities markets, the aim being to flag ‘conflict minerals’ as such. Minerals dug in the Democratic Republic of Congo’s North and South Kivu provinces, including coltan (columbium tantalum) cassiterite and gold, are used in capacitors and other components for tablets, phones and computers. Various armed rebel groups in and around the Kivus vie for control of the mostly hand-worked mines.

Though the M23 rebels, who’d been supported by Rwanda against Joseph Kabila’s government, surrendered last November, the Great Lakes area remains volatile. Several Mai-Mai militias remain active, as do Joseph Kony’s Lord’s Resistance Army and other groups. The UN maintains a task force, MONUSCO, in an expensive and largely vain attempt to keep the peace (UN missions have cost $8.7 billion since 1998).

Mining companies are running scared. Last month they argued in a District of Columbia circuit court that disclosure of conflict minerals’ provenance breached the First Amendment, because it made them say something – a burden that food and drugs firms have laboured under for decades. The companies would have been required to badge those minerals which had ‘not been found to be “DRC conflict-free”’ on their websites.

The DC court found meritless the SEC’s appeal to what’s called ‘rational basis review’, by which statutes like Dodd-Frank get opt-outs against constitutional rights if it can be shown that they are reasonably needed for ends pursued by the US government – which means, roughly, whatever you want. Unlike ingredients in food or liquor, telling consumers whether their phone uses minerals mined by children to fund warlords was deemed either not to be a reasonable end itself, or not reasonably to promote an end, of government. On 14 May the mining firms suffered a reverse in the courts in their efforts to get an across-the-board postponement of the 2 June deadline, but were granted a stay on reporting conflict minerals, lest their First Amendment rights be jeopardised. Only firms that actively label minerals ‘DRC conflict-free’ will be subject to a private sector audit.

http://www.lrb.co.uk/blog/2014/05/23/glen-newey/what-price-a-mobile-phone/

On Tuesday, April 29, 2014, Keith Higgins, the Director of the Division of Corporation Finance, released an eagerly awaited statement on the effect of the Court of Appeals decision on the conflict minerals rule. Two weeks ago, the Court of Appeals found that the conflict minerals rule violated the First Amendment when it required reporting companies to report and post on their websites that any of their products have “not been found to be ‘DRC conflict free.’” Further, the statement pointed out that the Court specifically noted that there was no “First Amendment objection to any other aspect of the conflict minerals report or required disclosures.”

As a result of that reading of the Court’s decision, the SEC indicated that it expects companies to file reports by the June 2, 2014 filing date, and stated that those reports “should comply with and address those portions of Rule 13p-1 and Form SD that the Court upheld.” According to the statement, that means:
...
Until further notice, no independent private sector audit is required unless a company chooses to describe products as “DRC conflict free.”

http://www.conflictmineralslaw.com/2014/04/29/urgent-sec-releases-statement-on-conflict-minerals-rule/

So, from the 2nd June, if a phone doesn't say "conflict free", you should assume that it was produced with minerals from dodgy DRC mines, and the makers don't care.

[Exposethefrauds]

1. as long as one can still get the cool new phone it does not matter to most where the raw material

for the parts came from or how they were obtained.