Abstract

The case focuses on Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), a US policy response to the problem of conflict minerals in the Democratic Republic of the Congo (DRC), and its proposed repeal. For decades, the exploitation of and trade in conflict minerals in the DRC by armed groups has helped finance conflict in eastern DRC that is characterized by extreme levels of violence and mass killings. The US Congress recognized that aiming to eliminate the nexus between armed groups and illegal mining profits was a key to broader reform efforts in the DRC, and in 2010, it included Section 1502 as part of the Dodd-Frank Act to help disrupt a major source of revenue for these armed groups. The law mandated that all publicly traded companies in the US should disclose annually to the US Securities and Exchange Commission (SEC) if any of the products they sold contained any conflict minerals (tin, tantalum, tungsten, and gold) originating in the DRC or adjoining countries. The case discusses how the provision led to significant improvements in the transparency of corporate supply chains and to a major reduction in the number of conflict mines for the 3T minerals in eastern Congo. However, regardless of good intentions, the Conflict Minerals Provision had some unintended consequences including a de facto embargo on the minerals mined in the region, increasing militia violence against civilians, and a loss of livelihood for millions of Congolese miners. A draft of the executive order signed by US President Donald Trump suspending Section 1502 due to the financial burden on US companies of sourcing minerals was leaked in February 2017. According to supporters of the law, any possible rollback would negatively impact peace, stability, and development in the DRC. In an opposing view, some industry groups in the US dismissed the regulation as ineffective and asserted that certain aspects of the requirements of the rule violated the First Amendment of Speech under the US Constitution. According to them, the Rule had actually caused more harm than good to the individuals it was created to protect. The SEC is modifying the Rule in light of a US District Court order to reconsider certain aspects of the regulation deemed to be unconstitutional. Jay Clayton, chairman of the SEC, was charged with resolving open issues concerning implementation of the Rule. He indicated that until regulatory uncertainties surrounding the rule were resolved, the SEC would not recommend enforcement action for failure to comply with certain of the Rule’s disclosure requirements. With the Conflict Minerals Rule continuing to face an uncertain future, some of the questions were: Should the law be repealed or reformed? How can the adverse unintended affects that the regulation has caused be minimized? How can the regulation be improved? What kind of policy might work better and what can be done to take everyone along?

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the issue of conflict minerals in the DRC
• Understand wicked problems and their implications for public policy and management
• Study the conditions that led to the US Government implementing Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
• Understand how the Conflict Minerals Rule helped in taming the problem pf conflict minerals in the DRC collaboratively
• Analyze the impact of the law on Congolese communities

Keywords

Business Environment; Conflict Minerals; Wicked Problems; Public Policy; Collaborative Problem Solving; Multi-Stakeholder Collaboration; Strategic Decision Making; The Stakeholder Network Model; Public Sector Management; Conflict Management