Dodd-Frank’s Misadventures in the Democratic Republic of Congo

Lead image by Getty. Lead image by Getty.[/caption] Looking out on the banana plants and cassava shrubs of Central Africa, it was odd to imagine the tentacles of a bank reform bill in the United States stretching all the way here. But such was the story of the 2010 Dodd-Frank Act, which has roused criticism not just in the U.S. but here, 6,000 miles from Wall Street—in the Democratic Republic of the Congo. In the wake of the U.S. financial collapse, the world was reminded of the extent of the damage that a complex, cross-border network combining financial, economic and political power can do. The reforming legislation in the aftermath of the crisis dealt mostly with the financial quackery that had grown rife in U.S. banks. But toward the end of the 848-page Dodd-Frank Act was an item that had nothing to do with subprime mortgages or liquidity ratios. “It is the sense of Congress that the exploitation and trade of conflict minerals originating in the Democratic Republic of the Congo is helping to finance conflict characterized by extreme levels of violence in the eastern Democratic Republic of the Congo,” read the clause. In the future, companies using coltan (an ore from which a mineral widely used in cell phones is extracted) and other resources from Congo in their products would have to submit to U.S. regulators a report on their supply chain, signed off by an independent auditor, demonstrating that they were not funding armed groups. Some 6,000 companies would be affected, among them Apple, Ford and Boeing.


The story of how this provision ended up in Dodd-Frank is about as strange as you would expect. At a 2007 dinner in Washington, Sam Brownback asked the Congolese president Joseph Kabila why he could not control his country’s war-torn east. According to a former congressional aide who was briefed on the encounter, Kabila told Brownback, then a Republican senator from Kansas and now its governor, that part of the problem was the vast black market in minerals that funded the militias. The following year Brownback introduced a bill designed to curtail the trade in coltan and other eastern Congolese minerals exploited by the armed groups that have terrorized the region since 1994. After that bill died, Brownback tried again—this time with a focus on making American manufacturers file reports on the supply chains by which they acquired minerals that are present in eastern Congo and neighboring countries. Brownback, a conservative Christian who declared during a brief run for the presidency in 2007 that “homosexual acts” were “immoral,” found an unlikely ally on the question of Congo’s minerals in Jim McDermott, a liberal Democratic congressman from Seattle who has been an ardent supporter of gay marriage. Both had been to Congo: Brownback on a congressional trip in 2005, McDermott as a medic in 1987. The pair agreed on next to nothing, except for the damaging role of the minerals trade in eastern Congo’s war. McDermott and Brownback worked on House and Senate versions of a “conflict minerals” bill. The U.S. has legislated on specific commodities linked to abuses before, including timber, jade and diamonds. As the Dodd-Frank financial reform bill began to take shape in the wake of the financial crisis, the backers of conflict minerals legislation seized their chance to attach a provision that would enact their own bill. The combination might have looked incongruous—but both financial reform and the conflict minerals rules would fall to the same institution to enforce: the Securities and Exchange Commission. Human rights campaigners including the Enough Project and Global Witness pushed hard for Section 1502, the Dodd-Frank provision that would enact the conflict minerals statute. They were joined by investors including Calvert Investments, Trillium Asset Management and Boston Common Asset Management, which formed the “Responsible Sourcing Network.” The supporters of 1502 were ranged against what the congressional aide called “ferocious” lobbying by manufacturing companies that used minerals exported from eastern Congo and objected to the costs of complying with new supply-chain rules. “They wanted to water down the bill and kill it,” said the former congressional aide, who worked on the legislation. “They lost.” Sasha Lezhnev of the Enough Project, which has for years sought to bring attention to the horrors of eastern Congo, recalls: “There were many, many meetings with NGOs, with technology companies, with lobby groups over many, many months. We didn’t know if it was going to pass until the very last minute.” The campaigners waged a public campaign as well, including blanketing the Facebook page of a legislator who voiced objections to the bill with images of suffering from Congo. “Some very smart staffers” in Congress kept the conflict-minerals bill afloat, Lezhnev says, helped by the bipartisan support it enjoyed. Ultimately, Brownback was among the Republican senators who voted against Dodd-Frank and the tighter banking regulation it introduced. But by then 1502 was safely ensconced in the draft legislation’s final pages.


During the 1998-2003 Second Congo War, which directly involved nine African nations, UN investigators described companies trading Congolese minerals as “the engine of the conflict.” A senior Congolese army officer remembered Viktor Bout, a notorious KGB agent-turned-arms dealer who was implicated in the illicit trade in coltan—and whose exploits inspired the 2005 film Lord of War—dropping in to do business. “He did terrible things here,” the officer told me. The violence in the East continued after the formal end of the war, with armed militias roaming the hills and valleys. Few, then, could fault the sentiment that inspired that odd Dodd-Frank clause. But the legislation was drafted in Congress, not Congo.  ]]>

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