Wednesday 25 May 2011

Dodd-Frank vs Europe

When President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010, there was hope that corruption and conflict from mineral-rich poor countries such as Congo would be reduced. The Act requires oil, gas, and mining companies registered with the US Securities and Exchange Commission to publicly disclose their tax and revenue payments to governments around the world. It also requires companies to disclose information about the origins of tin ore, coltan (used in cell phones and computers), wolframite (used in armaments) and gold.

This initiative could be a constraint to corruption, but only if realistic verification mechanisms are put in place and if there is sufficient pressure to make sure legislation is respected. This is an improbable set of conditions given the shady actors involved in Congo’s mineral business.

The European Parliament is currently discussing a similar law but it appears that Europe has no intention of adopting tough legislation like that of Dodd-Frank.

This is yet another example of how Congo’s international partners are powerless to act collectively in addressing the country’s macro-economic and security challenges.

Christopher Dodd, who pushed for this piece of legislation is the son of another Connecticut senetor, Thomas Joseph Dodd, who visited the Congo in 1961 to investigate the Katanga seccession.

1 comment:

  1. This is such a simplistic and "removed" view of what is actually happening on the ground in the Congo. Demonizing minerals instead of criminals is about as affective as burning down the town to stop a burglar.

    Our company, which is not a mining company, works with Congolese tribes to help them export without a dime going to conflict groups. Dodd-Frank has been disastrous for them.

    Supporters are quoting the UN, large NGOs and other organizations who support the bill, but we are quoting chiefs, tribes and hundreds of thousands of locals on the ground who have been devastated by it. Doesn't this say something very powerful to us?

    I challenge the supporters to take a poll of those they are supposedly trying to protect. Of course they won’t, because the response would tell them that, while Dodd-Frank was well-meaning, it is an unmitigated disaster in practice. COCABI, COMIMPA and COMIDER represent 20,000 miners in the conflict area and 100,000 people affected by this legislation. They all say they’ve never even been contacted to see how this might affect them.

    There are six regions from which Dodd-Frank minerals are mined, and only one of them has ever had anything to do with conflict. Dodd-Frank has put them all out of business before it is even enacted. The World Bank says it has negatively affected 10 million people in the Congo.

    I'm was in Tanzania last week to help a chief export his coltan using a visible, well-documented process that ensures not a dime goes to conflict. That chief and his people will go hungry because the smelters, citing Dodd-Frank, have vanished. The chief is devastated, as are the nearly 1 million honest people who find their meager livelihoods destroyed by this over-reaching act.

    The issue with Dodd-Frank is that it is a nuclear option that demonizes minerals instead of criminals. It’s no different than burning down every house in town to stop a burglar from stealing, who will simply steal from somewhere else. Ludicrous.

    Dodd-Frank has burned down the entire mining industry in the Congo in hopes that their scorched earth policy will catch a militia group in its path. They are willing to take down every innocent man, woman, and child in the Congo who live off mining. Such massive collateral damage is not acceptable under any circumstance.

    Remove mining from the equation and the militia will exact its pound of flesh from the locals by other means. This should be handled by targeting militias, not mining. Dodd-Frank takes the route of universal collateral damage, which, before the bill is enacted, has already destroyed the livelihoods of the innocents who depend on it.