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Dodd-Frank's "Conflict Minerals' Provision Has Failed to Reduce Violence, Made Matters Worse for Congo

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Location: Washington, DC

A provision buried deep within the 2,300-page Dodd-Frank Act is hurting the very people it was supposed to help in the war-torn central African nation of the Congo, according to expert witnesses who testified today before the Monetary Policy and Trade Subcommittee.

The provision, which was added to Dodd-Frank as Section 1502 without any congressional hearings, requires public companies to certify their supply chains are free of any and all "conflict minerals" originating in the Democratic Republic of Congo. The Securities and Exchange Commission issued its final rule implementing this provision of Dodd-Frank last year.

Its unintended consequences have been devastating to the already impoverished Congolese people, witnesses said.

It is "a case study in how good intentions can go awry," said David Aronson, a writer who has worked in central Africa throughout the past 25 years and written about the Congo for major newspapers. "The law imposed a de facto embargo on mineral production that impoverished the region's million or so artisanal miners," Aronson said.

"The economic harm caused" by the Dodd-Frank provision "might be worthwhile if the embargo were having its intended effect of reducing the overall level of violence in the region," he testified.

However, another witness who testified before the subcommittee said "there is no evidence that Section 1502 has reduced violence" in the region. Mvemba Phezo Dizolele, a native of the Congo and a Visiting Fellow at the Hoover Institution, said Section 1502 "did not yield the anticipated result" its proponents hoped for because it "requires the buy-in of the very negative actors it seeks to tame. This approach perverts basic peacemaking models and rewards criminals and would-be spoilers."

Subcommittee Chairman John Campbell (R-CA) noted that many Congolese derisively refer to Section 1502 as "Loi Obama" -- Obama's Law -- because it has made economic conditions in the country worse without ending the violence.

"Many of these people have seen their livelihoods eliminated as the market for legitimately-mined minerals evaporated," Chairman Campbell said. "Despite the economic consequences, there is no indication that the violence is subsiding."


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