[Senate Hearing 115-811]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 115-811
 
                   A PROGRESS REPORT ON CONFLICT MINERALS

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON AFRICA AND
                          GLOBAL HEALTH POLICY

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE


                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 5, 2017

                               __________

       Printed for the use of the Committee on Foreign Relations
       
       
       
       
       
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                 COMMITTEE ON FOREIGN RELATIONS        

                BOB CORKER, Tennessee, Chairman        
JAMES E. RISCH, Idaho                BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida                 ROBERT MENENDEZ, New Jersey
RON JOHNSON, Wisconsin               JEANNE SHAHEEN, New Hampshire
JEFF FLAKE, Arizona                  CHRISTOPHER A. COONS, Delaware
CORY GARDNER, Colorado               TOM UDALL, New Mexico
TODD YOUNG, Indiana                  CHRISTOPHER MURPHY, Connecticut
JOHN BARRASSO, Wyoming               TIM KAINE, Virginia
JOHNNY ISAKSON, Georgia              EDWARD J. MARKEY, Massachusetts
ROB PORTMAN, Ohio                    JEFF MERKLEY, Oregon
RAND PAUL, Kentucky                  CORY A. BOOKER, New Jersey
                  Todd Womack, Staff Director        
            Jessica Lewis, Democratic Staff Director        
                    John Dutton, Chief Clerk     




                   SUBCOMMITTEE ON AFRICA AND        
                      GLOBAL HEALTH POLICY        

                 JEFF FLAKE, Arizona, Chairman        
TODD YOUNG, Indiana                  CORY A. BOOKER, New Jersey
JOHN BARRASSO, Wyoming               CHRISTOPHER A. COONS, Delaware
JOHNNY ISAKSON, Georgia              TOM UDALL, New Mexico
RAND PAUL, Kentucky                  JEFF MERKLEY, Oregon

                              (ii)        

  


                            C O N T E N T S

                              ----------                              
                                                                   Page

Flake, Hon. Jeff, U.S. Senator From Arizona......................     1

Booker, Hon. Cory, U.S. Senator From New Jersey..................     2

Young, Hon. Todd, U.S. Senator From Indiana......................     4

Coons, Hon. Christopher, U.S. Senator From Delaware..............     4

Goss, Rick, Senior Vice President, Environment and 
  Sustainability, Information Technology Industry Council, 
  Washington, DC.................................................     5

    Prepared Statement...........................................     7

Dizolele, Mvemba, Lecturer, School of Advanced International 
  Studies, Johns Hopkins University, Washington, DC..............    11

    Prepared Statement...........................................    13

Ganesan, Arvind, Director, Business and Human Rights, Human 
  Rights Watch, Washington, DC...................................    15

    Prepared Statement...........................................    17

              Additional Material Submitted for the Record

Prepared Statement of Senator Richard Durbin.....................    34

Series of Letters Relating to Section 1502 of the Dodd-Frank Act 
  Submitted for the Record by Senator Cory Booker................    36

                                 (iii)

  


                 A PROGRESS REPORT ON CONFLICT MINERALS

                              ----------                              


                        WEDNESDAY, APRIL 5, 2017

                               U.S. Senate,
   Subcommittee on Africa and Global Health Policy,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:00 p.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Jeff Flake, 
chairman of the subcommittee, presiding.
    Present: Senators Flake [presiding], Young, Barrasso, 
Isakson, Paul, Booker, Coons, Udall, and Merkley.

             OPENING STATEMENT OF HON. JEFF FLAKE, 
                   U.S. SENATOR FROM ARIZONA

    Senator Flake. This hearing of the Senate Foreign Relations 
Subcommittee on Africa and Global Health will come to order.
    Today, we are going to look at Section 1502 of Dodd-Frank, 
the so-called conflict minerals provision, which was signed 
into law in 2010.
    For too long, armed militias in Eastern DRC have 
perpetrated unspeakable crimes against civilians in the absence 
of the rule of law. In an effort to deny these militias the 
revenues they collect from the mines in the area under their 
control, Congress included Section 1502 in Dodd-Frank.
    This provision required firms that file with the Securities 
and Exchange Commission to perform due diligence on their 
mineral supply chain. The thought behind Section 1502 is that 
the public disclosure of the source of minerals used in 
products would create an awareness of how these minerals can be 
exploited and facilitate human rights abuses in the DRC. This 
awareness would motivate shareholders and investors to ensure 
the minerals used in their products would be conflict-free.
    Section 1502 uses the SEC to achieve the foreign policy 
goal of preventing human rights abuses in the DRC, an approach 
that we will take a look at today. No hearings were held in the 
House or the Senate on Section 1502 prior to its inclusion in 
the conference report to Dodd-Frank.
    I think we can all agree that putting an end to the 
continued horrific abuses of human life in the DRC is a worthy 
goal of pursuit. After 7 years, however, it is past time for 
the Foreign Relations Committee to examine how the conflict 
minerals rule has affected events on the ground in the DRC and 
whether or not it is achieving its goal.
    There have been some positive results. Experts believe 
armed groups have become scarcer at the mine sites, as compared 
to before the law was written. The law has also created 
awareness on the part of consumers and investors around the 
world seeking to avoid indirectly supporting human rights 
crimes.
    There have also been some drawbacks. Section 1502's mandate 
on the private sector has been costly, and the Eastern DRC 
continues to see incidents of violence and human rights abuses.
    So this hearing is timely today. In late January, the 
acting chairman of the SEC indicated that his staff would 
reconsider whether the guidance on the implementing rule is 
``still appropriate'' and whether any additional relief for 
SEC-listed companies is appropriate.
    Before action is taken on the SEC regulation that seeks 
primarily to solve a foreign policy problem, it is important 
for this committee to examine precisely what the regulation's 
impact has been on the region. Equally important is to 
understand how this law intersects with other factors at play 
in the rest of the DRC, which continues to be plagued by 
conflict and violence.
    In fact, we learned last week of the death of American 
Michael Sharp, a United Nations employee who coordinated the 
Group of Experts in the Congo. Mr. Sharp was kidnapped along 
with his colleagues in central DRC last March, and their bodies 
were discovered last week.
    Mr. Sharp's death serves as a stark reminder that keeping 
armed militias from having access to lucrative mines is just 
but one small slice of the larger problem the DRC faces.
    I look forward to hearing what our witnesses have to say 
about the conflict minerals laws and its impact in the Eastern 
DRC. And I appreciated the meetings we had in my office 
yesterday, and I appreciated looking at your testimony.
    With that, we will turn to the ranking member, Mr. Booker.

                STATEMENT OF HON. CORY BOOKER, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Booker. Chairman Flake, I just want to thank you. 
This is the first subcommittee hearing of this Congress. It is 
my first opportunity to be your ranking member. As somebody who 
considers you a friend and somebody I respect, I am grateful 
for this opportunity. I think that this committee could have a 
very consequential effect for the better on the continent of 
Africa, so I am grateful and really feel privileged to be here 
today.
    Senator Durbin, my much senior Senator in terms of 
experience, wanted to be here today. He has been a leader on 
this issue, and he has some testimony he would like to present, 
and I would like to be able to introduce that for the record, 
if possible.
    Senator Flake. Without objection.
    [The information referred to above can be found in the 
``Additional Materials for the Record'' section of this 
Hearing.]
    Senator Booker. I want to thank the witnesses. I really got 
a lot out of reading your testimony. I know some time was spent 
with my staff as well.
    It is extraordinary how much commitment you all have given 
to this issue, how much time, energy, and focus on an issue 
that frankly needs more time, energy, and focus. So thank you 
for your leadership.
    I understand that I am in the company of not only experts 
but, frankly, people who have insights that can be really 
valuable because we have seen many of the positive aspects of 
increased international attention to conflict minerals over the 
past several years, and we have seen a lot of very valuable 
public-private partnership work.
    I think, Mr. Goss, you mentioned a lot of that in your 
testimony, which I think was really important.
    So we know today that, according to the Enough Project, 166 
out of 193 assessed mines in eastern Congo are now conflict-
free. That is something that we should be proud of. And 2016 
showed a record high in legal mineral exports from the DRC. 
These are important benchmarks to recognize.
    The North Kivu province, the most 3T mineral rich province 
in Congo, reported record high conflict-free numbers as well in 
minerals.
    But only through a robust, consistent, multifaceted 
approach--I think more than one of the testimonies talked about 
having many tools in the toolbox--can we help, having lasting 
impact on the region.
    We know that efforts to curtail illicit mining and mineral 
traffic must be paired with a package of aid, a package of 
reform efforts, focused not only on the mining industry but 
also at the government level. We know that we need high-level 
diplomatic engagement, especially on the part of the United 
States. The U.S. must lead.
    So I know at a hearing before this committee back in 2009, 
witnesses emphasized that the root causes of the shockingly 
high levels of violence in the DRC and the Great Lakes Region 
was a deep-rooted conflict funded in part through this mineral 
extraction.
    The U.N. Group of Experts documented that same year that 
FDLR exploitation of mineral mining in the Kivus continues to 
deliver millions of dollars to direct financing to FDLR 
coffers. And in 2010, a bipartisan group of Members in this 
chamber came together to discuss and debate and ultimately pass 
a provision that would require reporting on the source of 
conflict minerals.
    Again, this is not a ban. It is reporting. It is about 
transparency.
    At the same time, Senator Durbin in his remarks about 
transparency, this is what he said: You could say we were doing 
nothing, but at least then consumers would have some options on 
ensuring the electronics in their pockets were not contributing 
to violence.
    We have made progress, but today we are facing a flashpoint 
in the DRC as it confronts its largest political and security 
challenge in years. It is something that should concern all of 
us. We have seen armed groups proliferate in central and 
Southeastern DRC, areas previously viewed as relatively stable, 
all while the threats to civilians in the east have not abated.
    Recent history suggests that conflict in the DRC can and 
often does spill over its borders, drawing in other actors from 
the region and providing safe havens for foreign-origin 
militias.
    Now is the time for more international attention to all the 
root causes of the conflict in DRC, not less. We need more 
action, more focus, more attention, more investment.
    The conflict mineral provision was not intended in any way 
as a panacea for the threat to DRC stability. We can be doing 
more.
    And I want to say that the urgencies are seen, as my 
chairman said, the urgency is when you see people like Michael 
Sharp dying--and, again, I do not want to single out his death 
because we know that there are thousands of innocent people who 
have died in this conflict over the years. We owe them a debt 
not only for their work, the kind of leadership that Mr. Sharp 
showed, but also to pick up the cause and ensure that heroic 
people like this do not die in vain. We cannot let their work 
stop. We have to carry on and move forward and ultimately 
vindicate them by bringing peace to a great country.
    So I am again, Chairman, really excited about being here, 
grateful for your leadership for many years before I was even 
in the Senate, and I look forward to working with you as we go 
forward.
    Senator Flake. Thank you. I can tell you I was very excited 
when I knew that you were joining the committee and, in 
particular, the Subcommittee on Africa. So I look forward to a 
long, productive relationship.
    I am also glad to have Mr. Young, who just came to the 
Senate in January, join the subcommittee as well.
    Do you want to say a couple things?

                 STATEMENT OF HON. TODD YOUNG, 
                   U.S. SENATOR FROM INDIANA

    Senator Young. Thank you, Chairman, and thank you, Ranking 
Member, for convening this really important hearing. I have had 
an opportunity to review the opening remarks, and I will look 
forward to asking a question or two of our witnesses.
    But thanks so much for being here. I mean, it is really 
important that we shine a bright light on some of the 
challenges you are facing in DRC, and we are here to try to be 
part of the solution.
    I will be in and out over the course of this hearing, Mr. 
Chairman, but I look forward to engaging with your witnesses a 
bit later.
    Senator Flake. Thank you.
    Mr. Coons has joined us. Senator Coons, do you have 
anything to say?

             STATEMENT OF HON. CHRISTOPHER COONS, 
                   U.S. SENATOR FROM DELAWARE

    Senator Coons. Simply that I am eager to hear from the 
witnesses about the impacts that conflict minerals continue to 
have in Eastern Congo and what the impact is on industry and 
how we can strike an appropriate balance, both to make sure 
that supply chains are also value chains and reflect the values 
of American consumers and American people, but that we also 
have rules of the road that allow for transparent and 
appropriate development opportunities.
    And just my gratitude, Mr. Chairman and Ranking Member, for 
your long interest and leadership on all issues African.
    Thank you.
    Senator Flake. Thank you.
    We will turn now to our witnesses.
    Mr. Rick Goss joins us today from the Information 
Technology Industry Council, where he serves as senior vice 
president for environment and sustainability.
    Mr. Mvemba Dizolele, a Congolese-American, is a foreign 
policy analyst whose work has been featured in numerous 
publications like the New York Times and Newsweek. He also 
lectures at Johns Hopkins University of Advanced International 
Studies.
    Mr. Arvind Ganesan is the director of Human Rights Watch's 
Business and Human Rights Division, and his work has covered 
many countries, including Angola, Equatorial Guinea, Nigeria, 
and, of course, the DRC.
    We ask that you keep your comments to around 5 minutes, 
and, obviously, your full comments will be submitted for the 
record.
    With that, the committee recognizes Mr. Goss.

STATEMENT OF RICK GOSS, SENIOR VICE PRESIDENT, ENVIRONMENT AND 
   SUSTAINABILITY, INFORMATION TECHNOLOGY INDUSTRY COUNCIL, 
                         WASHINGTON, DC

    Mr. Goss. Thank you, Chairman Flake, Ranking Member Booker, 
members of the subcommittee. Thank you for the opportunity to 
testify today regarding Central Africa and Section 1502 of the 
Dodd-Frank Act.
    As the chairman said, my name is Rick Goss. I am the Senior 
Vice President of Environment and Sustainability at ITI, the 
global trade association representing the world's most 
innovative technology companies. ITI has been central to the 
conflict minerals dialogue for years, and I have led ITI's 
engagement on this priority since 2007.
    The tech sector is committed to contributing to peace and 
stability in Central Africa, and we have proven this commitment 
by sourcing responsibly from the region. Our engagement has 
helped provide critical economic benefits to hundreds of 
thousands of people who depend upon mining activities for their 
livelihood.
    As Congress considers replacing or modifying Section 1502, 
we urge you to ensure that the U.S. continues to drive 
diplomatic efforts in the region and to advance responsible 
sourcing initiatives. Should the U.S. fail to do so, Central 
Africa could experience additional volatility, and we could see 
the rise of inconsistent regulatory regimes.
    Turning to the issues that the subcommittee asked us to 
address, Section 1502 has yielded mixed success in cutting off 
funding to armed groups and reducing violence in the region. 
While government, civil society, and the private sector have 
together realized some clear progress on responsible sourcing, 
this mixed outcome in the region is due in part to the 
continued smuggling of gold, ongoing interference by a spectrum 
of armed groups, and the ready availability of numerous other 
sources of illegal revenue.
    While the DRC is increasing the responsible production of 
tin, tantalum, and tungsten, the 3Ts, this progress does not 
extend to gold. In a December 2016 report, the U.N. Group of 
Experts on the DRC stated that, ``Gold exploitation and trade 
remain poorly regulated, and the mineral is by far the one most 
used to finance armed elements and criminal elements in the 
DRC.''
    In fact, criminal networks in the Congolese Army remain 
some of the chief offenders. These elements along with myriad 
non-state armed groups directly interfere in mining operations; 
set up illegal roadblocks; and levy unlawful taxes on local 
communities, miners, and minerals. They exploit products such 
as timber, charcoal, and cannabis; and engage in human 
trafficking, forced labor, slaughter of endangered species, and 
extortion.
    Ultimately, even if Section 1502 has generated a measurable 
increase in transparency for 3T supply chains, armed actors 
have turned to gold and other lucrative and illicit methods.
    The second issue, while Section 1502 has yielded some 
positive impacts, it has also generated unintended 
consequences. First, the provision contributed to the de facto 
embargo documented in the region beginning in 2010, causing 
significant hardships for countless vulnerable people living in 
what has been termed the survival economy. Second, Section 1502 
has had an inordinate impact on small- and medium-sized 
enterprises here in the United States and elsewhere. And 
finally, by focusing almost exclusively on the role of the 
private sector, Section 1502 diverted critical attention away 
from the indispensable role of governments in addressing the 
crisis.
    We have three recommendations to share today.
    First, the U.S. should expand existing efforts to drive 
peace, security, and governance in Central Africa through 
increased support for political and diplomatic solutions and 
through development aid to help formalize the regional mining 
sector.
    Second, the U.S. should maintain its leadership position to 
guard against unintended consequences. If our government stops 
driving responsible sourcing, the region may experience renewed 
or increased volatility. Moreover, other geographies will 
likely regulate U.S. companies, potentially disrupting existing 
private sector programs. The U.S. should further advance the 
uptake of the OECD due diligence guidance, the international 
model for responsible sourcing that already forms the backbone 
of Section 1502 compliance.
    Our third recommendation is that the U.S. should consider 
removing ineffective requirements that result in burdensome and 
duplicative paperwork exercises, generate little benefit in 
Central Africa, or dissuade companies from investing in the 
region. Congress should seek to remedy the competitive 
disadvantages that Section 1502 creates between companies.
    In conclusion, the geopolitical challenges facing Central 
Africa are so severe that only concerted actions by regional 
governments, coupled with ongoing support from the 
international community, can resolve them. The region continues 
to be beset by rampant conflict and corruption, and 
destabilized by chronic interference from neighboring 
countries. The underlying causes of this conflict are 
political, not economic, and are linked to entrenched ethnic 
hostilities and disputes over political power.
    Tech will continue to actively engage and contribute to the 
solution, but governments must ultimately create the necessary 
conditions to allow private sector and civil society 
initiatives to thrive.
    Thank you again for the invitation to testify today, and I 
would be pleased to answer any questions.
    [The prepared statement of Mr. Goss follows:]

                    Prepared Statement of Rick Goss

                              introduction
    Chairman Flake, Ranking Member Booker, and members of the 
subcommittee--thank you for the opportunity to testify at today's 
hearing regarding the Democratic Republic of the Congo, conflict 
minerals, and Section 1502 of the Wall Street Reform & Consumer 
Protection Act, commonly referred to as the ``Dodd-Frank Act.''
    My name is Rick Goss, and I am the Senior Vice President of 
Environment and Sustainability for the Information Technology Industry 
Council, or ITI. ITI is a global trade association representing nearly 
60 of the world's most innovative companies in the broad technology 
sector.
    ITI has been centrally involved in the conflict minerals dialogue 
for years, and I have led ITI's engagement on this priority since 2007. 
This includes representing the tech sector during congressional 
negotiations; meeting with Securities and Exchange Commission (SEC) 
commissioners and staff throughout the Section 1502 rulemaking process; 
testifying before the U.S. House of Representatives; and advising the 
European Union and other jurisdictions as they seek to develop their 
own conflict minerals regulations.
    The tech sector is committed to contributing to peace and stability 
in the Congo, and our companies have made strong commitments to ethical 
sourcing throughout our supply chains. As Congress considers replacing 
or modifying section 1502, we urge you to ensure that the U.S. remains 
centrally engaged in driving diplomatic efforts in Central Africa and 
in supporting private sector initiatives to advance responsible 
sourcing. Should the U.S. fail to remain engaged, we could experience 
additional volatility on the ground in Central Africa, and inconsistent 
regulatory efforts arising in other jurisdictions.
    Along with governments and civil society, ITI and our members share 
a commitment to the fundamental principles of peace and security for 
the Congo, and we are dedicated to being responsible actors within the 
context of comprehensive, government-led strategies for Central Africa. 
First, we are committed to ethical sourcing throughout our global 
supply chains. We do not want to conduct business, either directly or 
indirectly, with any supplier that supports, prolongs, or perpetuates 
armed conflict or human rights abuses. Second, we want to source 
responsibly from Central Africa to help provide critical economic 
benefits to the hundreds of thousands of people who depend on mining 
and mining-related activities as their sole source of livelihood. With 
these twin objectives in mind, our sector has made a conscious choice 
to remain engaged in the region.
    With that depth of experience in mind, my testimony today will 
share our perspectives on three key points for lawmakers to consider:

   Expand existing diplomatic efforts to drive peace, security, 
        and governance in Central Africa;

   Maintain U.S. leadership on sourcing transparency to support 
        private sector progress in Central Africa and avoid unintended 
        economic and political outcomes; and

   Consider removing the requirements of Section 1502 that have 
        increased costs and burdens while failing to promote progress 
        in the region.

    In support of these outcomes, I would like to note three major 
themes:
    First, ITI members recognize that the private sector has a defined 
role to play in helping drive transparency and responsible sourcing 
efforts throughout global supply chains, and we have embraced that 
responsibility through our public commitments and concrete actions. 
These include our role in developing the Conflict-Free Sourcing 
Initiative, our participation in the Public-Private Alliance for 
Responsible Minerals Trade, and our efforts in support of the 
Organization for Economic Co-operation and Development (OECD) Due 
Diligence Guidance.
    Second, during congressional negotiations on this issue in 2009 and 
2010, there was strong bipartisan support for the United States to take 
a more active role to confront the ongoing humanitarian crisis in 
Central Africa.
    Third, the geo-political challenges in the Democratic Republic of 
the Congo (DRC) and throughout Central Africa are so severe, enduring 
and complex that only concerted actions by regional governments, 
coupled with ongoing support from the international community, will 
resolve them. Governments must take the lead to bring about peace, 
security, and governance reform and to create the necessary 
preconditions to allow private sector and civil society initiatives to 
thrive.
    I will now turn to the three specific issues that the subcommittee 
has asked this panel of witnesses invited to testify to address:

    Section 1502 of the Dodd-Frank Act has had mixed success in cutting 
off funding to armed groups in the DRC and reducing violence in the 
region. The eastern DRC is plagued with countless militias, local 
criminal groups, and corrupt military and government officials, all of 
whom prey on vulnerable civilian populations. While Section 1502 has 
clearly helped deprive armed groups in Central Africa from exploiting 
certain illicit sources of funding, its ultimate record of reducing 
overall illicit income flowing to these actors is notoriously difficult 
to determine. This challenge is in part due to continued smuggling of 
gold; the ongoing presence at mines of non-state militias, corrupt 
government officials, and criminal networks within the Congolese Army 
(the Armed Forces of the Democratic Republic of Congo--FARDC); and, the 
ready availability of numerous other sources of illegal revenue.
    Following a rapid decline in 2010, artisanal mining jobs have been 
returning to the region, and the DRC is recording increased production 
and export of tin, tantalum and tungsten--the so-called ``3Ts''--from 
validated mines.
    Numerous governments and credible independent observers report 
recent positive trends on breaking the links between armed groups and 
mining for 3T minerals. These officials note a significant reduction in 
the presence of armed groups--including Congolese armed forces--at 3T 
mining sites, largely due to increased transparency, monitoring, and 
control measures. Importantly, the DRC government has increased its 
involvement by imposing greater controls, taxes, legal enforcement, and 
oversight. According to the OECD, non-traceable exports of 3T trade at 
a discount of almost 30% compared to traceable materials.
    Increasing governance over 3T mines is partially attributable to 
the effects of Section 1502. To be clear, this progress is not tied to 
the paperwork and reporting requirements of the provision, but to the 
commitment of leading companies--in coordination with governments and 
civil society--to implement programs and systems that enable 
responsible sourcing from the impacted region. Altogether, more than 40 
smelters now source from the region via validated programs. Responsible 
in-region sourcing programs still only generate modest global volumes 
of 3T, but overall conditions are improving.
    Unfortunately, this progress on 3T minerals does not extend to 
gold. Given its high value concentrated in low volumes, gold remains 
subject to rampant smuggling and chronic interference from armed 
groups. In fact, dominion over gold mining and trading has become the 
preferred source of illicit income for armed groups across the 
spectrum. In a December 2016 report, the United Nations Group of 
Experts reported that, ``gold exploitation and trade remain poorly 
regulated, and the mineral is by far the one most often used to finance 
armed elements and criminal networks in the Democratic Republic of the 
Congo.'' \1\
    In conjunction with the OECD, and with support from the DRC 
government, the International Peace Information Service (IPIS) is 
conducting a multi-year study of security conditions at over 1,100 
mining sites in the eastern DRC.\2\ IPIS estimates that up to 80% of 
artisanal miners in the troubled eastern provinces work in the gold 
sector and adds that, while only 21% of artisanal miners of 3T minerals 
work under the influence of armed actors, that number jumps to 64% for 
gold. In 2016, the U.N. Group of Experts also reported that, ``Foreign 
armed groups from Burundi, Rwanda and Uganda continued to operate in 
eastern Democratic Republic of the Congo.'' The United Nations 
identified these same countries as being routes for non-certified gold 
smuggled out of the DRC and into global markets.\3\
    Some of the worst and most chronic offenders include criminal 
networks within the FARDC. In fact, FARDC units and other non-state 
armed groups alike have become more sophisticated in raising revenue 
from miners and mine sites. In addition to interfering directly in 
mining operations, they often set up illegal road blocks and levy 
unlawful taxes on mineral shipments. They extract recurring payments 
from miners and mine owners, or impose monopolies over basic consumer 
goods in and around mine sites. Through these and other tactics, they 
nonetheless raise revenues from mines that are deemed ``green'' sites.
    Meanwhile, control over mining and minerals distribution is only 
one of many sources of illicit income for militias, roving criminal 
groups and corrupt officials. These elements exploit other sources of 
income, through the sale of products such as timber, charcoal, cannabis 
and wildlife parts, and through practices such as human trafficking, 
forced labor and extortion. Illicit actors routinely raid villages, run 
black markets for goods, and operate protection schemes. Armed groups 
have also established operations in the national parks and wildlife 
preserves, where they profit from illegal charcoal production and the 
rampant slaughter of threatened and endangered animals.
    Overall, Section 1502 has generated real progress in bringing 
increased transparency to 3T mines and supply chains in the region, and 
in raising global awareness across the public and private sectors. 
These advances are fragile and need to be encouraged. However, as 
controls have increased on 3T minerals, militias, corrupt officials, 
and criminal networks have increasingly turned to gold and other 
lucrative methods to generate illicit income.
    Section 1502 has generated unintended consequences that have 
detracted from the provision's effectiveness. While Section 1502 has 
yielded some positive impacts--many of which we noted in our 2013 House 
testimony \4\--it has also caused some negative unintended 
consequences. First, along with the 2010 mining ban instituted by the 
DRC government, the Dodd-Frank Act provision contributed to the de 
facto embargo that governments and independent observers documented in 
the region beginning in 2010. In brief, many companies abandoned the 
region to avoid the onerous and potentially severe legal, financial, 
and reputational risks associated with Section 1502. This caused 
significant hardship for hundreds of thousands of people who rely on 
artisanal mining for their sole subsistence in what has been termed the 
``survival economy''.
    Second, Section 1502 has had an inordinate impact on small- and 
medium-sized enterprises here in the United States and elsewhere. While 
many of these businesses are not themselves obligated to report to the 
SEC, they are indirectly subject to the requirements if they are 
present in the supply chain of a regulated company or companies.
    Finally, Section 1502, by focusing almost exclusively on the role 
of the private sector, has diverted critical attention away from the 
indispensable role of governments in addressing the endemic political, 
security, and humanitarian crises in the region. Private sector 
initiatives alone cannot succeed in a region beset by rampant conflict 
and corruption, and destabilized by chronic interference and intrusions 
from neighboring countries. The underlying causes of this regional 
conflict are political, not economic, and are linked to entrenched 
ethnic enmities and disputes over political power, land rights, and 
citizenship. While control over natural resources is in part 
responsible for fueling violence in eastern Congo, it is striking to 
note that adjacent areas that are equally rich in resources are not 
plagued by conflict.
    Recommendations to maintain sourcing transparency, promote peace 
and security in Central Africa, and improve Section 1502 deficiencies. 
We have several specific recommendations to share, although not all of 
them are necessarily within the Security and Exchange Commission's 
purview to implement absent statutory changes.
    Overall, ITI and our members urge Congress to consider ways to 
overcome the deterrent effects of Section 1502 and provide incentives 
to companies that responsibly source from Central Africa. These efforts 
could include lowering the regulatory burden and providing public 
recognition to those companies that source through approved, in-region 
programs. The United States and other governments can also support in-
region transparency and governance initiatives, place collective 
pressure on foreign smelters to participate in audit programs, and 
increase sanctions on those groups and individuals that continue to 
trade in illicit resources.
    Our specific recommendations are as follows:
Expand existing diplomatic efforts to drive peace, security, and 
        governance in Central Africa.
    Intensify U.S. Diplomatic Efforts. The United States should 
increase its support for political and diplomatic solutions that 
advance regional security, including security sector reform for the 
Congolese military and police forces, and efforts to protect civilian 
populations. This could include targeted sanctions, as well as 
continued support for the United Nations Stabilization Mission in the 
DRC, for the Public-Private Alliance for Responsible Minerals Trade, 
and for related regional governance and transparency initiatives.
    Provide Targeted Development Aid. The biggest advances in 
responsibly sourcing in the region have come from bringing the mining 
sector--including artisanal miners--into a more formalized process. The 
mining sector in the DRC desperately needs infrastructure development 
in the form of roads and electricity, and access to basic financial and 
banking resources for legitimate operators.
Maintain U.S. leadership on sourcing transparency to support continued 
        progress in Central Africa and avoid unintended outcomes.
    Maintain U.S. Leadership. By enacting Section 1502, the United 
States set the stage for global conflict minerals approaches. U.S. 
action sends a strong signal to global markets about the need to break 
the link between armed groups and natural resources, and the European 
Union and other jurisdictions have acted to complement the U.S. 
approach. Should the federal government cease its engagement 
altogether, we may collectively suffer two major unintended 
consequences:
    First, we may lose the tenuous progress we have achieved in the 
region through collective industry pressure on global supply chains. 
While many tech companies have publicly committed to continuing their 
due diligence efforts regardless of the fate of Section 1502, our 
influence will become significantly diluted should other sectors not 
remain at the table. This is especially true given that our sector is 
only a minor consumer of gold--the primary source of illicit mineral 
income in the region. Moreover, should the demand for conflict free 
minerals diminish, we could see detrimental impacts on the roughly 
1,000 3T mines that are validated as responsible, potentially 
increasing regional volatility and armed group activity.
    Late last month, here in Washington, I had the pleasure of meeting 
a government delegation from the Democratic Republic of the Congo, 
including the Congolese Ambassador to the United States and 
representatives from the Ministry of Mines. The DRC government 
reiterated its strong support for the proper application of the OECD 
Due Diligence Guidance in the region, and raised concerns that a 
contraction of U.S. engagement on natural resources could have several 
unwelcome consequences. The DRC delegation identified these potential 
consequences to include:

   Escalating in the activities of non-state armed groups;

   Weakening policies to promote good business practices around 
        the responsible supply of minerals in the DRC and throughout 
        the region; and,

   Discouraging regional governments from implementing the 
        tools to combat the illegal exploitation of resources.

    Second, other geographies will almost certainly impose regulations 
on U.S. companies, causing a potential disruption in programs and 
systems due to inconsistent or conflicting requirements. ITI represents 
global companies, and the importance of private sector due diligence 
related to conflict minerals will not recede if Section 1502 is stayed 
or repealed.
    Advance the OECD Due Diligence Guidance. The OECD Due Diligence 
Guidance forms the backbone of Section 1502 compliance. It has also 
become the international norm as the European Union, the International 
Conference on the Great Lakes Region, and China now reference it. Where 
the U.S. approach is prescriptive, top-down and outcome-based, the OECD 
Guidance is process-based and risk-based, and assigns roles and 
responsibilities based on each actor's relative position within the 
supply chain.
Consider removing the requirements of Section 1502 that have increased 
        costs and burdens while failing to promote progress in the 
        region.
    Remove the Provisions that Discourage Legitimate Businesses from 
Sourcing from the Region. Certain requirements of Section 1502 dissuade 
companies from remaining economically engaged in the region. While some 
of these obligations have been partially set aside by the recent 
federal court ruling, the most punitive provisions include the 
independent private sector audit, the preparation and formal submittal 
of the Conflict Minerals Report to the SEC, and the need to 
characterize products. These obligations result in costly paperwork and 
duplicative due diligence exercises that generate little or no benefit 
in the impacted region.
    Move Any Requirements from Securities Law. Section 1502 creates 
competitive disadvantages between publicly-traded and privately-held 
companies, and between U.S. and foreign companies. Any federal efforts 
on conflict minerals should apply evenly to avoid these competitive 
disruptions.
                               conclusion
    While imperfect, Section 1502 has brought concerted industry 
pressure on global supply chains to responsibly source these minerals, 
and has helped bring desperately needed international attention to the 
ongoing conflict in Central Africa. Our member tech companies have 
established a strong record of dedication and achievement in driving 
transparency throughout our global supply chains to meet our public 
commitments even in the absence of legal requirements. Ultimately, 
though, our sector's commitment to sustainability and corporate social 
responsibility alone cannot bring peace and security to the Congo, and 
in the absence of concerted government and civil society engagement, 
the status quo will reign in Central Africa.
    Thank you again for the invitation to testify today. I would be 
pleased to answer any questions.

----------------
Notes

    \1\ See ``Letter dated 23 December 2016 from the Group of Experts 
on the Democratic Republic of the Congo addressed to the President of 
the Security Council,'' December 2016, available at http://
www.undocs.org/S/2016/1102
    \2\ See OECD ``Mineral Supply Chains and Conflict Links in Eastern 
Democratic Republic of Congo: Five Years of Implementing Supply Chain 
Due Diligence,'' 2015, available at http://mneguidelines.oecd.org/
Mineral-Supply-Chains-DRC-Due-Diligence-Report.pdf
    \3\ See ``Letter dated 23 May 2016 from the Group of Experts on the 
Democratic Republic of the Congo addressed to the President of the 
Security Council,'' May 2016, available at: http://www.undocs.org/S/
2016/466
    \4\ http://financialservices.house.gov/uploadedfiles/hhrg-113-ba19-
wstate-rgoss-20130521.pdf

    Senator Flake. Thank you.
    Mr. Dizolele.

  STATEMENT OF MVEMBA DIZOLELE, LECTURER, SCHOOL OF ADVANCED 
INTERNATIONAL STUDIES, JOHNS HOPKINS UNIVERSITY, WASHINGTON, DC

    Mr. Dizolele. Chairman Flake, Ranking Member Booker, and 
Senator Coons, it is a pleasure to be here again. Thank you for 
the invitation to testify before you.
    Mr. Chairman, the views that I express today are mine and 
mine alone, and I wish to submit them for the record.
    The last time I testified before you 4 years ago, Congo was 
grappling with the M23 rebellion. The insurgents had seized 
parts of North Kivu, laid siege on the provincial capital city 
of Goma, and displaced thousands of civilians before 
withdrawing into neighboring Uganda and Rwanda.
    Today, 7 years since the Dodd-Frank Act became law, we have 
a clear horizon now over which to analyze the impact of Section 
1502. So here are the five things that I think worked, the 
merits of the law.
    Number one is the level of awareness that Dodd-Frank 1502 
brought to bear. Now we know that American consumers demand 
that suppliers mind the supply chain, and this is unprecedented 
and needs to be commended.
    Number two, the law had immediate psychological effects on 
the Congolese authorities; business operators; regional, 
political, and economic actors; as well as businesses, 
international firms. Even President Kabila sought to preempt 
the effect of the law by suspending mining once that law was 
coming through the pipeline.
    Number three, the law attempted to clean the mineral supply 
chain to curtail illicit and illegal mining exploitation and 
trade, and eradicate the scourge of conflict minerals.
    Number four, and this is very important, the law 
contributed to Congo's acceleration of the delimitation and re-
situation of mining sites, inquiries, and the training of 
mining police, as well as capacity-building for mining agents 
and inspectors. And also, this spurred dialogue among the 
various parties concerned in this line of business.
    Number five, armed groups found it difficult to export 
minerals and raise revenues from mines in areas that they 
control.
    What did not work? Here are the seven things that I think 
did not work.
    From its inception, 1502 cast a negative shadow on 
otherwise legal and legitimate businesses and immediately led 
to a de facto boycott of products from the region.
    The boycott then led to closures of comptoirs, which are 
trading posts.
    And the other problem, number three, is that the trade 
itself, the mineral trade, was analyzed as a standalone 
process, divorced from everything else that was happening, be 
it local politics, national, and regional.
    And also, in many ways, it was represented as a silver 
bullet to a much more complex problem.
    The implementation of Section 1502 led to increased 
unemployment, loss of revenue for artisanal miners, and 
increased fraud.
    Number five, increased unemployment has caused a 
recrudescence of banditry, including kidnappings for ransom.
    And then, number six, the law did not account for other 
sources of revenue that militias have. They racketeer. They tax 
everything that is happening in the area that they control. And 
so it did not really cut their resources.
    Number seven, which I think is actually equally troubling, 
is that Rwanda has taken advantage of 1502 to launder and 
certify Congolese resources and has emerged as the world's 
largest exporter of coltan, when, in fact, they do not have 
significant resources of this. This can be linked directly to 
1502.
    So what are the unintended consequences here? I think 
captains of high-technology industry and policymakers in the 
U.S. and Europe invested a disproportionate amount of energy 
and capital to solve the mineral trade problem at the expense 
of the larger governance crisis that is the source, actually, 
of instability and conflict in Congo.
    So when we think about where Congo is today, we realize 
that Congo is much closer to a bigger--it is at the highest 
volatile level it has been at in 20 years, so we have sources 
of conflict all over the country, having migrated from the east 
to the south to the center and to central Congo. So we have 
groups like Bundu dia Mayala that are regularly massacred by 
the forces. You have violence in Butembo, in Erengeti, in Beni, 
where people get killed every night in their sleep by death 
squads that neither MONUSCO nor the FRDC have been able to 
preempt. Now we are facing a situation where President Kabila 
does not want to go and wants to stay.
    So when the Congolese take up arms or take to the streets 
for civil disobedience, the reasons remain the same. It is bad 
governance.
    So what should we do then? I think this legislation could 
have worked better if it was part of a larger, comprehensive 
process. As Dodd-Frank stands today, like I said, it allows to 
launder, legalize, and certify the looting of Congolese 
resources, which is a net loss for the Congolese, and that 
cannot continue.
    The U.S. should pursue what Ambassador Nikki Haley has 
started at the U.N. Security Council and ask for greater 
transparency and accountability for MONUSCO in delivering what 
they said they would deliver to Congo and also asking them to 
present an exit plan over the next 5 years, so they actually 
can allow Congo to start building its own state and its own 
military.
    So far, they are serving as an extension to the Kabila 
regime, and also as a broken crutch to the Kabila regime. As 
long as MONUSCO is there indefinitely, Congo will never get on 
its feet.
    The last point I would like to recommend is that the U.S. 
continue to exert pressure on the Kabila regime to open up the 
political space to protect the citizens' rights and liberties, 
respect the Constitution, and engage in a credible political 
process that will culminate in the election this year or early 
next year to bring a new President.
    Thank you.
    [The prepared statement of Mr. Dizolele follows:]

              Prepared Statement of Mvemba Phezo Dizolele

    Chairman Flake, Ranking Member Booker and Distinguished Members of 
the Subcommittee on Africa and Global Health Policy:
    Thank you for the invitation and honor to testify before your 
subcommittee. I appreciate your continued interest in developments in 
the Democratic Republic of Congo (DRC) and your support for the 
Congolese people.
    Mr. Chairman, the views expressed in this statement are mine, and 
mine alone. With your permission, sir, I would like to submit my 
written statement into the record.
    The last time I testified before your subcommittee 4 years ago, 
Congo had been grappling with the M23 rebellion. The insurgents had 
seized parts of North Kivu, laid siege on the provincial capital city 
of Goma, and displaced thousands of civilians before withdrawing into 
neighboring Uganda and Rwanda.
    That crisis reflected yet another escalation of the protracted 
violence that has come to define Congo. The rebels exploited the Kabila 
regime's unwillingness to raise an adequate professional army to defend 
the country's territorial integrity and protect the Congolese. The M23 
also exposed the limitations of the United Nations peacekeeping 
mission, which has been reticent to apply its Chapter VII mandate and 
use force to protect civilians. Troop contributing countries lack the 
required political will and adequate personnel level and equipment to 
carry out their mission.
    The United Nations Security Council is notorious for its 
schizophrenic Congo policy, which consistently places the interests of 
the Kabila regime above the aspirations and rights of the Congolese 
people.
    It is this regime of suffering, violence and unbridled looting of 
natural resources that inspired Section 1502 of the Dodd-Frank Act. 
Proponents of 1502 sought to bring peace to Congo's eastern provinces 
of North and South Kivu by regulating mineral trade through United 
States law, cleaning up the supply chain and reducing armed groups' 
access to financial means. The regulation would de facto curb the 
violence and human rights abuses, they claimed.
    Today, nearly 7 years since the Act became law, there is a clear 
horizon over which we can analyze the impact of Section 1502.
                    what are the merits of this law?
    1. Section 1502 supporters mobilized media and social networks in 
an unprecedented manner to raise American consumers' awareness of the 
links between the conflict in Congo and their electronics. By and 
large, consumers now expect technology firms to mind the supply chain.
    2. The law had an immediate psychological effect on Congolese 
authorities and business operators, regional political and economic 
actors, and international firms. For instance, Congo's President Joseph 
Kabila sought to pre-empt the impact of the law before it went into 
effect and temporarily suspended mineral exploitation in the Kivus.
    3. The law attempted to clean the mineral supply chain to curtail 
the illicit and illegal mineral exploitation and trade, and eradicate 
the scourge of conflict minerals, so to speak.
    4. The law also contributed to Congo's acceleration of the 
delimitation and registration of mining sites and quarries; the 
training of the mine police; increased capacity-building for mining 
agents and inspectors. These initiatives encouraged consultations 
between concerned parties.
    5. Armed groups found it difficult to export minerals and raise 
revenue from mines in areas they controlled.
                        where did the law fail?
    1. From its inception, Section 1502 cast a negative shadow on 
otherwise legal and legitimate businesses and immediately led to a de 
facto boycott of mining products from Congo's eastern provinces.
    2. The boycott caused closures of trading posts, known locally as 
comptoirs.
    3. This law treated the mineral trade as a stand-alone process, 
divorced from local, national and regional politics, and its proponents 
presented the regulation as a silver bullet to a much more complex 
problem.
    4. The implementation of Section of 1502 led to increased 
unemployment, loss of revenue for artisanal miners, and increased 
fraud. Artisanal mining has sustained hundreds of thousands of families 
since the collapse of the agriculture sector in the Kivus in the early 
1980's and the collapse of state-owned mining giant Gecamines in the 
former Katanga Province.
    5. The increased unemployment has caused a recrudescence of 
banditry, including kidnappings for ransom.
    6. The law did not account for other sources of revenue at the 
disposal of armed groups, i.e., taxation of commercial activities and 
racketeering in the areas they controlled.
    7. With a better organized state administrative infrastructure, 
Rwanda has taken advantage of Section 1502 to launder and certify 
mineral resources from the illicit and illegal trade in Congo and 
export them as Rwandan products. Despite insignificant mineral 
deposits, Rwanda has become the world's largest exporter of coltan. In 
other words, Section 1502 legalized the looting of Congolese mineral 
resources.
                        unintended consequences
    Focused on the so-called conflict minerals in the Kivus and their 
certification, Section 1502 provided a false sense of progress on the 
security front. Captains of the high technology industry and 
policymakers in the United States and Europe invested disproportionate 
amount of energy and political capital to solve the mineral trade 
problem at the expense of the larger governance crisis that fuels 
insecurity and instability in DRC.
    In the 7 years that the Dodd-Frank Act has regulated this mineral 
trade, Congo is no closer to peace than it was in 2010. On the 
contrary, the situation is arguably at its most explosive level in two 
decades, as violence has spread both geographically from the east to 
the south and the west, and intensified in scale.
    The heightened volatility stems from President Joseph Kabila's 
determination to subvert the Constitution and stay in office beyond his 
second and last 5-year term, which ended in December of 2016. Efforts 
by the international community and the Catholic Church to broker an 
interim power-sharing agreement have failed. President Kabila has 
remained silent throughout this process, sustaining the impasse.
    The Congolese people now view Joseph Kabila and his government as 
extra-constitutional, illegal and illegitimate. Within this volatile 
context, they fear a resurgence of the wider conflict that engulfed DRC 
from 1996 to 2003 and caused an excess of 6 million deaths.
    Beyond the mobilization of armed militias in the eastern Kivus, the 
years 2015 and 2016 were particularly violent as new centers of 
instability emerged in other parts of Congo, including western Kongo 
Central, southern Tanganyika and southern Kasai Central.
    In Kongo Central, Bundu dia Mayala partisans have regularly met 
violent death by gunfire from security forces. In North Kivu, residents 
of Butembo, Beni, Erengeti and other localities, are massacred on a 
daily basis in their sleep by elusive death squads that the U.N. 
peacekeepers and the Congolese Army have failed to either apprehend or 
vanquish.
    The populations of Kasai Central have witnessed never-before-seen 
violence reminiscent of ISIS. Beheading is now a common practice in a 
region that had not experienced armed conflict since the 1960's. It is 
uncertain at this point as to whom--the Congolese Army or the militia--
is most to blame for this violence. The conflict resulted from the 
Government's mismanagement of a royal succession dispute in the Bajila-
Kasanga's Kamwina Nsapu chieftaincy.
    Michael Sharp, the American who coordinated the United Nations 
Group of Experts in Congo, was killed in this conflict along with 
colleagues.
    Whether the Congolese embrace civil disobedience or armed struggle, 
their grievances are rooted in blatant violation of democratic 
principles by the Kabila regime, bad governance, mismanagement of 
resources, and incompetence. This popular discontent has nothing to do 
with minerals.
    Over the past 2 years, pro-democracy protests brought thousands of 
young people and political opposition partisans to the streets in 
several cities to demand the respect of the Constitution and better 
governance. The ensuing police and military repression in the capital 
city of Kinshasa resulted in tens of youths being either killed by 
gunfire or arrested.
    Political opposition leaders, civil society leaders, youth 
activists and other proponents of the respect of the Constitution 
remain the primary targets of this campaign of repression.
    President Kabila and his supporters' intransigence to remain in 
power no matter the cost will continue to fuel tensions and exacerbate 
violence.
    Due to its myopic approach, Section 1502 misdiagnosed the mineral 
trade as the root of the conflict, not as a symptom, and offered 
inadequate prescriptions and no reprieve from the aforementioned 
incidents.
    Proponents of the law ignored the multidimensional nature of 
conflict and failed to adjust their narrative as it became clear to 
independent analysts that Section 1502 would not and could not bring 
peace.
                          what should be done?
    1. This legislation might have worked better had it been part of a 
comprehensive political process. As it now stands, Dodd-Frank Section 
1502 launders, legalizes and certifies the looting of Congolese 
resources--a net loss for DRC. This law should be folded and 
discontinued.
    2. The United States should pursue what Ambassador Nikki Haley has 
started at the United Nations Security Council, demand greater 
accountability of the U.N. peacekeeping mission along with a credible 
exit plan to be implemented over the next 5 years. MONUSCO has long 
been part of the problem, serving as an extension of and a broken 
crutch to the Kabila regime, and stifling the emergence of a functional 
state and an adequate professional army in Congo.
    3. The United States should continue to exert pressure on the 
Kabila regime to open the political space, protect citizens' rights and 
liberties, respect the Constitution, and engage in a credible political 
process that will culminate in the election of a new president.
    I thank you.

    Senator Flake. Thank you.
    Mr. Ganesan.

   STATEMENT OF ARVIND GANESAN, DIRECTOR, BUSINESS AND HUMAN 
           RIGHTS, HUMAN RIGHTS WATCH, WASHINGTON, DC

    Mr. Ganesan. Thank you, Mr. Chairman, Ranking Member 
Booker, and members of the subcommittee. Thank you again for 
the opportunity to testify today on Section 1502.
    Since 2005, we at Human Rights Watch have documented the 
pernicious effect that the trade in gold has had on civilians 
in Eastern Congo. Armed groups, foreign-backed rebels, and, at 
times, the Congolese Army have killed, raped, pillaged, and 
forcefully conscripted child soldiers as they tried to control 
the lucrative gold trade. That was why Human Rights Watch 
supported 1502 as an important tool to help stop the flow of 
mineral funds to abusive armed groups.
    This hearing comes at a critical time for the Congo. Over 
the past 2 years, government officials and security forces 
carried out a brutal campaign of repression against those 
opposed to President Kabila's efforts to stay in office after 
his two terms expired last year. New elections are supposed to 
be held at the end of this year, but the deal is stalled, and 
violence between militia groups and Congolese security forces 
have escalated, along with alarming increases in human rights 
abuses.
    Just last month, as you noted earlier, two members of the 
U.N. Group of Experts, Michael Sharp, an American, and Zahida 
Catalan, a Swede, were killed while investigating large-scale 
human rights abuses. It remains unclear who was responsible, 
but it is important to note that the Group of Experts has been 
instrumental in exposing the links between natural resources 
and the conflict.
    Without 1502, an already explosive situation in Congo could 
get worse. Abusive armed groups, factions of the security 
forces, and other opaque mafia-like networks allegedly linked 
to government officials, could return to the mines in Eastern 
Congo. This could further destabilize this volatile region, 
which is clearly not in the U.S. interests. That might also 
lead to efforts to look at alternatives like targeted 
sanctions, like what happened in Burma several years ago.
    In mid-March, Bloomberg News reported that the Congolese 
Minister of Mines wrote the Securities and Exchange Commission 
warning that eliminating 1502 would lead to ``escalation in the 
activities of non-state armed groups.''
    And just last month, my colleagues were in Eastern Congo 
and met with miners and former child soldiers from the NDC-R, 
an abusive and violent group working there. They told us how 
NDC-R is taxing the gold trade at dozens of mining sites, 
making over $20,000 a month and allegedly trading gold for 
weapons.
    These problems could actually become more severe if the 
administration cuts support for U.N. peacekeeping in Congo and 
makes further cuts to foreign assistance. That would perversely 
make it easier for abusive armed groups to make money from 
conflict minerals while simultaneously reducing funds to 
entities meant to curtail them.
    While imperfect, 1502 is having an impact. Since 2012, 
mining at the Kalimbi tin mine in South Kivu, for example, has 
had a traceability scheme so that production of tin benefits 
local workers and not abusive armed groups or corrupt 
officials.
    Stopping 1502 would also hurt responsible U.S. companies 
such as Apple, Intel, and Tiffany, and it would create a race 
to the bottom. They and others would be placed at a competitive 
disadvantage against other companies that operate opaquely in a 
way that could fund armed groups. And these companies, along 
with Warren Buffett's Richline Group, have publicly expressed 
support for the law.
    Instead of abandoning the law, what the U.S. should do is 
do what it has successfully done over decades, which is be the 
first country to enact a law ensuring that companies act 
responsibly and then work diligently to make sure others do the 
same. That is what the U.S. did in 1977 with the Foreign 
Corrupt Practices Act. And this is starting to happen with 1502 
since just last month the European Parliament passed its own 
rules on conflict minerals.
    On the ground, there are currently more than 200 conflict-
free smelters and key parts of Congolese civil society support 
it, including, recently, the president of the DRC Catholic 
Bishops Conference as well.
    But we cannot deny the law has had problems. Between 2010 
and before final rules were implemented in 2012, the 
uncertainty, misinformation, and other factors led to a de 
facto boycott by companies of the sector, and they avoided 
sourcing from Congo. There is also evidence that mineral-
related violence during that time did not subside.
    However, those problems are not solely due to 1502. For 
example, the Kabila government did order a 6-month halt to 
mining in the Kivus in 2010.
    And today, companies are still slow to comply with the law, 
and the trade in gold, as others have mentioned, is harder to 
control.
    We support constructive proposals to ensure 1502 is more 
efficient and effective. But in fairness, we have not heard 
those types of specific proposals from leading industry critics 
of the law.
    There are also indications the costs of 1502 are 
decreasing. So, for example, ELM Sustainability Partners found 
the actual cost of implementation for industry are 15 percent 
to 26 percent of what the SEC originally estimated. And as 
others noted, there are record highs in Eastern Congo for the 
export of conflict-free tin and tantalum in 2016.
    In general, we think at Human Rights Watch the cost of 
capital should be lower for responsible companies, and we would 
support proposals to advantage 1502-compliant companies in 
government procurement. And while we are not experts on tax, we 
think that Congress and others should examine using tax credits 
or other comparable incentives to help support 1502 
implementation.
    We would also like to see broader growth of the conflict-
free economy in the Congo, perhaps through institutions like 
the World Bank or other institutions.
    The situation in Congo is complex. But without 1502, 
instability in Congo would grow, responsible companies would 
suffer, and armed groups would be emboldened. That would be a 
very, very unfortunate outcome.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Ganesan follows:]

                  Prepared Statement of Arvind Ganesan

    Chairman Flake, Ranking Member Booker and other members of the 
subcommittee, thank you very much for the opportunity to testify today 
on Dodd-Frank Section 1502 and its impact on addressing the trade in 
``Conflict Minerals.'' Human Rights Watch has documented abuses in the 
Democratic Republic of Congo since the fall of Mobutu Sese Seko and 
throughout the country's vicious civil war and the violence and abuses 
that continue.
    Since 2005, we have documented the pernicious effect that the trade 
in gold has had on civilians in eastern Congo. Numerous armed groups, 
foreign-backed rebels, and at times the Congolese army have killed, 
raped, pillaged, and forcibly conscripted child soldiers as they sought 
to gain or maintain control of lucrative gold mines, which in turn 
helped finance their abusive movements. We've also documented how a 
major mining company paid a rebel group to explore for gold in its 
concession area in 2005.
    It is for these reasons that Human Rights Watch supported and 
continues to support Dodd-Frank 1502. We never saw it as a panacea to 
stop the abuses or violence in Congo completely. Rather, we saw it as 
an important tool to help address a specific goal: stopping the flow of 
funds to abusive armed groups who were exploiting Congo's lucrative 
mining resources through increased transparency and accountability.
    Today, we are here because Dodd-Frank 1502 may be suspended or even 
revoked. We know legislation can sometimes be a blunt tool and that it 
can have unintended consequences. With that in mind, we welcome a 
discussion on how Section 1502 can fulfill its objectives more 
efficiently; however, we strongly believe that its suspension or 
revocation would be damaging for security, human rights, and for 
responsible companies. To be crystal clear: if the president suspends 
the law or if Congress revokes it, we believe that the repercussions 
would be very serious.
    This hearing comes at a critical time in Congo. Over the past 2 
years, government officials and security forces have carried out a 
brutal campaign of repression against those opposed to President Joseph 
Kabila's efforts to stay in power beyond the December 19, 2016 end of 
his constitutionally mandated two-term limit. Scores of peaceful 
protesters have been killed, pro-democracy activists and opposition 
leaders have been imprisoned, and media outlets have been shuttered. 
After significant pressure from the international community--including 
targeted U.S. sanctions against top officials and other strong measures 
backed by this Congress--President Kabila made some important 
concessions in an end-of-the year deal mediated by the Catholic Church.
    This agreement calls for presidential elections to be held by the 
end of this year and says clearly that there will be no changes to the 
constitution or a referendum to allow Kabila to run for a third term. 
Yet implementation of the deal has stalled, as violence between militia 
groups and the Congolese security forces have escalated in many parts 
of the country, along with an alarming increase in human rights 
violations. Some of these situations are directly linked to Kabila 
staying in power beyond the end of his constitutional mandate. Kabila 
has agreed to hold elections and step down from power, and the 
prospects for stability likely hinge on whether he abides by that 
commitment. Continued U.S. engagement and strong pressure on Kabila to 
do so is critical.
    Last month, two members of the U.N. Group of Experts on Congo, 
Michael Sharp, an American, and Zaida Catalan, from Sweden, were killed 
while investigating large-scale human rights abuses in Congo's central 
Kasai region. It remains unclear who was responsible for the murders. 
The Group of Experts has been instrumental over the years in exposing 
the links between the trade in natural resources, armed groups, 
sanctions-busting, and the violence in Congo.
    In this context, suspending or eliminating Dodd-Frank 1502 would 
make an already explosive situation in Congo worse. Abusive armed 
groups, factions of the security forces, and other opaque mafia-like 
networks allegedly linked to government officials could then easily 
return to the lucrative mines in eastern Congo to finance their 
activities. This could lead to new security problems throughout the 
volatile region--where some of Congo's nine neighboring countries have 
illegally benefited from the country's vast mineral wealth. And it 
could also create direct security risks for the United States, which 
has a clear interest in promoting a more stable and peaceful central 
Africa region.
    Suspending Dodd-Frank 1502 would also harm responsible American 
companies that have embraced the law and the principles that underpin 
it, including some of this country's most successful and well-known 
companies, such as Apple, Intel, and Tiffany. They and others would 
suddenly be placed at a competitive disadvantage against other 
companies that prefer to operate opaquely in a way that could fund 
armed groups. Eliminating the rule would punish responsible companies 
and reward irresponsible ones by creating a ``race to the bottom,'' 
legalizing opaque sourcing of conflict minerals while disadvantaging 
companies that choose to keep their supply chains clean.
    In the absence of 1502, it is possible that civil society groups 
could end up pressing for targeted sanctions on the Congolese minerals 
sector if it becomes clear that abusive armed groups are profiting from 
this trade. Such targeted sanctions are typically the approach the 
international community has taken in recent years to address similar 
problems. While understandable, this is a much more draconian approach 
than the transparency and auditing procedures 1502 require. These are 
serious consequences for Congo, for major U.S. companies, and for human 
rights.
   suspending 1502 will make it easier to fund armed groups secretly
    The fundamental purpose of Dodd-Frank 1502 is to keep money out of 
the hands of armed groups that trade in and profit from certain 
minerals. Human rights groups, responsible companies, and the U.S. 
government have shared this goal for many years. It is important not to 
lose this aspect of the law: it is a rare instance where key 
institutions in and out of government agree on what the problems is, 
want to stop it, and have managed to put a law in place to help do it. 
That is something Congress and the administration should support.
    Without the law, it would be easier for abusive armed groups to 
fund themselves secretly, which could help to further destabilize parts 
of Congo. In mid-March, Bloomberg news reported that the Congolese 
Minister of Mines, Martin Kabwelulu, wrote the U.S. Securities and 
Exchange Commission, warning that eliminating 1502 would lead to an 
``escalation in the activities of non-state armed groups.'' The U.S. 
has sought for decades to help de-escalate these activities; removing a 
tool that can help do that undercuts longstanding U.S. foreign policy 
objectives.
    This problem could be exacerbated by the administration's possible 
budget cuts for U.N. peacekeeping in Congo and by possible further cuts 
to other foreign assistance to Congo. The combination of suspending or 
eliminating 1502 while cutting support to peacekeeping and other 
foreign assistance could make it easier for abusive armed groups to 
make money from conflict minerals while simultaneously reducing funds 
to entities meant to curtail conflict and foster stability.
    Considering Congress' longstanding interest in Congo, the fragile 
situation on the ground, and the billions of dollars the U.S. has spent 
on peacekeeping efforts in the country, this scenario would be 
extraordinarily counterproductive to U.S. geopolitical and security 
interests.
    While imperfect, Dodd Frank has already had some tangible positive 
effects for the people of eastern Congo and those seeking greater 
transparency. Since 2012, mining at the Kalimbi tin mine in Nyabibwe, 
South Kivu, for example, has had a functional traceability scheme, 
which allows for the continuous production of tin that benefits the 
local workers, and not the abusive armed groups or corrupt army or 
government officials.
    Global Witness reported that in 2012, the Congolese government 
suspended the operations of two Chinese companies because they failed 
to carry out proper due diligence and suspected they may be sourcing 
from armed groups. But it is troubling that the same year, Global 
Witness reported that two Congolese army officers were caught trying to 
smuggle more than 1,000 pounds of minerals, including coltan. The 
government refused to press charges, but the officer who stopped them 
and tried to stop the smuggling was suspended from his post. At 
present, however, we have some indications that Congolese government 
officials are starting to take actions to prevent mineral wealth from 
illegally profiting armed groups or army officers.
    It is also important to remember the types of groups that could be 
emboldened and enriched without the transparency and systems Dodd-Frank 
requires. Human Rights Watch and others have documented the abuses by 
several armed groups that benefited from this trade and the harm they 
have caused. This includes the armed group known as the Nduma Defense 
of Congo-Renove (NDC-R), one of the most abusive groups operating in 
eastern Congo that benefits greatly from the uncontrolled and illicit 
exploitation of gold there. Traceability efforts so far have had a much 
greater impact on tin, tantalum, and tungsten than on gold. The NDC-R 
has committed serious human rights violations, including the killings 
of dozens of civilians and recruitment of children over the past 2 
years.
    Last month, my colleagues were in eastern Congo's Walikale 
territory in North Kivu and met with several former child soldiers from 
NDC-R and miners. They told us how the group led by Guidon Shimiray 
Mwissa is systemically taxing the lucrative gold trade in dozens of 
mining sites. By holding a monopoly on things like alcohol and 
cigarettes in the mining pits and illegally taxing those who work in or 
near the mines, Guidon is making over $20,000 a month. According to 
some of his former cadres, he's also allegedly trading gold for 
weapons.
    Suspending Dodd-Frank 1502 would make it easier for other abusive 
armed groups and corrupt officials to enrich themselves the way Guidon 
is by making the trade even more opaque and easier to do business with 
armed groups. This would make an already bad situation even worse.
            suspending or eliminating dodd-frank 1502 will 
                disadvantage responsible u.s. companies
    Suspending or revoking Dodd-Frank 1502 would hurt some of the 
United States' leading companies, such as Tiffany, Intel, and Apple. 
These firms have taken meaningful steps to keep their supply chains 
free from links to abuses in Congo and would be placed at a competitive 
disadvantage against companies inclined to operate less responsibly.
    Responsible companies have worked hard to comply with the 
requirements of 1502. In March 2016, Apple announced that 100 percent 
of its conflict mineral supply chain had been audited to ensure 
compliance with Dodd-Frank 1502. That move was widely praised by human 
rights groups. While its supplies were not fully conflict-free, it has 
achieved the kind of oversight needed to eliminate conflict minerals 
from its supply chain. It took the company about 6 years of steady work 
on the ground and with its suppliers to meet this goal. But Apple is 
not just focusing on its legal requirements; it is also trying to clean 
up its cobalt supply chain after facing scrutiny over problems in it.
    Intel began to examine conflict minerals in 2008 and has reported 
that its microprocessors have been conflict free since 2013. The 
company has said that it was on track to make its entire product base 
conflict-free. It took several years for the company to get control 
over its supply chains and build the capacity to source from properly 
audited mines.
    Also, Intel commissioned an important study on Millennials' 
attitudes towards conflict minerals. The survey provides useful 
insights into the minds of key consumers. 97 percent of those surveyed 
believed that companies should ``act in a way that benefits society.'' 
Almost 70 percent would avoid companies that they think are not 
socially responsible. About 70 percent cared about conflict minerals 
once they learned about them, and a similar percentage said that how a 
company dealt with conflict minerals would influence whether they 
bought its products. Dodd-Frank 1502 gives consumers the information 
they need to make decisions, helps companies meet those expectations, 
and isolates companies that do not.
    Tiffany & Co., one of the world's most recognizable and prestigious 
jewelry companies, has also invested a considerable amount of time and 
resources to ensure that it monitors its supply chain to exclude 
conflict minerals. It conducts detailed reviews of its global supply 
chains. It works, like other companies, with programs to support 
conflict-free smelters and other initiatives. The company has made the 
investment to ensure its products are conflict-free.
    Each of these companies is an American icon and a leader in their 
industries. And each of them does not want Dodd-Frank 1502 or 
comparable regulation to go away.
    When it became apparent that 1502 might be suspended, Tiffany 
issued a statement noting ``we firmly believe that the continued 
existence of Federal regulation that addresses the sourcing of conflict 
minerals provides an important framework for industry, laying the 
foundation for protection of human rights and responsible sourcing 
efforts in Congo and beyond. We urge Congress to support legislation 
that effectively promotes due diligence and transparency for the 
sourcing of all conflict metals and gemstones.''
    Richline Group, a jeweler owned by Warren Buffet's Berkshire 
Hathaway, has also come out in support of 1502 and noted that ``Section 
1502 has proven to be an important and effective first step in the 
effort to create a conflict-free mining industry in Congo that benefits 
legitimate business rather than extortion and violence'' and said ``we 
fully support the continued implementation of Section 1502.''
    From personal experience, I know that the CEO of one of these 
companies had strong reservations against Dodd-Frank 1502 when it first 
became law, but ultimately saw that it was something the company could 
and would implement it in part because it was far less costly and 
laborious than he originally expected and because it was the right 
thing for the company to do.
    The support from major companies highlights a perverse consequence 
that suspending or repealing Dodd-Frank would cause: it would create an 
uneven playing field placing major U.S. companies at a competitive 
disadvantage relative to companies that did not want to disclose their 
supply chains, or worse still, do not care whether their activities led 
to the secret funding of armed groups in Congo. In this sense repealing 
1502 would create a perverse incentive to behave less responsibly, and 
would harm the efforts of responsible companies. Tiffany, Apple, Intel, 
and Richline have said they believe keeping conflict minerals out of 
their supply chain is the right thing to do and that they will continue 
to do it. But without regulation, they will bear a steep cost for being 
responsible. Dodd-Frank levels the playing field and makes sure 
responsible companies are not penalized for doing the right thing while 
requiring others to meet minimum standards.
    Additionally, 129 investors with assets worth approximately $5 
trillion under management have also urged the U.S. government to keep 
the law in place and to ensure its continued implementation and 
enforcement.
    The U.S. should maintain the same path it has successfully pursued 
over decades: be the first country to enact a strong law ensuring that 
companies act responsibly and then work diligently to make sure others 
do the same. This is what the U.S. did with the Foreign Corrupt 
Practices Act. It passed the law in 1977, worked to get other countries 
to pass similar statutes, and now there is an important global anti-
corruption regime that includes many countries with strong anti-
corruption laws of their own. Multilateral institutions like the 
Organization for Economic Cooperation and Development (OECD) and the 
U.N. have also developed their own standards. The U.S. played a leading 
role in these efforts--in part because it led by example.
    This approach has also been true with 1502. U.S. adoption of 1502 
led the EU and OECD, for example, to start developing their own 
standards on conflict minerals that will, at least in the case of the 
EU, apply to a broad swath of companies beyond U.S. jurisdiction. Just 
this March, the European Parliament approved new conflict minerals 
regulations. That approach creates a race to the top where U.S. 
companies lead, versus suspending 1502 and creating a race to the 
bottom where U.S. companies are hurt.
    Five years after the rules went into force, there is progress. 
There are more than 200 conflict-free smelters and major companies, as 
noted previously, are working towards full compliance and do not want 
the rule to end. And other jurisdictions are developing their own, 
similar, rules.
    Internationally, the London Bullion Market Association and the 
Dubai Multi-Commodities Center are putting policies into place to deal 
with illicit funds derived from minerals. In Congo, the International 
Tin Supply Chain Initiative is also working to support company due 
diligence. These are relatively new initiatives and their efficacy is 
not yet known, but they are examples of the momentum 1502 is creating 
and what could be lost if is eliminated.
    On the ground, significant parts of Congolese civil society 
generally support the law. As Dr. Denis Mukwege wrote in the New York 
Times in 2015, ``A conflict-free minerals industry would greatly 
benefit the people of Congo and contribute to ending the unspeakable 
violence they have endured for years. The legislative tools to help 
make this a reality are available to international policy makers, but 
they must be enacted and enforced.'' Those views are echoed by a number 
of civil society groups.
                    challenges with dodd-frank 1502
    There are very compelling reasons to keep 1502, but we do not want 
to downplay the fact that this law has had its challenges, claim that 
implementation of the law has been perfect, or suggest that it is the 
sole answer to conflict and abuse in eastern Congo.
    During the period after Dodd Frank became law in 2010 and before 
its implementing rules were finalized in 2012, uncertainty, 
misinformation, and other factors led to adverse consequences on the 
ground. That uncertainty before the final rules were issued led to a de 
facto boycott as companies avoided sourcing from Congo. There is also 
evidence that mineral-related violence during that time did not 
subside.
    However, those problems are not solely due to Dodd-Frank 1502. The 
Kabila government exacerbated the negative economic impacts when it 
ordered a 6-month halt to all mining in the Kivus in 2010. Between 2010 
and 2012, the period between enactment of 1502 and implementation of 
its final rules, companies chose to boycott Congo since nothing in the 
law required that companies stop doing business with Congo. These 
measures, coupled with the uncertainty over Dodd-Frank's final rules, 
created problems.
    There are still reports of problems facing artisanal miners ranging 
from low prices affecting artisanal coltan miners.
    Another key issue is that U.S. companies are still slow to comply 
with the law. In 2015, Global Witness and Amnesty International 
reported that as much as 80 percent of covered companies were not 
properly disclosing and auditing their conflict minerals supply chain. 
This is an important area for growth and development--as it could help 
strengthen the positive impact of the law and enable a more level 
playing field for all companies down the road.
                            the way forward
    We support constructive proposals to ensure Dodd-Frank 1502 is more 
efficient and effective. Suspending or scrapping the law will not do 
this and will instead disadvantage responsible companies, while likely 
creating more instability in parts of Congo and making it easier for 
abusive armed groups to pay for their activities.
    If industry groups or companies have specific ideas on how to make 
1502 more efficient or effective, you should make sure they are sharing 
them. There are already indications that costs of implementing 1502 are 
decreasing significantly as new tools are developed to make it easier 
to comply. ELM Sustainability Partners did an assessment of the law and 
found that the total industry costs are about 15-26 percent of the 
original costs that the SEC reported. Meanwhile, eastern Congo reported 
record highs for conflict-free exports of tin and tantalum in 2016.
    You should also request a study--perhaps from the GAO--on how to 
promote conflict-free minerals on the ground, and stronger incentives 
to promote and reward responsible companies.
    Unfortunately, the main industry critics, namely the National 
Association of Manufacturers, have not put forward specific proposals 
that would tweak 1502 to make it more effective. Many organizations are 
regularly discussing implementation with key companies and have 
listened closely to their concerns and challenges.
    As a general principal, we believe that responsible companies in 
any sector should be rewarded for safeguarding human rights in their 
operations and others should be incentivized to do the same. Broadly, 
the cost of capital should be lower for responsible compliant companies 
than noncompliant ones and the opportunities for responsible companies 
should be greater.
    In that context, we would encourage you to support proposals that 
have been made by industry associations to advantage 1502 compliant 
companies in government procurement and efforts by responsible 
investors to favor and support those companies over others. And while 
we are not experts on tax policy, it is worth Congress and others 
examining how to use tax credits or comparable incentives to help 
support 1502 implementation because it could help lower the costs of 
implementation for companies.
    Finally, we suggest Congress encourage efforts to support and 
promote conflict-free smelters on the ground. The principal way to do 
this is to make sure more companies are complying and sourcing from 
responsible mining and smelting sources. Given that the U.S. is still 
the largest donor to the World Bank, it would be worth examining how 
that institution can help the Congolese government and industry grow a 
conflict-free market.
                               conclusion
    The situation in Congo is complex. But it is highly likely that 
suspending Dodd-Frank 1502 or eliminating it will contribute to greater 
instability, create a competitive disadvantage for responsible 
companies, and it could create a troubling paradox where, as U.S. aid 
to Congo and U.N. peacekeeping may decline, the opportunity for abusive 
armed groups to make money off from conflict minerals will increase. 
The U.S. would also fall behind its peers on an issue where it set the 
global example--this is not what Congress should seek to encourage or 
support.
    Instead, we hope the administration and Congress will seek to 
refine 1502, support responsible companies, and look at holistic 
approaches to keeping conflict mineral revenues out of the hands of 
abusive armed groups, whether they be militias, rebels, mafias, or 
government.

    Senator Flake. Thank you.
    Thank you all for the testimony. I will start a round of 
questions.
    Mr. Goss, you mentioned in your testimony that while 
Section 1502 has clearly helped deprive armed groups in Central 
Africa from exploiting certain illicit sources of funding, its 
ultimate record of reducing overall illicit income flowing to 
these actors is notoriously difficult to determine.
    You mentioned a little in your testimony gold is not 
covered here and that is where a lot of the illicit activity 
comes. Can you talk a little more about this? Is this akin to 
squeezing a balloon and seeing the violence and illicit 
activity go elsewhere?
    Mr. Goss. Yes, Senator. In fact, that is the same analogy I 
typically use.
    Because there are so many discrete sources of illicit 
income for militias, non-state armed actors, corrupt government 
and military officials, by bringing in additional controls on 
3T, we have generated some positive benefits for communities.
    But at the same time, these illicit state and non-state 
actors have gone to gold mines. They have gone to illegal 
roadblocks, wildlife trafficking, extortion. They control basic 
goods in and around mine sites. You even have validated mine 
sites where there are illegal roadblocks or illegal taxation 
schemes right outside. So what appears to be a validated mine 
site may actually be contributing to conflict.
    So, yes, it is very much like the analogy that you used.
    Senator Flake. Does that argue for a more comprehensive 
approach? Mr. Dizolele has talked about this is enforcement by 
the SEC. They are not going to enforce on wildlife trafficking 
or roadblocks or kidnappings. Do we need something more 
comprehensive?
    Mr. Goss. One of the basic tenets of our testimony and the 
tech sector's approach is that our role is to build our systems 
and, along with government and civil society, bring along the 
peace and security that is needed for our systems to achieve.
    Right now, we have a situation, as my fellow witnesses have 
described here, where you have a largely lawless region in 
eastern DRC. You have almost a borderless region between DRC, 
Uganda, Rwanda, and Burundi, where armed groups pass back and 
forth here. It is one of the most corrupt areas in the world, 
and it is very difficult, despite our best efforts, to create 
clean and legitimate sourcing in that region.
    And what we are really calling for here is renewed activity 
from the U.S., from the European Union, and the international 
community to work with regional governments to increase peace 
and security for the people of the Congo and so our programs 
can thrive in that situation.
    Senator Flake. Thank you.
    Mr. Dizolele, Mr. Kabila is in charge now, will be in 
charge for a while, maybe for the foreseeable future, not 
knowing what is going to happen politically. Is that government 
capable of partnering with the United States on a more 
comprehensive approach to stop illicit activity beyond just the 
conflict minerals?
    Mr. Dizolele. Senator, the government in Kinshasa is one 
that exhibits schizophrenia in the sense that I think, on one 
level, when cooperation suits them, they will take on the 
cooperation. And when it does not, they will fight it.
    I will say, no. The current government is not capable of 
acting as a real partner. And I think this is the problem that 
we face with laws like Dodd-Frank, 1502, because it does not 
account as much for the weakness of the state. It puts a lot of 
faith into the consumer, into businesses. But pretty much 
absent in that proposition is the role of the state.
    And this is the frustration from the Congolese perspective, 
is that we can bring all the cleanliness we want in the 
process.
    One, it will not be as clean as we think. We have a lot of 
papers and certificates that are signed, but that is a 
different thing than to actually have it as a clean process.
    So long as the state is not strong, transparent, 
accountable to the people, they cannot be a reliable partner to 
the international community, sir.
    Senator Flake. All right. Thank you.
    Mr. Ganesan, you obviously would not try to assert that 
there is no illicit activity elsewhere, but I assume you would 
argue that, at least in this space, with the 3Ts, with the 
conflict minerals, that 1502 has had a positive impact?
    Mr. Ganesan. Yes, I think the most important thing to 
remember about rebel groups or mafias or others is, by 
definition, they are illicit, so they will engage in illicit 
economic activity.
    What 1502 does is it tries to install some kind of 
transparency and auditing regime to make sure that those 
commodities that hit the international marketplace are 
disclosed and, by doing so, raise the transaction costs for 
illicit actors and, hopefully, get clean actors working on it. 
So, yes, it is having an impact, particularly on the 3Ts.
    On gold, the problem is slightly different because of the 
value of gold and how it is smuggled. So, in 2005, we did a 
report looking at how gold was coming from the Congo through 
Uganda and making its way into Swiss refiners. And when we 
notified and worked with Swiss refiners to kind of change that 
trade, what we saw is gold started making its way to the United 
Arab Emirates through Dubai and elsewhere in the world.
    So our feeling with gold is, one, it is always valuable and 
it is always going to be a target for rebel groups or others to 
smuggle. But more importantly, to really get a control on the 
gold trade the way people have done with electronics, you will 
have to work with countries like the UAE, companies there, 
companies in India and elsewhere, who are major consumers of it 
to make sure that they are cleaning up their supply chains too.
    Now, Human Rights Watch is starting to do that with gold 
and some other commodities, and we are talking to Indian 
companies and others. But it has to do in part with the nature 
of the gold trade. However, that does not minimize the value of 
1502 and analogous schemes that Europe and others are putting 
there, because it is clearly having an effect.
    Senator Flake. Thank you.
    Senator Booker.
    Senator Booker. Thank you, Chairman Flake.
    So there is one chorus, if I hear correctly, that all of 
you are saying, that 1502 is just one part to what should be a 
much larger agenda that we have.
    Now, I just remind folks that we, as a part of this effort, 
1502, a lot more has been done. In fact, in foreign assistance, 
you have seen U.S. bilateral aid allocations totaling an 
estimated $295 million in fiscal year 2016 in addition to $62.5 
million in emergency food aid, $100 million in other additional 
emergency humanitarian aid, and $440 million in U.S.-assessed 
contributions to MONUSCO.
    So I guess what I am concerned about is that folks are 
isolating this one element of what should be a larger plan and 
weakening it.
    Mr. Goss, maybe I will start with you because on page 4 of 
your testimony, as Mr. Flake read, you say while Section 1502 
has clearly helped deprive armed groups in Central Africa from 
exploiting certain illicit sources of funding, its ultimate 
record of reducing overall illicit income flowing to these 
actions is notoriously difficult to determine.
    I love the tech industry because it is such a data-driven 
industry and having explicit measures is something that clearly 
is important for business. And I know this is very hard to 
measure, what was causation and what was correlation, but you 
admit on page 7 that, overall, Section 1502 has generated real 
progress in bringing increased transparency to the 3T mines and 
supply chains in the region, and in raising global awareness 
across the public and private sectors. That is just one element 
of you pointing out sort of the good elements of this.
    So you are not in any way suggesting throwing out this one 
specific tool in the larger toolbox. In some ways, it sounds 
like from your testimony, you are calling for us to lean in 
even further with some of the other actions. In other words, 
you do not see this as a bad action. It is having some very 
positive effect, many of which you note here. Is that correct?
    Mr. Goss. Yes, thank you, Senator.
    Certainly, we do see some positive effects from 1502. In 
2013, ITI testified on the House side, and we included a link 
to our testimony here, but we made several comments about the 
benefits of 1502, including increasing public awareness and 
consumer awareness, certainly driving more concerted effort. 
Other sectors joined with tech and electronics. And as 
Professor Dizolele mentioned, driving more activity on the 
ground from governments in the region here.
    So there are certainly positives that 1502 has generated 
here. There are also, and I think both of my fellow witnesses 
here have made a nod to this, there are some unintended 
consequences.
    What we would like to see, certainly, is a strong, 
continued U.S. presence on this issue. Certainly, there is a 
better way, in our view, to approach transparency in terms of 
mineral sourcing. There are portions or provisions of 1502 that 
discourage companies from sourcing in the region that we think 
could be reconsidered, and, frankly looking more toward that 
OECD due diligence guidance, which is now about to be used in 
the European Union. It is being used by the International 
Conference of the Great Lakes Region. Even China has adopted a 
version of it here as well. And again, it is part of the SEC 
compliance approach. We think that is a much more effective and 
balanced way of driving transparency.
    Senator Booker. Mr. Dizolele, am I pronouncing that right, 
Dizolele? Thank you very much.
    Mr. Dizolele. Yes, sir.
    Senator Booker. I just want to give respect to a fellow 
bald American.
    [Laughter.]
    Senator Booker. Mr. Dizolele pointed out very pointedly and 
correctly that the implementation of this in the short term, in 
a short period of time, had some immediate impacts that were 
ultimately corrected for over time.
    But as a guy who roots for American companies, obviously, 
and who is very invested in technology and innovation, it is a 
clear thing that if we suspended this rule at any point, it 
would be a disadvantage to the American companies that have 
already adopted many of the practices that this rule was 
intended to manifest and actually might create a perverse 
incentive because you are now going to have to compete against 
people that do not utilize these practices. Is that correct?
    Mr. Goss. Yes, I would agree with that. Our primary concern 
is that if 1502 were to be suspended or repealed, it would lead 
to increased volatility in an already very volatile region.
    Senator Booker. And stability and predictability are things 
that are good for American companies, yes?
    Mr. Goss. I would agree with that, yes.
    Senator Booker. All right.
    Mr. Goss. May I?
    Senator Booker. Please.
    Mr. Goss. I think as Mr. Ganesan said, we have several of 
our members who have already publicly come out and said that 
they are going to be continuing their commitments and their due 
diligence activities regardless because it is part of the tech 
sector DNA in terms of what we feel we owe to our supply 
chains, to our customers, and to our shareholders.
    Senator Booker. Right. Those people who operate with those 
values would be at a disadvantage should the rules be changed 
for those who want to do a race to the bottom.
    I want to stop here because I am trying to get on the good 
side of my chairman. This is our first hearing. I do not want 
to go over.
    Senator Flake. Senator Young.
    Senator Young. I thank the chairman, and the ranking member 
for his concise comments there.
    I thank all of you once again for being here.
    Mr. Dizolele, in your prepared statement, you touch on the 
performance of the United Nations peacekeeping mission in the 
Democratic Republic of the Congo. As you know, the U.N. 
Security Council extended last week the mission of MONUSCO, the 
U.N. stabilization mission in DRC. The Security Council 
reiterated that a strategic priority of that mission is the 
protection of civilians.
    Did I understand correctly in your earlier testimony you 
actually indicated that MONUSCO is doing more harm than good?
    Mr. Dizolele. Yes, Senator.
    Senator Young. Incredibly troubling, as the United Nations 
hears from the U.S. Mission to the United Nations about the 
importance of revisiting each of these peacekeeping missions 
and ensuring that they are doing good and that they are 
fulfilling their mission in advancing core U.S. interests.
    In your prepared statement, Mr. Dizolele, you discussed the 
massacre of civilians on a daily basis by death squads that the 
U.N. peacekeepers have ``failed to either apprehend or 
vanquish.''
    Does that not represent a failure of the U.N. peacekeepers 
to fulfill their mission in the DRC and to uphold Chapter 7 of 
the U.N. Charter?
    Mr. Dizolele. Yes, Senator Young. I have been embedded with 
U.N. peacekeepers as a reporter, so I have actually gone on 
patrol with them over periods of time. I have been with the 
Moroccans in Eritrea. I have been with the Uruguayans trying to 
intercept weapons.
    The question is, what is the problem we are trying to 
solve? That is what we typically forget when we analyze all 
these things, Dodd-Frank 1502 or the U.N.
    The U.N. came to help Congo transition from the chaos of 
the war to a functional state, and that has not happened. So 
the mandate that might have started as one page is about 20 
pages today. So when you read the mandate of MONUSCO, you are 
thinking you are reading the attribution of the Congolese 
State. That is not the role.
    So it is stifling the emergence of the Congolese State.
    Senator Young. So in peacekeeping, as with life generally, 
if everything is a priority, nothing is a priority.
    Mr. Dizolele. Correct, sir. And I think the priority in the 
case of the DRC has to get the functional state so that MONUSCO 
will exit and the Congolese will take full responsibility for 
their security. They are very capable people. It has been 20 
years, and every 6 months, we are clamoring for an extension of 
U.N. mandates and nobody is asking the tough questions about 
the Congolese Army, about the Congolese State, and why they are 
failing to protect their own citizens.
    The Congolese will appreciate U.S. contributions to the 
U.N. to go to them directly so they can use that money to 
rebuild their state.
    Thank you, sir.
    Senator Young. Continuing, Mr. Dizolele, would we in 
Congress be making a mistake if we conflated the broader 
peacekeeping mission with the intervention brigade, which, as 
you know, was established to neutralize armed groups and reduce 
their threat to civilians?
    Would you separate out the intervention brigade and assess 
their performance differently in the Congo than you would the 
broader peacekeeping mission? Or are they both doing more harm 
than good, to your mind?
    Mr. Dizolele. I would want to separate them, because if we 
remember the story or the history of the intervention brigade, 
it was supposed to act independently of the U.N. They had a 
mandate from the country. They were trying to solve specific 
problems. They were not to be there forever to support 
countries, except for South Africa, but they were very 
effective.
    The moment they got folded into the U.N., we forgot about 
their presence, in fact. We do not know they exist anymore 
unless somebody like you mention them because now they go by 
the SOPs of the U.N., and they are part of the units that are 
around the area that I described where civilians are being 
killed every night while the U.N. is standing there, and every 
night there are dead bodies.
    Senator Young. Well, hopefully, it provides a measure of 
reassurance that the United States Ambassador to the United 
Nations, Nikki Haley, has made improving these peacekeeping 
missions, going through each of the peacekeeping missions that 
the U.N. has commissioned and ensuring that they are actually 
out there doing more good than harm, to adopt your language.
    The U.S. assumes the presidency, as you know, of the U.N. 
Security Council this month. What do you believe should be the 
key priorities or areas, Mr. Dizolele, of focus when it comes 
to U.N. peacekeeping more broadly?
    Mr. Dizolele. I think, Senator, it is to make the mission 
limited in scope and time, because that is really where the 
devil lies.
    There used to be a mission in the Congo in the 1960s. It 
was only for 4 years, the grandmother of MONUSCO. It was called 
ONUC. They were there for 4 years. They delivered what they 
were to do, and they left. And the Congolese were able to 
emerge and do their own bidding.
    So the moment we leave them open-ended, that is where the 
problem starts because then the mission creep. That is when 
countries become very comfortable.
    And in the Congo, we have an example of this. Over the last 
17 years, the U.N. and MONUSCO have had to be bailed out of 
tough situations.
    In early 2000, the French intervened with Operation Artemis 
in Ituri. That mission was very small. The French came in for 3 
months, I think. They cleaned the place and left. They had no 
interest in staying longer. So they were effective. In 2006, 
the Germans came and helped MONUSCO. Recently, we see with the 
Force Intervention Brigade.
    Those are signs of failure, not of success. If a 
peacekeeping force has to be bailed out, that is troubling, 
just to illustrate my point, sir.
    Senator Young. Thanks so much for the benefit of your 
experience and perspective.
    Senator Flake. Thank you much.
    I should note, on the peacekeeping issue, I was in Namibia 
for a year while the U.N. was there under Resolution 435, UNTAG 
forces. That was a good example of one defined in scope, 
mission, and time. They were there for a year, kept the peace, 
had the process for elections, and drafted the Constitution. It 
worked. But too often, we have seen failures.
    Continuing on, Mr. Ganesan, can you describe the process 
that the European Union has put forward? How does that differ 
from Section 1502?
    Mr. Ganesan. It relies more on the OECD guidance, and there 
is about a 4-year implementation leeway for it, so it will not 
go into force until 2021. In our view, that is probably a 
little bit too long. Two or 3 years is probably more reasonable 
and more along the lines of what the SEC did. It gives some 
flexibility to companies but it is largely analogous to what 
1502 does.
    It is important because it shows that, in the European 
Parliament and in the European Union, companies will have to 
start following similar standards. And we know with large 
multinationals, they will gravitate towards one standard and 
support it.
    What I think it also shows is that, in looking at 1502, 
there is space outside of opening up the rule or anything else, 
to think about how one can provide, in a way, safe harbor for 
companies that are complying with other good rules and make 
sure that they are seen as complying here in the U.S. and 
taking steps like that. Because we know that there will be more 
scrutiny on what is going on with European companies as well as 
other companies around the world, and finding ways to do that.
    I would just want to add to something that Mr. Goss said 
and just clarify something.
    The boycott took place because the law passed in 2010 and 
the rules went into force in 2012. In that period in between, 
nobody knew what the rules would look like, and that created 
uncertainty. Some institutions interpreted that far more 
aggressively than others and did not operate in the Congo.
    One of our fears in thinking about how to tweak 1502 is 
that, if you open up the rule or the rulemaking process, you 
may just be setting up another boycott because there will be so 
much uncertainty for a year or two. That is why, in thinking 
about how to address 1502, while also addressing the fact that 
what we really do not want us to inject new instability in the 
Congo as a whole, is to look at ways to modify it or tweak it 
outside of opening up the rule.
    So if one can provide safe harbor because of what Europe is 
doing, or if one can provide better incentives for companies to 
implement it better, it would be better to do it outside the 
rule than thinking about modifying or opening up the rule as 
well.
    Senator Flake. Mr. Goss, do you have any thoughts or not, 
in terms of modification, what can be done to ensure that we do 
not create the same kind of uncertainty that we had at the 
beginning?
    Mr. Goss. We would certainly be open to a safe harbor type 
approach. I will agree with my colleague here that, especially 
as ITI represents multinational corporations, having that 
certainty, having that alignment, is paramount for us. It is 
one of the reasons why we pointed to the OECD due diligence 
guidance, because it has emerged as the international norm 
here.
    I will note that the underlying language of 1502 is very 
particular, and so the SEC I think is somewhat delimited in 
terms of how they might be able to open up or change the rule. 
But we would certainly be open to a safe harbor or other 
similar type approaches that would avoid any uncertainty or 
volatility but make it a little more streamlined and a little 
more consistent with the emerging global practices.
    Senator Flake. Thank you.
    Mr. Dizolele, you talked a lot about having a more 
comprehensive policy that looks at governance. Is part of the 
problem, as you see it, that the SEC, by definition, can only 
enforce the law but without looking at the broader context, 
like legislation that might be passed by this committee or 
Congress as a whole? Is that one of the limitations, problems, 
that it is just so narrow in terms of what the SEC can and 
cannot do?
    Mr. Dizolele. Yes, Mr. Chairman. I think, for one, the SEC 
I do not think is really equipped for this kind of challenge. 
It is a political issue in nature. That is how I see it, 
primarily.
    And then, two, it is really an issue of foreign relations. 
So a commission like yours, USAID, the State Department, have a 
lot more to do with this. So far, they are doing a lot of 
things already, the public-private alliance, and many other 
issues that are taking place or projects that are taking place 
now. So I think we should focus on those.
    I just do not believe a regulation from the U.S. is going 
to solve this issue in that way. There are many more campaigns 
in the world that are successful, and they are not always 
regulated from Congress. In this case, as I said, there are 
added troubling issues.
    So if we establish that Congolese resources have been 
siphoned off to Rwanda, how does 1502 account for that? There 
is a clear net loss to the Congolese year in, year out. I am 
talking about hundreds of millions of dollars.
    So how can we allow a law to continue knowing very well 
this is a clear effect, and then telling the Congolese we are 
helping you increase your own welfare?
    I think just to conclude on that point, there is a wealth 
of platforms. I think groups like Human Rights Watch, groups 
like ITI and others can come together to continue enforcing. I 
think the greatest value of Dodd-Frank 1502 is bringing that 
heightened awareness they have brought to bear. I think we 
cannot underestimate that.
    I do not think there is a serious company out there that is 
saying, gee, how can we go and mess up Congolese more and get 
more out? It is costly. It is costly to do business in a place 
like the DRC. I have tried to do business in the DRC.
    Senator Flake. Thank you.
    Senator Booker.
    Senator Booker. Mr. Dizolele, I really appreciate your 
insights and value the way you are looking at this.
    You and I probably both have the same perspective, that 
there are some times, when it comes to African peoples, a sort 
of pernicious paternalism in trying to dictate to other 
countries about how to deal with their own issues and their 
problems. Would you agree with that?
    Mr. Dizolele. Yes, Senator Booker.
    Senator Booker. And I have seen it in the American context. 
I still remember Frederick Douglass, in a very famous meeting 
with Abraham Lincoln, where Lincoln in a very paternalistic way 
said, okay, we are going to solve your problems and send you 
all out of the country. And Frederick Douglass was like, do not 
tell me what is best for blacks. We want to stay in this 
country and be a part of it.
    So this is something that is problematic with the continent 
as a whole. And I am grateful for you talking about, even in 
terms of how we do aid and funding, to think about empowering 
local communities and listening to the government as well. That 
is where I really appreciate that sentiment.
    And that is why, in all the things that I read in 
preparation for this hearing on this critical issue, when I 
looked at what the Congolese people are saying about this rule, 
111 different Congolese civil society organizations based in 
Congo wrote to the SEC over the past 2 months asking that the 
U.S. conflict minerals law not be repealed, suspended, or even 
weakened. In multiple separate letters, these organizations all 
stated that a suspension or repeal would increase violent 
conflict, and that while the law had a rough initial 
implementation stage, which I have already talked about, it is 
now leading to what they are saying--these are Congolese 
voices--it is now leading to increased rule of law and 
decreased incentives for armed groups.
    I want to read also from the Congolese Government itself. 
They wrote advocating for it. They submitted and stated in 
their letter, and I quote, ``The DRC Government through the 
Ministry of Mines recognizes that Section 1502 of the Dodd-
Frank Act provides a major opportunity to break the link 
between recurring conflicts, the production and trade of 
minerals in the DRC.''
    I am an American United States Senator, and I want to do 
what is in the interests of my country, but I do believe that 
when it comes to--and I am new on this committee and new on 
this subcommittee--but I value the voices of Africans. I value 
the voices of indigenous people about determining their own 
destiny. And here is a chorus of folks from government to civil 
society organizations, multiple letters, all saying not only do 
not repeal this rule but do not suspend it or modify it.
    Could you just give me some insight in response?
    Mr. Dizolele. Thank you, Senator. A very important point 
you are making.
    I read those letters. I know some of the people who signed 
those letters. I have been to the mines. I was writing about 
the mines and filming the mines before they became a fad. I had 
on guard and drove like I am going to die to go to the mine, 
film, and come out. This was 13 years ago. I will give you a 
couple examples.
    Senator Booker. Please.
    Mr. Dizolele. If the Congolese Government is calling for 
this, then that is actually a call for help. If the Congolese 
Government is saying do not repeal your law, and they are not 
doing anything on their own side to solve this problem, that is 
not a positive sign.
    I saw the minister, the representative of the government 
when he was here last week, and I asked him this question. He 
had no answer. He could not even realize that Rwanda had 
certified Congolese mineral.
    So I asked two points, then we can continue. I asked a 
fellow who is one of the foremost experts in this area just as 
I was preparing for this presentation. I said, look, I have 
seen what you sent. You sent me press releases. They do not 
send analysis. ``This is why we believe this.'' It always goes 
to, ``If we do not do this, there will be a war.''
    There is no evidence of that. It is all like this or that.
    So I said, look, I do not agree with you. I recommend that 
this law be folded and discontinued.
    If, in fact, the U.S. folded this law and discontinued, 
what will happen? And he said, ``Well, nothing. It is, after 
all, an American law. We are trying to do things.''
    They have already set things in motion that are now 
continuing, some of the things that I have mentioned 
positively.
    Senator Booker. Mr. Dizolele----
    Mr. Dizolele. He did not think it was the end of the world.
    Senator Booker. Thank you for that candid response.
    In the larger activities of the Senate, there have been a 
lot of accusations of hypocrisy, probably little of them are 
true. But in this case, I am about to be a hypocrite and go 
over my time for a minute, if I can have the minute?
    Thank you very much.
    Mr. Ganesan, I would like to ask you the same thing, from 
your perspective. This is incredible insight from somebody who 
has been on the ground, been to the mines, talked to the 
various leaders.
    I have these letters, and if you will allow me to submit 
them for the record?
    Senator Flake. Without objection.
    [The information referred to above can be found in the 
``Additional Materials for the Record'' section of this 
Hearing.]
    Senator Booker. I would like for you to comment on that, 
and then let me just pile on a question, and then I am done, on 
top of that one, comment on that.
    But I also want you, because the biggest concern I have 
right now, which I am grateful--in fact, the two men to my 
right have been very loud on this concern as well, that the 
budget that we have just seen from President Donald Trump, at a 
time when everybody on this panel is asking for more 
engagement, it cut back a lot of critical programs even beyond 
what we are talking about today.
    You are out there working on these issues. I would just 
love for you to answer the question I asked, but then also 
comment on the so-called skinny budget in terms of what it does 
to the State Department and diplomacy, and how that threatens, 
that lack of leadership, essential American leadership, what 
that might do to regions like DRC.
    Mr. Ganesan. I think I would start by saying that I have 
been working on the flow of revenue from oil and other natural 
resources around the world since about 1998 or 1999. And the 
one thing that is always important to remember with 1502 or 
elsewhere is that a 1502 is not meant to solve every problem. 
It is meant to solve a specific problem, which is to raise the 
transaction costs of illicit actors getting control of those 
funds, and making the trade more transparent and accountable 
for major companies and the like.
    So it can only address that specific narrow problem of the 
overall situation in the Congo. The overall situation in the 
Congo is there are many factors that would not be affected by 
the law, but the part that is is important. And in that 
context, it is quite illustrative because it is rare to see 
industry organizations, major companies in the world like Apple 
and Intel and Tiffany, and very large parts, including the 
Catholic bishops of Congo, saying this law is a good idea.
    I know working on businesses, it is rare that you will hear 
all of us agree on anything, and we all seem to agree on the 
same thing in this case.
    So I think it is important to note that it does help in a 
certain way, but it is not a panacea for all the problems in 
the Congo. And my view would be that that is a good thing, that 
more companies are trying to implement it. More jurisdictions 
like the European Union are putting in their own laws. And we 
assume that in the next 5 to 10 years, this will be a global 
norm.
    And on civil society, they are seeing it is helping in some 
way.
    Now a good analogy is what I saw with UNITA at the end of 
the Angolan civil war, who made a lot of money and fueled their 
conflict in its last few years off of diamonds.
    When that war ended, we interviewed the leadership of UNITA 
and we asked what did the whole issue of blood diamonds, in 
that case the Kimberley Process, how did it affect you? And 
they said very clearly to us: ``It made it extraordinarily 
expensive to procure weapons. We had to retreat further in the 
bush. And it was harder to do things.''
    So I would accept that when you are dealing with mafia 
networks, rebel groups, or corrupt officials, they will always 
find ways to steal or siphon off money. But to the extent that 
you can control a part of that trade, make it more transparent, 
and make it more legitimate so that responsible actors are the 
ones benefiting from it, that is a good thing, as long as you 
recognize that it will not solve every problem.
    Senator Booker. Thank you, sir. And maybe you can submit 
for the record that second part of my question about your 
perspective, especially when it comes to conflict in Africa 
specifically with the DRC, what your concerns might be about 
the budget that was submitted.
    I would prefer, just out of respect to my colleagues, maybe 
you submit that in writing.
    Senator Flake. It is all right, if you want to answer.
    Mr. Ganesan. So I think, in this particular context, it is 
threefold.
    Number one is how it impacts specific programs for the 
Congo itself. And right now, there seems to be a pause in 
cutting funding to the Congo, as we have seen from Ambassador 
Haley and others, but that may not be true in multiple years.
    The second part is how it impedes the State Department's 
ability to conduct the diplomacy or undertake initiatives 
globally to try to address these types of issues, whether it is 
the issue of conflict minerals or others, and work with 
companies and other governments to lay out standards.
    And the third, and it is not with the State Department, is 
the proposal to cut $600 million from the World Bank. The World 
Bank, through the IFC, which lends to the private sector as 
well--it is development assistance--is one of those 
institutions that is perfectly poised to help build a conflict-
free economy in countries like the Congo, and the U.S. is the 
largest donor to it. But if you cut $600 million out of their 
budget, it is going to be less likely that that can happen.
    So I think it is the panoply of, if the goal is to build a 
stable and accountable country through accountable, transparent 
governments and industries that benefit people, you need all of 
those institutions funded in a way that they can actually put 
their resources into these kind of activities.
    Senator Booker. Thank you, sir.
    Thank you, Chairman, for the indulgence.
    Senator Flake. Thank you.
    Senator Young.
    Senator Young. Mr. Dizolele, in your prepared statement, 
you say of the United Nations Security Council, quite 
damningly, they are notorious for their schizophrenic Congo 
policy, which consistently places the interests of the Kabila 
regime above the aspirations and rights of the Congolese 
people.
    Can you elaborate on that assertion, sir?
    Mr. Dizolele. Yes, Senator Young.
    As I said earlier, there was a specific mandate for the 
mission when it came, and that mandate was to help with the 
departure of foreign troops. That mandate has mutated over 
time, including helping organize the elections and many other 
things.
    So if I were to take a couple examples of the organization 
of the elections, the U.N. will not be involved in organizing 
the election. But when the Congolese people, whether it be the 
opposition or civil society, calls for changes or denounces 
certain things, they do not act. So for the people, they do not 
see them anymore as the force that they were supposed to be. 
This is the part of the problem that I alluded earlier on to.
    And then they also undermine the emerging of an adequate 
military for the Congolese. So the area where MONUSCO is very 
present, they do everything, including buying gas for the 
Congolese Army. So without MONUSCO, the Congolese Army cannot 
do anything. And then in the areas where they are there with 
the FRDC, they do not act, just like the FRDC.
    So it creates this confusion of what exactly they are 
doing.
    And the last point is, Michael Sharp was killed several 
days ago. You know, the Group of Experts, if you read their 
reports over time, it is amazing how much knowledge they have 
collected over time. When they go brief the Security Council, 
most of the time, the Security Council does not act on the very 
recommendations of the people they send to risk their lives. 
And that is something very important.
    Senator Young. So you have offered a couple of very 
powerful examples. Thank you.
    One of the things that I hope to get to, in consultation 
with yourself and others, is the source of such schizophrenic 
policies at the U.N. Security Council. What do you believe is 
the source at the Security Council of this schizophrenic Congo 
policy?
    Mr. Dizolele. National interests of each country, sir.
    So the French may vote for one thing on the Security 
Council, but in the field, in Congo, the engagement with the 
Congolese Government dictates something else.
    Senator Young. So this is structural. This is formidable, 
if one wants to try to address the structural challenges of the 
U.N. Security Council. I do not anticipate the membership or 
the prerogatives changing anytime soon.
    And this is a difficult question, but I ask if you have any 
recommendations to at least mitigate some of these challenges 
which lead to schizophrenic policies?
    Mr. Dizolele. Senator, I think, as I said earlier, at least 
from the U.S. perspective, it will be important for the U.S. to 
just demand greater accountability. This is why I think the 
approach that Ambassador Nikki Haley is taking is so 
refreshing. So that the role of the U.S. on the Security 
Council is not to rubberstamp MONUSCO, because that is really 
what has been happening, but to push and push further.
    Senator Young. Well, I am going to interject and just tell 
the chairman I could not agree more with our witness. I think 
using what leverage we have as a country to try to effect some 
change within the Security Council is very important, so I 
commend our Ambassador and her efforts on that front.
    Mr. Dizolele. Thank you, Senator.
    Senator Flake. I want to thank you all on behalf of the 
committee, and my colleagues here, for your expertise and your 
testimony and your willingness to share it. This will be 
invaluable to us as we consider these policies moving ahead, 
and also to the SEC as it considers its policy and decides what 
to do going forward.
    For the benefit of the members, the hearing record will 
remain open through Friday.
    Senator Flake. And with the thanks of the committee, this 
committee stands adjourned.
    [Whereupon, at 3:09 p.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


              Prepared Statement of Senator Richard Durbin

    Chairman Flake and Ranking Member Booker, thank you for the 
opportunity to say a few words today on this issue. The law we are 
discussing today was originally led by Senators Sam Brownback, Russ 
Feingold and myself--as well as Congressman McDermott in the House.
                congo conflict/rape capital of the world
    It is isn't very often that Congress can make a policy change that 
has life-or-death consequences for millions of people, but in 2010 a 
law was enacted that is changing the money supply for warlords in the 
Democratic Republic of Congo.
    Many here may not realize that more than five million people have 
been killed during the long-running conflicts in the Democratic 
Republic of Congo, which have been the most deadly since World War II.
    Tragically, women and children have suffered the most, as we too 
often see in conflict. Millions have been displaced from their homes, 
and the prevalence of rape and sexual violence as a weapon of war is 
almost beyond belief . . . earning eastern Congo the grim distinction 
of being the ``Rape Capital of the World.''
    Sam Brownback first took me there in 2005 and I returned again in 
2010.
    At the time we were working on this law, the U.N. reported that 
about 1,000 women were assaulted every day in Congo . . . roughly 
equivalent to 12% of all Congolese women.
    One of the drivers and funders of this conflict was paradoxically 
that which fills the DRC with such potential . . . its natural 
resources.
    Instead of paying for the nation's peace, education, roads and 
public health programs, the DRC's mineral wealth was being siphoned off 
to fund the armed groups that vie for local and regional control of 
vast areas far from Congo's capital, Kinshasa.
                         conflict minerals law
    Tin, tantalum, tungsten and gold are found in everyday electronics, 
jewelry, airplanes and manufacturing equipment. But these minerals also 
have provided weapons and salaries to fighters, including conscripted 
child soldiers, who then visit unspeakable horrors on innocent 
civilians in return.
    That is why in 2009, I joined Brownback, Feingold, and McDermott in 
drafting a simple reporting requirement for U.S.-registered 
corporations that source these four minerals from the DRC or its 
neighbors.
    It wasn't a ban.
    It was simply a transparency measure that said if you used any of 
these key minerals from the eastern Congo region you had so say what, 
if anything, you were doing to not source from those fueling the 
region's violence.
    You could say you were doing nothing, but at least then consumers 
would have some options on ensuring the electronics in their pockets 
weren't contributing to the violence.
    And on a broader scale, it aimed to use collective industry action 
to clean up the supply chain of these mineral . . . which I am proud to 
say has worked.
    You see, before these rules, not a single smelter of tin, tungsten, 
tantalum, or gold had submitted to and passed an audit to prove they 
weren't dealing in conflict minerals. Today, 76 percent of the world's 
smelters of the 3Ts or gold have passed such an audit.
    This is remarkable and due to many industry leaders on the issue, 
including Intel, Apple, Kemet and a number from Illinois including 
Motorola and AAR Corp.
    And it is due to a cleaning up of the mining industry in eastern 
Congo.
    For example, in 2014 the Enough Project noted that 112 out of 155 
surveyed mines passed as conflict free.
    Obviously, this process is far from complete or perfect . . . but 
it is one that has helped ease the grip Congolese warlords had on the 
mining sector.
    I also realize there is chance today to explore important lessons 
learned from this law and its consequence . . . but I hope we do not 
undermine the larger effort.
    That the Administration is considering weakening this law is 
senseless and immoral, and I fear would lead to more bloodshed.
    I think as Americans become increasingly conscious about the 
origins of the products they buy, reducing transparency and eliminating 
incentives for responsible sourcing in this industry would be a grave 
mistake.

                              ----------                              


   Series of Letters Relating to Section 1502 of the Dodd-Frank Act 
            Submitted for the Record by Senator Cory Booker
            

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