Based on our ongoing dialogs with clients and other companies, and our attendance at last week’s EICC-GeSI Conflict Minerals Workshop in Philadelphia, we have a few predictions about the upcoming second report on OECD’s downstream pilot program on the implementation of their due diligence guidance. The report was originally scheduled for release last month, but is not yet available and we don’t know when it will be published (although we would expect in advance of the next meeting the first week of May). As our client base consists more of heavy industry, hard metals and non-electronics consumer products, some of our predictions stand in contrast to “conventional wisdom.” Especially for US companies subject to DF1502, there is an increasing recognition that the makeup of the downstream pilot participants is heavily skewed toward the electronics industry, and the results of the pilot are therefore not representative of heavy manufacturing or other non-electronics sectors. At the same time, we expect an increased awareness of conflict minerals (CM) issues in pilot participants which means a related increase in uptake of basic program elements such as company policies on conflict minerals. Many companies (arguably most companies (a) outside the electronics industry and (b) not
Read more →The highly-touted Solutions for Hope (SfH) Project in the DRC has received global publicity as a potential model for future conflict-free mineral sourcing within the DRC. As part of the project, an independent audit of the operations was conducted to evaluate conformance of the operation to the OECD Due Diligence Guidance. This work was conducted by Gregory Mthembu-Salter, a consultant to the United Nations Group of Experts. This audit document, which forms the basis of SfH’s conflict-free mine claims, is available on the SfH website. (NOTE: When we began writing this piece, the link to this audit report functioned properly. At the time of our publication, the link appears to have become corrupted, therefore we include the document in its exact form as originally downloaded from the SfH website on April 5, 2012. SfH OECD audit report) With the world carefully watching the SfH project, one expects the highest attention to detail and scrutiny at each step in the process. However, with all due respect to Mr. Mthembu-Salter (whom Elm will be meeting at the end of this month at the ITRI Conflict Minerals Programme in Cape Town South Africa), it is unlikely that an SEC Conflict Minerals Report (CMR)
Read more →Do you have questions about conflict minerals programs or cultural/business contexts of conflict minerals in Central Africa? In just over a month, Elm’s Lawrence Heim will be presenting at ITRI’s Conflict Minerals Programme in Cape Town South Africa as part of ITRI’s International Tin Conference 2012. He is joining a panel of world renowned experts from Central African countries including DRC, the United Nations (UN), US Agency for International Development (USAID) and more. These recognized experts, covering a range of topics relevant to cultural and business implications of conflict minerals in Africa, include (alphabetically): Patrick Amisi, Minister of Mines, Maniema, DRC Banny Banza, Vice President Stakeholders Committee Katanga, Head of SAESSCAM Katanga Bali Barume – BGR Yves Bawa – Pact Cyprien Birhingingwa, South Kivu civil society Assheton Carter, Senior Vice President, Pact Joseph Ikoli – DRC Eric Kajemba, OGP (civil society) (to be confirmed) John Kanyoni, FEC & Association des Comptoirs, North Kivu and DRC Bob Leet – EICC/Intel Gilbert Leya – Katanga Paul Mabolia, ICGLR Committee on Illegal Exploitation of Natural Resources, DRC Joseph Mbaya – Rwanda Kay Nimmo – ITRI Henry Nkeng – MONUSCO – Centre de Negoce Dr Emmanuel Nkurunziza, President of Stakeholders Committee Rwanda, Director General
Read more →With little fanfare, OECD published its Final Draft Supplement on Gold v. 3.0. Based on – but significantly longer than – the Supplement on Tin, Tantalum and Tungsten, the gold supplement offers far more details concerning the reality of program development and implementation. We take this as a positive sign that OECD is indeed paying attention to the input from the pilot program participants and is willing modify their documents/approach.
Read more →In today’s news, Bloomberg reported that SEC Chair Mary Shapiro public stated the the final conflict minerals regulation should not be anticipated before mid year.
Read more →Top law firm Akin Gump recently published an Alert containing their in-depth analysis of the letter from Senator Leahy and others to SEC expressing views on the final SEC conflict minerals regulation yet to be promulgated. Akin Gump noted Leahy’s comments on the SEC’s apparent position that the conflict minerals report (CMR) be “furnished” rather than “filed”. The practical impact of the “furnished” vs. “filed” distinction is that “furnished” information is not automatically incorporated by reference into a reporting issuer’s filings with the Commission and is not subject to liability under Section 18 of the Exchange Act. Section 18 of the Exchange Act makes reporting issuers liable for “false or misleading statements” if investors rely on such statements when purchasing or selling securities at a price which was affected by such statements. Reporting issuers who are required to “furnish” information to the SEC as an exhibit to an annual filing may still be subject to liability for violations of Sections 13(a) or 15(d) of the Exchange Act if they fail to furnish a required exhibit or if the required exhibit is “unreliable”. Penalties for such violations may be injunctive, civil or criminal and may also extend to individual executives of
Read more →During our recent research on the financial impact of consumer sentiment about conflict minerals, we conducted a deep review of the Enough Project’s rankings of electronics companies’ conflict minerals programs. These rankings are frequently referred to in publications and in social media venues such as twitter. As we are auditors by vocation and predilection, we took an in-depth look at the data collection tool/approach, the data itself and interpretation thereof. Our review found that the rankings Reflect outdated and incomplete information, Appear to contain bias, and Are inconsistent in applying their scoring system. Flawed questions. Several of the questions in the survey are flawed because they ask for solutions and information that did not exist at the time of the survey – and still don’t today. For instance: Question: Has the company published the refiners it uses for 3TG? This fails to recognize the existence of legally-binding non-disclosure and confidentiality agreements that are common between suppliers, especially in the electronics industry. Even today, concerns about confidentiality are unresolved and no company has published a list of its 3TG refiners. Confidentiality agreements are many times necessary to protect key intellectual property and valuable trade secrets related to the products manufactured and similar
Read more →The Elm Consulting Group International LLC is preparing its Self-Implemented Conflict Minerals Audit Preparation© tool, or SICMAP℠, for a major update reflecting the upcoming final SEC regulations on conflict minerals. In addition, the tool will be renamed/rebranded to better reflect its use and scope. Upon its update and relaunch, it will be called the Conflict Minerals Self Diagnostic© or CMSD℠. Lawrence Heim, Elm’s conflict minerals service leader: When SICMAP℠ was developed last year, companies were expressing concerns about the audit element of the conflict minerals regulation. As the issue has evolved and companies have learned more, questions turned to the due diligence process itself. Therefore, we felt that the upcoming regulatory update was an appropriate time to more clearly communicate the tool’s capabilities by changing its name. CMSD℠ will retain the previous features and functionality, such as: “At a glance” color-coding indicating progress/status Tabbed sections for each major program element Live web links to reference materials Summaries of language from the U.S. law and final SEC regulation Pragmatic guidance on each element based on actual conflict minerals experience Detailed step-by-step direction on conducting “reasonable country of origin inquiry” CMSD℠ Version 1.0 Table of Contents I. Initial decisions related to manufacturing,
Read more →International tin industry association ITRI is hosting its biennial international conference in Cape Town, South Africa on April 23 – 25, 2012. Following the conference on April 26, ITRI will hold a one-day seminar on conflict minerals. Elm is pleased to have been selected to present on audit requirements under the US Securities and Exchange Commission (SEC), their relationship to traditional environmental auditors/auditing practices and how this impacts conflict minerals due diligence programs/activities intended to support compliance with the upcoming SEC regulation. The complete program, covering a wide range of critical topics and featuring renowned experts on the subject including many from the affected African countries/economies, is available here.
Read more →As is generally known, the corporate disclosure and auditing requirements of Dodd-Frank Section 1502 are to start “with the [company’s] first full fiscal year that begins after the date of promulgation of such regulations.” Therefore, the timing is a function of both the corporate fiscal year as well as the date of promulgation. In the wake of SEC moving the window for promulgation of the final conflict minerals rule to between January – June 2012 (with many sources indicating the end of January), we asked several notable legal experts to offer their thoughts on how (or if) this delay would impact publicly traded companies that operate on a fiscal year other than the calendar year. If the rule is indeed promulgated in January, how might a company with a March – February or July – June fiscal year be impacted for 2012? Would it be plausible to satisfy the CMR reporting requirement with a short summary report on due diligence process development/implementation status that will likely be lacking in significant detail? _________________________ K. Russell LaMotte is a Principal at Beveridge & Diamond, PC in Washington DC. He previously served as a senior lawyer at the State Department. His practice focuses
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