SEC Conflict Minerals Rule: Initial Disclosures Indicate Most Companies Were Unable to Determine the Source of Their Conflict Minerals
Published: 2015-08-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Armed groups in eastern DRC continue to commit severe human rights abuses and profit from the exploitation of minerals, according to the United Nations. Congress included a provision in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that, among other things, directed SEC to promulgate disclosure and reporting regulations regarding the use of conflict minerals from the DRC and adjoining countries. The act also directed State and USAID to develop a strategy to address the linkages among human rights abuses, armed groups, the mining of conflict minerals, and commercial products.
This report examines (1) company disclosures filed with SEC for the first time in 2014 in response to the SEC conflict minerals disclosure rule; and (2) State and USAID actions related to the U.S. conflict minerals strategy in the DRC region. This report also includes information on sexual violence in the DRC and three adjoining countries. GAO reviewed and analyzed relevant documents and data and interviewed officials from relevant U.S. agencies and nongovernmental, industry, and international organizations; and analyzed a random sample of company disclosures from the SEC database that was sufficiently large to produce estimates for all companies that filed. GAO also traveled to the DRC, Rwanda, and Burundi to conduct field work.
section_title: What GAO Found
paragraphs: According to a generalizable sample GAO reviewed, company disclosures filed with the Securities and Exchange Commission (SEC) for the first time in 2014 in response to the SEC conflict minerals disclosure rule indicated that most companies were unable to determine the source of their conflict minerals. Companies that filed disclosures used one or more of the four “conflict minerals”—tantalum, tin, tungsten, and gold—determined by the Secretary of State to be financing conflict in the Democratic Republic of the Congo (DRC) or adjoining countries. Most companies were based in the United States (87 percent). Almost all of the companies (99 percent) reported performing country-of-origin inquiries for conflict minerals used. Companies GAO spoke to cited difficulty obtaining necessary information from suppliers because of delays and other challenges in communication. Most of the companies (94 percent) reported exercising due diligence on the source and chain of custody of conflict minerals used. However, most (67 percent) were unable to determine whether those minerals came from the DRC or adjoining countries (Covered Countries), and none could determine whether the minerals financed or benefited armed groups in those countries. Companies that disclosed that conflict minerals in their products came from covered countries (4 percent) indicated that they are or will be taking action to address the risks associated with the use and source of conflict minerals in their supply chains. For example, one company indicated that it would notify suppliers that it intends to cease doing business with suppliers who continue to source conflict minerals from smelters that are not certified as conflict-free.
a Covered Countries: Angola, Burundi, Central African Republic, the Democratic Republic of the Congo, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda, and Zambia.
Department of State (State) and U.S. Agency for International Development (USAID) officials reported taking actions to implement the U.S. conflict minerals strategy, but a difficult operating environment complicates this implementation. The agencies reported supporting a range of initiatives including validation of conflict-free mine sites and strengthening traceability mechanisms that minimize the risk that minerals that have been exploited by illegal armed groups will enter the supply chain. As a result, according to the agencies, 140 mine sites have been validated and competition within conflict-free traceability systems has benefited artisanal miners and exporters. Implementation of the U.S conflict minerals strategy faces multiple obstacles outside the control of the U.S. government. For example, eastern DRC is plagued by insecurity because of the presence of illegal armed groups and some corrupt members of the national military, weak governance, and poor infrastructure.
section_title: What GAO Recommends
paragraphs: GAO is not making any recommendations.

section_title: Letter
paragraphs: Over the past decade, the United States and the international community  have sought to improve security in the Democratic Republic of the Congo  (DRC), the site of one of the world’s worst humanitarian crises. An  estimate by the International Rescue Committee indicated that since  1998, more than 5.4 million people have died in the DRC as a result of  this crisis, which has also destabilized the minerals-rich eastern part of  the country, created insecurity, displaced thousands of people, and  perpetuated a cycle of poverty. As we previously reported, illegal armed  groups and some units of the Congolese national military have committed  severe human rights abuses and mass killings and profited from the  illegal exploitation of minerals originating in eastern DRC, particularly in   In January 2015, the United  the provinces of North Kivu and South Kivu.Nations (UN) reported that the momentum created by the defeat of M-23,  an illegal armed group, in November 2013 failed to translate into  significant gains in security and stability in 2014 in eastern DRC. The UN  also reported that while there has been progress on traceability and due  diligence efforts concerning minerals produced in the DRC, smuggling  continues, and that elements of the Congolese army and some armed  groups remain involved in the minerals trade.
Pub. L. No. 111-203, § 1502. 124 Stat. 1376, 2213-18. several U.S. agencies—the Securities and Exchange Commission (SEC),  the Department of State (State), the U.S. Agency for International  Development (USAID), and the Department of Commerce (Commerce)— to take certain actions to implement the act’s conflict minerals provisions.  For example, Section 1502(b) of the act required SEC, in consultation  with State, to promulgate disclosure and reporting regulations regarding  the use of conflict minerals from the DRC and adjoining countries. SEC  adopted its conflict minerals disclosure rule in August 2012. The act also  required State, in consultation with USAID, to submit to appropriate  congressional committees a conflict minerals strategy to address the  linkages between human rights abuses, armed groups, mining of conflict  minerals, and commercial products. In addition, the act mandated GAO  to report, beginning in 2012, and annually thereafter, on the effectiveness  of the SEC rule in promoting peace and security in the DRC and adjoining  countries and to report annually, beginning in 2011, on the rate of sexual  violence in war-torn areas of the DRC and adjoining countries, among  other things.
This report examines (1) company disclosures filed with SEC for the first  time in 2014 in response to the SEC conflict minerals disclosure rule, (2)  State and USAID actions related to the U.S. conflict minerals strategy in  the DRC region, and (3) any new information on the rate of sexual  violence in eastern DRC and three adjoining countries—Burundi,  Rwanda, and Uganda—that has become available since we issued our  2014 report.
To address our objectives, we analyzed documents and data and  interviewed officials from State, USAID, SEC, Commerce,  nongovernmental organizations (NGO), industry, and international  organizations, including several offices within the United Nations. To  examine company disclosures filed with SEC in 2014 in response to the  SEC rule, we downloaded Specialized Disclosure reports and Conflict  Minerals Reports from SEC’s publically available Electronic Data  Gathering, Analysis, and Retrieval (EDGAR) database. We randomly  sampled 147 reports from a population of 1,324 to create estimates  generalizable to the population of all companies that filed. All estimates  based on our sample have a margin of error of plus or minus 10  percentage points or less at the 95 percent confidence level. We  determined that the EDGAR database was sufficiently reliable for  identifying the universe of filings on July 31, 2014. We reviewed the  Dodd-Frank Act and the requirements of the SEC disclosure rule to  develop a questionnaire that guided our data collection and analysis of  the filings. We also attended an industry conference on conflict minerals  and spoke with company representatives to obtain additional  perspectives. We traveled to the DRC, Burundi, and Rwanda to conduct  field work. We met with a range of stakeholders, including NGOs,  contractors, international organizations, and private sector  representatives, and visited three conflict minerals sites—a tantalum mine  in the DRC, a tin mine in Rwanda, and a gold mine in Burundi—to  observe operations and artisanal mining activities. For a complete  description of our scope and methodology, see appendix I.
We conducted this performance audit from September 2014 to August  2015 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Brief History of Conflict in the DRC and the Region
paragraphs: The DRC is a vast, mineral-rich nation with an estimated population of  about 75 million people and an area that is roughly one-quarter the size of  the United States, according to the UN. The map in figure 1 shows the  DRC’s provinces and adjoining countries.
Since its independence in 1960, the DRC has undergone political  upheaval, including a civil war, according to State. In particular, eastern  DRC has continued to be plagued by violence, often perpetrated against  civilians by illegal armed groups and some members of the Congolese  national military. In November 2012, M-23, an illegal armed group,  occupied the city of Goma and other cities in eastern DRC and clashed  with the Congolese national army. During this time, the UN reported  numerous cases of sexual violence against civilians, including women  and children, which were perpetrated by armed groups and some  members of the Congolese national military.
Some of the adjoining countries in the region have also experienced  recent turmoil, which has led to flows of large numbers of refugees and   The United Nations High  internally displaced persons into the DRC.Commissioner for Refugees (UNHCR) estimated that as of mid-2013  there were close to 50,000 refugees from the Central African Republic,  over 120,000 refugees from other countries, and around 2.6 million  internally displaced persons living in camps or with host families in the  DRC.
section_title: Uses of Conflict Minerals
paragraphs: Various industries, particularly manufacturing industries, use the four  conflict minerals in a wide variety of products. For example, tin is used to  solder metal pieces and is also found in food packaging, in steel coatings  on automobile parts, and in some plastics. Most tantalum is used to  manufacture tantalum capacitors, which enable energy storage in  electronic products such as cell phones and computers, and to produce  alloy additives, which can be found in turbines in jet engines. Tungsten is  used in automobile manufacturing, drill bits and cutting tools, and other  industrial manufacturing tools and is the primary component of filaments  in light bulbs. Gold is used as reserves and in jewelry and is used by the  electronics industry.
As we reported in 2013, conflict minerals are mined in various locations  around the world. For example, tin is predominantly mined in China,  Indonesia, Peru, and Bolivia, as well as in the DRC, while tantalum is  reportedly predominantly mined in areas such as Australia, Brazil, and  Canada. Gold, however, is mined in many different countries, including  the DRC.
section_title: U.S. Government Response to Conflict in the DRC
paragraphs: Congress has focused on issues related to the DRC for almost a decade.  In 2006, Congress passed the Democratic Republic of Congo Relief,  Security, and Democracy Promotion Act of 2006, stating that U.S policy is  to engage with governments working for peace and security throughout  the DRC and hold accountable any individuals, entities, and countries  working to destabilize the country. In July 2010, Congress passed the  Dodd-Frank Act, of which Section 1502 included several provisions  concerning conflict minerals in the DRC and adjoining countries.directs State, USAID, SEC, and Commerce to take steps on matters  related to the implementation of those provisions (see text box).
Dodd-Frank Act Provisions Concerning Conflict Minerals in the  Democratic Republic of the Congo and Adjoining Countries
Section 1502(a) states that “it is the sense of the Congress that the  exploitation and trade of conflict minerals originating in the  Democratic Republic of the Congo is helping to finance conflict  characterized by extreme levels of violence in the eastern  Democratic Republic of the Congo, particularly sexual- and  gender-based violence, and contributing to an emergency  humanitarian situation therein, warranting the provisions of section  13(p) of the Securities Exchange Act of 1934, as added by  subsection (b).”
Section 1502(b) requires the Securities and Exchange  Commission (SEC), in consultation with the Department of State  (State), to promulgate disclosure and reporting regulations  regarding the use of conflict minerals from the DRC and adjoining  countries.
Section 1502(c) requires State and the U.S. Agency for  International Development (USAID) to develop, among other  things, a strategy to address the linkages among human rights  abuses, armed groups, the mining of conflict minerals, and  commercial products.
Section 1502(d) requires that the Department of Commerce report,  among other things, a listing of all known conflict minerals- processing facilities (smelters and refiners) worldwide.
As we have previously reported, SEC, State, USAID, and Commerce  have each taken steps to address the provisions of the act.
subsections: section_title: SEC Promulgated Conflict Minerals Disclosure Rule in 2012
paragraphs: SEC issued its conflict minerals disclosure rule in August 2012 in  response to Section 1502(b) of the Dodd-Frank Act, which required that  SEC promulgate disclosure and reporting regulations regarding the use of  conflict minerals from the DRC and adjoining countries by April 2011. In  its summary of the rule, SEC noted that to accomplish the goal of helping  to end the human rights abuses in the DRC caused by the conflict,  Congress chose to use the securities laws disclosure requirements to  bring greater public awareness of the source of companies’ conflict  minerals and to promote the exercise of due diligence on conflict mineral  supply chains.
In the SEC adopting release, SEC noted that it understood Congress’s  main purpose in doing so was to attempt to inhibit the ability of armed  groups in the DRC and adjoining countries to fund their activities by  exploiting the trade in conflict minerals. According to SEC, Congress’s  objective was to promote peace and security, and reducing the use of  such conflict minerals was intended to help reduce funding for the armed  groups contributing to the conflict and thereby put pressure on such  groups to end the conflict. SEC also indicated that one of the cosponsors  of the provision noted that the provision would “enhance transparency”  and “also help American consumers and investors make more informed  decisions.”
Companies are required to file a Specialized Disclosure report (Form SD)  if they manufacture or contract to manufacture products that contain  conflict minerals necessary to the functionality or production of the  products and, as applicable, file a Conflict Minerals Report. The form  provides general instructions to companies for filing the conflict minerals  disclosure and specifies the information that their Conflict Minerals  Reports must include. Companies were required to file under the rule for  the first time by June 2, 2014, and annually thereafter on May 31.
section_title: State and USAID Developed U.S. Conflict Minerals Strategy in 2011
paragraphs: In 2011, State and USAID developed the U.S. Strategy to Address the  Linkages between Human Rights Abuses, Armed Groups, Mining of  Conflict Minerals and Commercial Products. The strategy includes five  objectives:  1.  Promoting an Appropriate Role for Security Forces. U.S. efforts under  this objective aim to end the commercial role of the DRC security  forces in the minerals trade and to make the security forces more  effective within their appropriate, limited role in monitoring and  securing trade.  2.  Enhance Civilian Regulation of the DRC Minerals Trade. U.S. efforts  under this objective will aim to increase the capacity of DRC civilian  authorities involved in overseeing the minerals trade, particularly in  the east.  3.  Protect Artisanal Miners and Local Communities. U.S. efforts under  this objective will aim to reduce the vulnerability of men and women in  local communities directly and indirectly engaged in the mining sector.  4.  Strengthen Regional and International Efforts. U.S. efforts under this  objective aim to support the implementation and coordination of  national, regional, and international efforts to promote monitoring,  certification, and traceability—particularly the Great Lakes regional  initiative—as well as the harmonization of due diligence guidance  developed in various forums.  5.  Promote Due Diligence and Responsible Trade through Public  Outreach. U.S. efforts will aim, through public outreach, to encourage  all stakeholders to take steps at the local, regional, and international  level to promote the responsible trade in minerals.
section_title: Commerce Issued List of Known Conflict Minerals- Processing Facilities in September 2014
paragraphs: Following our June 2014 report, Commerce issued a list of all known  conflict minerals-processing facilities worldwide in September 2014. We  reported in June 2014 that Commerce had not yet fulfilled its mandate  under the act to report, among other things, a list of all known conflict  minerals-processing facilities worldwide to appropriate congressional  committees. We also recommended that the Secretary of Commerce  provide to Congress a plan that outlines the steps, with associated time  frames, to develop and report the required information about smelters and  refiners of conflict minerals worldwide. As of July 2015, GAO was  reviewing Commerce’s related actions to assess its progress toward  implementing the recommendation.
section_title: First Company Filings in Response to the SEC Rule Are Fewer Than SEC Estimated and Provide Limited Insights Regarding Country of Origin and Chain of Custody
subsections: section_title: Companies Filed for the First Time in Response to the SEC Rule in 2014 on Conflict Minerals Used in 2013
paragraphs: Companies filed for the first time in response to the SEC rule in 2014 on  conflict minerals used in calendar year 2013. As we previously reported,  SEC adopted the final conflict minerals disclosure rule on August 22,  2012. As adopted, the final rule applies to any company that files  reports with SEC under Section 13(a) or Section 15(d) of the Securities  Exchange Act of 1934 and uses conflict minerals that are necessary to  the functionality or production of a product manufactured or contracted by  that company to be manufactured. The SEC conflict minerals disclosure  rule details a process for companies to follow, as applicable, to comply  with the rule. Broadly, the process falls into three steps that require a  company to (1) determine whether the rule applies to it; (2) conduct a  reasonable country of origin inquiry concerning the origin of conflict  minerals used; and (3) exercise due diligence, if appropriate, to determine  the source and chain of custody of conflict minerals used. Figure 2  depicts SEC’s flowchart summary of the conflict minerals disclosure  rule.
Step 1: Determine Applicability of the Conflict Minerals Disclosure Rule  A company is subject to the rule if, as step 1 of figure 2 indicates, the  company files reports with SEC under Section 13(a) or 15(d) of the  Exchange Act and conflict minerals are necessary to the functionality or  production of a product manufactured or contracted by that company to  be manufactured. If a company does not meet this definition, it is not  required, under the conflict minerals rule, to take any action, make any  disclosures, or submit any reports. If, however, a company meets this  definition, the company moves to step 2 of figure 2 (discussed later) and  must file a Form SD.
section_title: Number of Companies Was Lower than SEC Estimated; Most Were Domestic
paragraphs: The number of companies that filed Form SDs in 2014—1,321—was  substantially lower than SEC’s estimate of 6,000 companies that could  possibly be affected by the rule. In its rule proposal, SEC had estimated  that approximately 6,000 companies could possibly be affected by the  rule by estimating the number and types of businesses that SEC staff  believed may manufacture or contract to manufacture products with  conflict minerals necessary to the functionality or production of those  products. According to an SEC official, this estimate was intentionally  overly inclusive, was not an expectation, and was provided to satisfy the  requirements of the Paperwork Reduction Act.
Our analysis of a sample of 2014 Form SD filings indicated that an  estimated 87 percent of the companies that filed were domestic, while an  estimated 13 percent were foreign. Also, while not all of the companies  in our sample identified which conflict minerals they used in calendar year  2013, as there was no requirement in the rule to do so, of those  companies that did, about 58 percent reported using tin, 43 percent  reported using tantalum, 39 percent reported using tungsten, and 44  percent reported using gold (see fig. 3).
section_title: Company Filings in 2014 Indicate Companies Performed Country-of- Origin Inquiry but Provided Limited Insights Regarding Country of Origin of Conflict Minerals Used, Citing Difficulty Obtaining Information From Suppliers
paragraphs: The sample of filings in 2014 that we reviewed indicates that 99 percent  of companies conducted a country-of-origin inquiry and most companies  reported that they were unable to determine the country of origin of  conflict minerals they had used in 2013. Company representatives we  interviewed cited difficulties in obtaining information from suppliers. If a  company determines that it is subject to the SEC conflict minerals  disclosure rule, the company is required to conduct a reasonable country  of origin inquiry regarding the origin of conflict minerals it used and  disclose its determination in a Form SD (illustrated by step 2.1 of fig. 2).  The rule does not prescribe the specific actions that are required for an  RCOI, noting that it will depend on each company’s facts and  circumstances. However, the rule provides general standards: A company  must conduct an inquiry regarding the origin of conflict minerals it used  that is reasonably designed to determine whether any of those conflict  minerals originated in the Covered Countries or are from recycled or  scrap sources, and must conduct the inquiry in good faith.the rule recognizes that a company, after conducting an RCOI, may not  know whether conflict minerals it used originated from a Covered  Country. For example, the rule explains that step 3 can be triggered by  the determination that the company has a reason to believe that its  necessary conflict minerals may have originated in the Covered Countries  and may not have come from recycled or scrap sources.
According to our analysis of all companies in our sample that filed a Form  SD in 2014, an estimated
67 percent reported that they were unable to determine the country of
4 percent reported that conflict minerals came from Covered
24 percent reported that conflict minerals did not originate in Covered
2 percent reported that conflict minerals came from scrap or recycled
3 percent did not provide a clear determination.
In our analysis of a sample of filings, an estimated 99 percent of  companies that filed a Form SD reported conducting an RCOI. Almost all  (96 percent) of the companies reported that they conducted a survey of  their suppliers to try to obtain information about whether they used conflict  minerals, the country of origin of those conflict minerals, and the  processor of the conflict minerals. We did not systematically analyze how  companies conducted their supplier surveys, but a few of the Form SDs  that we reviewed and some company representatives we spoke with  indicated that they used a supplier survey and industry template to  conduct their RCOIs. For example, one company reported that its method  for determining the country of origin of its minerals was to conduct a  supply chain survey with direct suppliers using a template developed by  an industry association. Another company reported contacting suppliers  and using an industry survey template–the Conflict Minerals Reporting  Template–from the Conflict-Free Sourcing Initiative, an industry  association. In our analysis, an estimated 47 percent of companies  reported that they received responses from the suppliers they surveyed.  Nineteen companies in our sample reported that they had 100 percent  response rates from their suppliers, but 12 of them were unable to  determine the source of the conflict minerals. Four reported that they  were able to determine that conflict minerals they used did not come from  Covered Countries, while1 was able to determine that conflict minerals it  used came from Covered Countries. Representatives of some  companies that we spoke with told us that they received information from  suppliers that was incomplete, limiting their ability to determine the source  and chain of custody of the conflict minerals they used in 2013. As we  reported in July 2013, a company’s supply chain can involve multiple tiers  of suppliers. As a result, a request for information from a company could  go through many suppliers, as figure 4 illustrates, delaying the  communication of information to the company. For example, as we  previously reported, companies required to report under the rule could   Those suppliers could  submit the inquiries to their first-tier suppliers.either provide the reporting company with sufficient information or initiate  the inquiry process up the supply chain, such as by distributing the  inquiries to suppliers at the next tier—tier 2 suppliers. The tier 2 suppliers  could inquire up the supply chain to additional suppliers, until the inquiries  arrived at the smelter. Smelters could then provide the suppliers with  information about the origin of the conflict minerals. Figure 4 illustrates  the flow of information through the supply chain.
Representatives of some companies that we spoke with told us that they  were making efforts to address concerns about the lack of information on  the country of origin of conflict minerals they had used. For example, one  representative told us that in the future the company plans to include in all  new and renewing contracts a conflict minerals clause that will require its  suppliers to source only conflict-free minerals, leveraging continuing  business negotiations with its suppliers and adding downward pressure  for suppliers to source responsibly from the region. Another company’s  representative told us that the company would alter its outreach strategies  to contact suppliers sooner and more frequently during the reporting  process.
The rule requires a company that determines that, based on its RCOI,  conflict minerals it used (1) did not originate in the Covered Countries or  (2) came from recycled or scrap sources, to disclose in its Form SD its  determination and briefly describe the RCOI it used in reaching the  determination and the results of the inquiry (illustrated in step 2.3 of fig.  2). As indicated above, an estimated 26 percent of all companies that  filed a Form SD reported in these two categories. While we did not  individually analyze each company’s description of method of RCOI in  this group, as mentioned earlier, an estimated 96 percent of the  companies in our sample that conducted an RCOI reported using supplier  surveys.
Step 3: Exercise Due Diligence on the Source and Chain of Custody of  Conflict Minerals Using a Nationally or Internationally Recognized  Framework, if Available.
section_title: Company Filings Indicate Companies Exercised Due Diligence but Most Were Unable to Determine Whether or Not Conflict Minerals Used Came From Covered Countries, or Whether They Financed or Benefited Armed Groups
paragraphs: According to our analysis, the exercise of due diligence on the source and  chain of custody of conflict minerals yielded little or no additional  information, beyond the RCOI, regarding the country of origin of conflict  minerals or whether the conflict minerals used in 2013 in products by  companies benefited or financed armed groups in the Covered  Countries. According to the SEC rule, based on a company’s RCOI, if a  company knows that conflict minerals it used originated in the Covered  Countries or has reason to believe that they may have originated in the  Covered Countries and may not have come from recycled or scrap  sources, the next step is to exercise due diligence using a nationally or  internationally recognized due diligence framework, if such a framework is  available for the necessary conflict minerals (step 3.1).
Majority of companies exercised due diligence and most maintained  the determination that they could not identify origin of conflict  minerals. According to our analysis, about 92 percent of the  companies mentioned the OECD framework in connection with their  due diligence, while another 2 percent mentioned a framework other  than the OECD framework. Notwithstanding, the results remained  as indicated above in the discussion of RCOI. That is, an estimated  67 percent of all companies declared that they were unable to  determine the country of origin of the conflict minerals in their  products.
Companies unable to determine if conflict minerals benefited or  financed armed groups in Covered Countries. As we indicated in the  discussion of RCOI, an estimated 4 percent of the companies  determined that the necessary conflict minerals used in their products  originated from Covered Countries. However, according to our  analysis, all of these companies disclosed that they conducted due  diligence on the source and chain of custody of conflict minerals they  used but none were able to determine whether such conflict minerals  financed or benefitted armed groups during the reporting period (step  3.3 of fig. 2).
SEC rule provides a temporary period during which companies can  describe their products as “DRC conflict undeterminable.” The SEC  rule allows a temporary period during which, if after exercising due  diligence for source and chain of custody of conflict minerals used in  their products, companies remain unable to determine the origin of  conflict minerals used and whether those minerals financed or  benefitted armed groups, those companies can describe their  products as DRC conflict undeterminable (step 3.5 of fig. 2) in their  Conflict Minerals Report (CMR). The temporary period is in place for  2 years for all companies and 4 years for smaller reporting companies  following the effective date of the rule. However, due to continuing  litigation in a legal challenge to the conflict minerals rule, SEC staff  has issued guidance stating, among other things, that companies are  not required to use this label. See appendix II for additional  information on this issue. Figure 5 depicts the SEC conflict minerals  disclosure rule timeline. As we previously reported, SEC staff had  indicated that they anticipated that most companies during the first  year of filing would likely claim “DRC conflict undeterminable” in their  disclosures. According to SEC staff, of the 1,321 companies that filed  distinct Form SDs in 2014, 89 percent were larger companies, while  smaller companies made up 11 percent of all companies that filed a  Form SD.
According to SEC, the temporary period recognizes that company  processes for tracing conflict minerals through the supply chain must  develop further. After the temporary period described above, if in  exercising due diligence the company was not able to determine whether  the conflict minerals came from Covered Countries or financed or  benefited armed groups in those countries, it must include in its CMR a  description of those products as not having been found to be DRC conflict  free.
Majority of companies should have filed conflict minerals report as an  exhibit to their Form SDs. The rule requires a company that exercised  due diligence on the source and chain of custody of conflict minerals it  used to file a Conflict Minerals Report as an exhibit to its Form SD  (step 3.3), when appropriate. According to our analysis, at least an  estimated 71 percent of companies should have filed a CMR as an  exhibit to their Form SDs. The CMR must also include an Independent  Private Sector Audit (IPSA) report. According to the SEC disclosure  rule, the audit’s objective is for the auditor to express an opinion or  conclusion as to whether the design of the company’s due diligence  measures as set forth in the CMR, with respect to the period covered  by the report, is in conformity with, in all material respects, the criteria  set forth in the nationally or internationally recognized due diligence  framework used by the company, and whether the company’s  description of the due diligence measures it performed as set forth in  the CMR, with respect to the period covered by the report, is  consistent with the due diligence process that the company  undertook. Under the rule, for products that have not been found to be  DRC Conflict Free, the companies are required to disclose, for those  products, the facilities used to produce the conflict minerals, the  country of origin of the minerals, and the efforts to determine the mine  or location of origin.
Companies that disclosed that conflict minerals came from covered  countries indicated they are or will be taking action. Examples include the  following: notify suppliers that the company intends to cease doing business  with suppliers who continue to source conflict minerals from smelters  that are not certified as conflict-free;  include a conflict minerals clause in new or renewed contracts  requiring suppliers to provide conflict minerals information on a  prospective basis and identify alternative sources of conflict minerals  if suppliers are found to be providing the company with minerals that  support conflict in the Covered Countries;  increase the number of surveyed suppliers; reach out earlier in the  year, and direct suppliers to information and training resources; participate in the Conflict-Free Sourcing Initiative, an industry  association effort, to define best practices and induce smelters and  refiners to adopt socially responsible business practices; and address, as appropriate, complaints or concerns expressed through  grievance mechanisms.
section_title: State and USAID Actions to Implement the U.S. Conflict Minerals Strategy Have Yielded Some Results, but Conditions Remain Difficult
subsections: section_title: State and USAID Are Taking Action to Implement Strategy Objectives
paragraphs: State and USAID officials reported that they are implementing the U.S.  conflict minerals strategy (the strategy) they submitted to Congress in  2011 through specific actions that address the five key objectives of the  strategy. Both State and USAID officials in Washington and the region  reiterated that the strategy and its five key objectives remain relevant  although years have passed since the strategy was developed. In  November 2014, we requested a consolidated list of the actions the  agencies are taking under the strategy’s objectives. The information we  received included actions by each agency, or its implementing partners,  and status or results, where applicable, as shown in tables 1 through 5.State and USAID reported that some activities are associated with  multiple objectives.
subsections: section_title: Promote an Appropriate Role for Security Forces (Objective 1)
paragraphs: As we previously reported, some members of the security forces in the  DRC, such as some members of the Congolese national military units,  are consistently and directly involved in human rights abuses against the  civilian population in eastern DRC and are involved in the exploitation of  conflict minerals and other trades. Some of the reported actions being  undertaken by the International Organization for Migration (IOM), a  USAID implementing partner, are helping to lessen the involvement of the  military and increasing the role of legitimate DRC government  stakeholders in mining areas (see table 1). For example, USAID reported  that IOM has assisted with the planning and demilitarization of mine sites  in eastern DRC through leading a multi-sector stakeholder process of  mine validation to ensure that armed groups and criminal elements of the  Congolese military are not active in eastern DRC mines.
Official Congolese agencies tasked with regulating the minerals trade  have responsibilities that include collecting production and export figures.  However, as we reported in 2010, U.S. and DRC officials, a foreign  official, and industry representatives told us that their ability to carry out  their duties is reportedly impeded by various factors such as weak  capacity, volatile security, and poor infrastructure, among other things.  USAID reported that it is undertaking a number of actions, through  implementing partners, to enhance civilian regulation and traceability of  the DRC minerals trade.
Traceability mechanisms may minimize the risk that minerals that  have been exploited by illegal armed groups will enter the supply  chain and may also support companies’ efforts to identify the source of  the conflict minerals across the supply chain around the world. Such  initiatives in the Democratic Republic of the Congo and adjoining  countries focus on tracing minerals from the mine to the mineral  smelter or refiner by supporting a bagging and tagging program or  some type of traceability scheme.
For example, USAID reported funding TetraTech, a technical services  company, to (1) build the capacity for responsible minerals trade in the  DRC, (2) strengthen the capacity of key actors in the conflict minerals  supply chain, and (3) advance artisanal and mining rights. In addition,  USAID indicated that it is funding IOM to support DRC infrastructure and  regulatory reform. According to an IOM official we spoke with in the  region, IOM also provides the DRC government with information on which  mines should be suspended from the conflict-free supply chain based on  safety and human rights violations. A USAID official and representatives  of local human rights organizations we met with during our visit to North  Kivu also told us that the implementation of traceability schemes is  contributing to positive outcomes.
For example, in some cases, according to USAID, local miners earn  double the price for certified conflict-free minerals compared to non- certified illegal minerals, which is more than they would earn from  smuggling. Table 2 shows actions USAID has taken to enhance civilian  regulation of the DRC minerals trade.
According to USAID, artisanal mining provides survival incomes to  Congolese throughout the country but it is particularly significant in  eastern DRC, where roughly 500,000 people directly depend on artisanal  mining for their income. These miners work under very difficult safety,  health, and security conditions and almost always within an illegal and  illicit environment. Moreover, as we observed during our visits to the  mines in the region, artisanal mining is a physically demanding activity  requiring the use of rudimentary techniques and little or no industrial  capacity (see figs. 8 and 9 for illustrations of artisanal miners at work).
State and USAID reported several programs (shown in table 3), through  their implementing partners, aimed at protecting artisanal miners and  local communities and providing alternative livelihoods. For example,  State reported that it funded an implementing partner, Heartland Alliance  International (HAI), a service-based human rights organization, for anti- human-trafficking initiatives as well as to promote alternative livelihoods  and improve workers’ rights in the artisanal mining sector. According to  State, these efforts aimed to reduce the vulnerability of men and women  in local communities. State officials reported some illustrative examples of  success in promoting alternative livelihoods. For example, a woman who  used to transport minerals, a physically demanding, low-paying job,  attended one of HAI’s alternative livelihood trainings where she received  a kit to sell fish. Today, she makes a better living from selling fish and is  able to pay her children’s school fees without working in the mining  sector, according to State officials. In addition, USAID has funded Pact,  an implementing partner, to promote community conflict-mitigation and  conflict minerals monitoring structures at local levels. State also  supported Pact to build local capacity for monitoring security and human  rights conditions and mineral traceability, and provide local artisanal  mining communities with resources to monitor, record, and report on  initiatives and human rights abuses. State indicated that its actions  through Pact also support enhancing civilian regulation of the minerals  sector and strengthening regional and international cooperation, other  objectives of the strategy.
In our July 2012 report, we provided a description of regional and global  initiatives being undertaken by various stakeholders that may facilitate  responsible sourcing of conflict minerals in the DRC region. These  included, among others, efforts by the UN and International Conference  on the Great Lakes Region (ICLGR). Objective 4 of the U.S. conflict  minerals strategy calls for actions to strengthen regional and international  efforts. USAID reported that it is working with TetraTech to achieve this  goal. Specifically, USAID said it is working with TetraTech to build the  capacity of the ICGLR, an intergovernmental organization. According to  USAID, this effort supports the implementation and coordination of  regional countries’ efforts to promote monitoring, certification, and  traceability of mine sites. A TetraTech representative we met with in the  region told us that TetraTech is also organizing workshops for educating  and raising awareness about regional certification in ICGLR countries.
According to officials we interviewed from the United Nations  Organization Stabilization Mission in the Democratic Republic of the  Congo (MONUSCO), the ICGLR, and local officials, U.S. diplomacy has  increased awareness and improved coordination about conflict minerals  in the region; a situation described by some of the officials as the most  effective State and USAID actions for conflict minerals in the region.
State and USAID reported engaging in various efforts to reach out to  industry associations, NGOs, international organizations, and regional  entities to help promote due diligence and responsible trade in conflict  minerals. For example, State and USAID reported that they leveraged  private sector interest to establish the Public-Private Alliance for  Responsible Minerals Trade (PPA) to support supply chain solutions to  conflict minerals challenges in the region. The alliance includes State,  USAID, and representatives from U.S. end-user companies, industry  associations, NGOs, and ICGLR, among others. In addition, State is  engaged with the Conflict-Free Sourcing Initiative (CFSI) and State and  USAID both participate in the biannual OECD, UN Group of Experts  (UNGOE), ICGLR forums. According to State and USAID officials, these  efforts promote continued engagement with industry officials and civil  society groups and encourage due diligence and strengthening of conflict- free supply chains. At a conference in Kinshasa, DRC, co-hosted by the  OECD, UN Group of Experts, and the ICGLR in November 2014, we  observed State and USAID officials outline their actions, outcomes, and  next steps to conference participants. A USAID official in the region told  us that teams of private sector executives, which State and USAID  officials in the DRC and Rwanda helped to organize and host, have  visited eastern DRC and Rwanda mining sites on several occasions,  reinforcing the executives’ commitment to source minerals responsibly.
According to the USAID official, these efforts have resulted in a reduction  in predatory taxes, contributions by exporters to social development, and  increased focus on certification and traceability systems. Noting that visits  to the DRC and some locations in Rwanda had been coordinated and led  by State and USAID staff, a State official added that some private  companies had made independent contributions to community projects  and other companies had been active in providing feedback on  certification and traceability mechanisms.
section_title: State and USAID Face Difficult Conditions in Implementing the U.S. Conflict Minerals Strategy
paragraphs: Although State and USAID officials have provided some examples of  results associated with their actions, the agencies face difficult operating  conditions that complicate efforts to address the connection between  human rights abuses, armed groups, and the mining of conflict minerals.  We have described some of these challenges in our previous reports but,  as we observed during our recent visit to the region, numerous  challenges continue to exist. First, the mining areas in eastern DRC  continue to be plagued by insecurity because of the presence and  activities of illegal armed groups and some corrupt members of the  national military. In 2010, we reported extensively on the presence of  illegal armed groups, such as the Democratic Forces for the Liberation of  Rwanda or Forces Democratiques de Liberation du Ruwanda (FDLR),  and some members of the Congolese military and the various ways in  which they were involved in the exploitation of the conflict minerals sector  in eastern DRC. In 2013, the Peace and Security Cooperation  Framework signed by 11 regional countries noted that eastern DRC has  continued to suffer from recurring cycles of conflict and persistent  violence. Although U.S. agency and Congolese officials informed us  during our recent field-work in the region that a large number of mines  had become free of armed groups (referred to as green mines),  MONUSCO officials we met with in the DRC also told us that armed  groups and some members of the Congolese military were still active in  other mining areas. Specifically, MONUSCO officials described two  fundamental ways in which armed groups continued to be involved in  conflict minerals activities: directly, by threatening and perpetrating  violence against miners to confiscate minerals from them; and indirectly,  by setting up checkpoints on trade routes to illegally tax miners and  traders. As we noted in our 2010 report, U.S. agency and UN officials and  others believe that the minerals trade in the DRC cannot be effectively  monitored, regulated, or controlled as long as armed groups and some  members of the Congolese national military continue to commit human  rights violations and exploit the local population at will.
As we reported in 2010, U.S. government officials and others have  indicated that weak governance and lack of state authority in eastern  DRC constitute a significant challenge. As we noted then, according to  U.N. officials, if Congolese military units are withdrawn from mine sites,  civilian DRC officials will need to monitor, regulate, and control the  minerals trade. We also noted that effective oversight of the minerals  sector would not occur if civilian officials in eastern DRC continued to be  under paid or not paid at all, as such conditions easily lead to corruption  and lack of necessary skills to perform their duties. Evidence shows that  this situation has not changed much. U.S. agencies and an implementing  partner, as well as some Congolese officials, told us that there are  insufficiently trained civilians to effectively monitor and take control of the  mining sector. ICGLR officials we met with highlighted the importance of a  regional approach to addressing conflict minerals and indicated that  governments’ capacity for and interest in participating in regional  certification schemes varies substantially, making it difficult to implement  credible, common standards. Corruption continues to be a challenge in  the mining sector. For example, a member of the UN Group of Experts  told us that smuggling remains prolific and that instances of fraud call into  question the integrity of traceability mechanisms. This official stated that  tags used to certify minerals as conflict free are easily obtained and  sometimes sold illegally in the black market. According to USAID, USAID  is working to introduce a pilot traceability system to increase  transparency, accountability, and competition in the legal artisanal mining  sector. According to U.S. government officials and officials from local and  civil society in the region that we met with, lack of state authority bolsters  armed group activity and precludes public trust in the government.
Poor infrastructure, including poorly maintained or nonexistent roads,  makes it difficult for mining police and other authorities to travel in the  region and monitor mines for illegal armed group activity. In our 2010  report, we reported that the minerals trade cannot be effectively  monitored, regulated, and controlled unless civilian DRC officials,  representatives from international organizations, and others can readily  access mining sites to check on the enforcement of laws and regulations  and to ensure visibility and transparency at the sites. During our recent  visit to the region, poor road conditions made travel to the mines very  challenging (see fig. 10).
In addition, U.S. agencies cited the overall lack of an investor-friendly  environment, including poor investment climate, arbitrary and excessive  taxation and predatory government monitoring and enforcement, and the  scarcity of basic services, such as water and electricity, as challenges  that make it difficult for mining companies to conduct business, a  fundamental issue that precludes economic development and makes it  more difficult for U.S. agencies and contractors to conduct oversight and  provide services. Also, a mine owner in eastern DRC that we met with  cited a range of challenges to conducting business in the region, including  lack of access to financing, poor security, and inadequate infrastructure.
section_title: Additional Information Available on Rate of Sexual Violence in Eastern DRC and Adjoining Countries since GAO’s June 2014 Report
paragraphs: Since we last reported, in June 2014, results from three new population- based surveys related to sexual violence in eastern DRC have been  published, one of which provides a basis for comparison with results of an  earlier survey of sexual violence in the DRC. The Dodd-Frank Act  mandated GAO to report annually, beginning in 2011, on the rate of  sexual violence in war-torn areas of the DRC and adjoining countries.  No new population-based surveys related to sexual violence in Uganda,  Rwanda, or Burundi have been published since our last report, but some  surveys in these countries are underway or being planned. Some new  additional case file data on sexual violence are available for some of  these countries. However, as we reported in 2011, case file data on  sexual violence are not suitable for estimating an overall rate of sexual  violence.
subsections: section_title: Three New Population- Based Studies Provide Additional Data on Sexual Violence in the DRC; Additional Studies for Adjoining Countries Are Under Way or Planned
paragraphs: We identified three new population-based surveys related to sexual  violence in eastern DRC that have been published since June 2014: (1) a  Demographic and Health Survey (DHS) conducted by the DRC Ministry of  Planning with technical assistance from ICF International, (2) a USAID- funded survey conducted by a U.S.-based monitoring and evaluation firm  (Social Impact) and (3) a survey co-produced by the Harvard  Humanitarian Initiative, a university-based research center, and the  United Nations Development Program (UNDP). For the purposes of this  report, we define eastern DRC as encompassing South Kivu, North Kivu,  and the Ituri District of Orientale Province. Population-based surveys for  Burundi and Rwanda are underway or planned by ICF International,  which does not currently have plans to conduct another DHS for Uganda.  We previously reported that population-based surveys are more  appropriate for estimating the rate of sexual violence than case file data  because population based surveys are conducted using the techniques of   However, there  random sampling and their results are generalizable.are limitations and challenges to using such surveys to gather data on  sexual violence and estimate the rate of such violence, particularly in  eastern DRC. Examples of limitations include undercoverage caused by  poor infrastructure and insecurity, which can limit access to some areas;  and underreporting, as survey response rates partly depend on whether  or not sexual violence victims are willing to discuss such difficult  experiences. In addition, if large sample sizes are required, the result can  be higher survey costs.
subsections: section_title: 2014 Demographic and Health Survey of the DRC
paragraphs: Ministry of Planning and Implementation of the Modern Revolution (MPSMRM), Ministry  of Public Health (MSP), and ICF International. Democratic Republic of Congo  Demographic and Health Survey 2013-14. Rockville, MD, 2014. study was designed to provide data for monitoring the population and  health situation in the DRC, using indicators such as fertility, sexual  activity, and family planning, among other things. The DRC Ministry of  Planning conducted the survey with the support of the DRC Ministry of  Public Health as well as several foreign governments; international, and  nongovernmental organizations, including USAID; various UN agencies;  and the World Bank.
The 2014 DHS survey of the DRC is the second such survey conducted  by the DRC’s Ministry of Planning that has yielded nationwide information  on sexual violence in the DRC, so it provides a basis for comparison over  time. The first DHS survey was published in August 2008, and was  conducted from January 2007 to August 2007. According to ICF  International’s analysis of the 2007 survey data, 28 percent of women  nationwide, ages 18-49, reported having experienced sexual violence in  the 12-month period preceding the survey, while 36 percent of women  nationwide reported they had experienced sexual violence at some point  in their lifetime.
According to an analysis by ICF International, which compared estimates  from the 2007 and 2013-2014 survey data, nationwide estimates of  sexual violence decreased from 2007 to 2013-2014 for both the 12-month  period preceding the surveys (28 percent to 17 percent) and the lifetime  figures (36 percent to 29 percent). ICF International determined these  differences to be statistically significant. For North Kivu, the rate of sexual  violence reported by women in the 1-year period preceding the 2007 and  2013-2014 surveys decreased from 30 percent in 2007 to 14 percent in  2013-2014, which is also statistically significant, according to ICF  International. For South Kivu, ICF International found no statistically  significant difference in the rate of sexual violence reported by women in  the 12-month period preceding the survey and at any point in their lives  between the 2007 and 2013-2014 surveys. See table 6 for a summary of  the comparisons.
A population-based survey, funded by USAID and conducted by the U.S.- based organization Social Impact, on human-trafficked individuals, ages  15 and older, in artisanal mining towns in South Kivu and North Katanga,  found that 7.1 percent of women and 1.2 percent of men had experienced  sexual violence in the previous year at the mining sites. The survey,  published in August 2014, and covering data collected from April 2014 to  May 2014, also found that the most common perpetrators of this violence  were friends or acquaintances (identified as responsible for about one- half of the attacks) and miners (identified as responsible for about one- fifth of the attacks). The survey is intended to measure sexual violence in  areas that have artisanal mines and included a sample of territories within  eastern DRC and outside of eastern DRC. Because of this, survey results  may not be generalizable to the population of eastern DRC.
section_title: Harvard Humanitarian Initiative / UNDP Survey of Eastern DRC
paragraphs: A 2014 survey, co-produced by the Harvard Humanitarian Initiative and  UNDP, of adult men and women, ages 18 and older, in the eastern DRC  provinces of North and South Kivu and the Ituri District, found that 23  percent of respondents had witnessed sexual violence being committed  by armed groups on civilians since 2002. The survey also found that a  total of 9 percent of respondents had witnessed sexual violence being  committed by armed groups on civilians over the 12-month period prior to  the survey. The survey was conducted between November 2013 and  December 2013. According to the survey report, the survey was  conducted to assess the population of eastern Congo’s perceptions,  knowledge, and attitudes about peace, security, and justice, and aimed at  providing results that were representative of the adult population of  territories and major urban areas in eastern Congo. The interviewers  asked respondents if they had witnessed sexual violence being  perpetrated by armed groups on civilians, but did not explicitly ask  whether the respondents had ever experienced sexual violence; therefore  we found that the data cannot be used to estimate the rate of sexual  violence in eastern DRC.
section_title: Additional Population Surveys of Adjoining Countries Under Way or Planned
paragraphs: Although no new population-based surveys related to sexual violence in  Uganda, Rwanda, and Burundi have been published since July 2014,  population-based surveys are underway or planned by ICF International  in Rwanda and Burundi. (Fig. 11 shows a timeline of population-based  surveys for the DRC, Rwanda, Uganda, and Burundi since 2007).  According to ICF International, data collection for a DHS for Rwanda is  complete and it expects to publish the survey results by the end of 2015.  ICF International said it has planned a DHS for Burundi in late 2015 and  expects the report to be available in late 2016. ICF International said that  discussions are underway to conduct another DHS for Uganda in 2016  but it may or may not include questions related to sexual violence.
section_title: Some Additional Case File Data on Sexual Violence Have Become Available since GAO’s 2014 Report
paragraphs: Since GAO’s June 2014 report, State and some UN agencies have  provided additional case file data on instances of sexual violence in the  DRC and adjoining countries. State’s annual country reports on human  rights practices provided information pertaining to sexual violence in the  following countries:
DRC. The state security force, rebel and militia groups, and civilians  perpetrated widespread sexual violence. The United Nations  registered 3,635 victims of sexual violence from January 2010 to  December 2013. These crimes were often committed during attacks  on villages and sometimes as a tactic of war to punish civilians for  perceived allegiances with rival parties or groups. The crimes  occurred largely in the conflict zones in North Kivu province but also in  provinces throughout the country.
Burundi. Centre Seruka, a clinic for rape victims, reported an average  of 135 new rape cases per month from January through September.  Of that number, 68 percent were minors, and 17 percent were  children under age five. Centre Seruka also reported approximately  30 percent of its clients filed complaints, and 70 percent knew their  aggressors.
Rwanda. Domestic violence against women was common. Although  many incidents remained within the extended family and were not  reported or prosecuted, government officials encouraged the reporting  of domestic violence, and the Rwanda National Police stated that  reporting of such cases increased.
Uganda. Rape remained a serious problem throughout the country,  and the government did not consistently enforce the law. Although the  government arrested, prosecuted and convicted persons for rape, the  crime was seriously underreported, and authorities did not investigate  most cases. Police lacked the criminal forensic capacity to collect  evidence, which hampered prosecution and conviction. The 2013  police crime report registered 1,042 rape cases throughout the  country, of which 365 were tried. Of these, 11 convictions were  secured, with sentences ranging from 3 years to life imprisonment, 11  cases were dismissed; and 343 cases were still pending in court at  year’s end.
In addition, some UN entities reported case file information on sexual  violence in the DRC and Burundi, as described below:
DRC. A March 2015 report of the Secretary-General on conflict- related sexual violence showed that, from January 2014 to September  2014, the United Nations Population Fund (UNFPA) recorded 11,769  cases of sexual violence in the provinces of North Kivu, South Kivu,  Orientale, Katanga, and Maniema. Of these cases, 39 percent were  considered to be directly related to the dynamics of conflict, being  perpetrated by arms bearers. The report also notes that, as in 2013,  North Kivu and Orientale remain the provinces most affected by  conflict-related sexual violence, with 42 percent of all incidents taking  place in Orientale.
DRC. MONUSCO reported in September 2014 that armed groups and  national security forces continued to commit crimes of sexual  violence. Between June 30, 2014, and September 25, 2014, it  recorded 37 cases of sexual violence committed by armed groups and  national security forces, 15 of which were committed by the armed  forces of the Democratic Republic of Congo and 10 by Mayi-Mayi  combatants from different groups. The report indicates that 18 of the  37 cases of sexual violence occurred in North Kivu, South Kivu, and  Orientale Provinces.
DRC. MONUSCO also recorded 61 cases of sexual violence in  conflict during the reporting period of September 25, 2014 to  December 30, 2014. MONUSCO reports that at least 30 women and  31 children were victims of sexual violence, allegedly committed by  armed groups and national security forces in eastern DRC.
Burundi. UNFPA reports that it supported 3,203 survivors of sexual  violence at care centers located in the areas of Seruka, Nturengaho,  and Humara. In addition, 24 UNFPA-supported hospitals across six  provinces in Burundi are also collecting sexual violence data. UNFPA  reports that these hospitals provided medical support to 180 survivors  in 2014.
As we previously reported, several factors make case file data unsuitable  for estimating rates of sexual violence. First, because case file data are  not aggregated across various sources, and because the extent to which  various reports overlap is unclear, it is difficult to obtain complete data, or  a sense of magnitude from case files. Second, in case file data as well as  in surveys, time frames, locales, and definitions of sexual violence may  be inconsistent across data collection operations. Third, case file data are  not based on a random sample and the results of analyzing these data  are not generalizable.
section_title: Agency Comments
paragraphs: We provided a draft of this report to SEC, State, USAID, and Commerce  for their review. Agencies provided technical comments, which we have  incorporated as appropriate.
We are sending copies of this report to appropriate congressional  committees. The report is also available at no charge on the GAO website  at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-8612 or gianopoulosk@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To examine company disclosures filed with the Securities and Exchange  Commission (SEC) for the first time in 2014 in response to the SEC  conflict minerals disclosure rule, we downloaded the Specialized  Disclosure reports (Form SD) and Conflict Minerals Reports from SEC’s  publically available Electronic Data Gathering, Analysis, and Retrieval  (EDGAR) database on July 31, 2014. We downloaded 1,324 filings  identified as Form SDs in EDGAR. To review the completeness and  accuracy of the EDGAR database, we reviewed relevant documentation,  interviewed knowledgeable SEC and GAO officials, and reviewed prior  GAO reports on internal controls related to SEC’s financial systems. We  determined that the EDGAR database was sufficiently reliable for  identifying the universe of SD filings on July 31, 2014. We reviewed the  conflict minerals section of the Dodd-Frank Wall Street Reform and  Consumer Protection Act and the requirements of the SEC conflict  minerals disclosure rule to develop a questionnaire that guided our data  collection and analysis of Form SDs and Conflict Minerals Reports. Our  questionnaire was not a compliance review of the Form SDs and Conflict  Minerals Reports. The questions were written in both yes/no and multiple  choice formats. An analyst reviewed the Form SDs and Conflict Minerals  Reports and recorded responses to the questionnaire for all of the  companies in the sample. A second analyst also reviewed the Form SDs  and Conflict Minerals Reports and verified the questionnaire responses  recorded by the first analyst. Analysts met to discuss and resolve any  discrepancies.
We randomly sampled 147 filings from a population of 1,324 to create  estimates generalizable to the population of all companies that filed. All  estimates based on our sample have a margin of error of plus or minus  10 percentages points or less at the 95 percent confidence level.  Because we followed a probability procedure based on random  selections, our sample is only one of a large number of samples that we  might have drawn. Since each sample could have provided different  estimates, we express our confidence in the precision of our particular  sample’s results as a 95 percent confidence interval. This is the interval  that would contain the actual population value for 95 percent of the  samples we could have drawn. We also attended an industry conference  on conflict minerals and spoke with company representatives to obtain  additional perspectives.
To examine Department of State (State) and U.S. Agency for  International Development (USAID) actions related to the U.S. conflict  minerals strategy in the DRC region, we reviewed the U.S. Strategy to  Address the Linkages between Human Rights Abuses, Armed Groups,  Mining of Conflict Minerals and Commercial Products, developed by State  and USAID in 2011, and State’s and USAID’s websites. We interviewed  State and USAID officials in Washington for an update on the U.S.  implementation of the strategy in the Democratic Republic of Congo  (DRC) and continuing challenges. We also reviewed the Dodd-Frank Wall  Street Reform and Consumer Protection Act.
In November 2014 we traveled to the DRC region and met with several  State and USAID officials implementing actions related to the strategy  and host country officials. We also met with representatives of  nongovernmental organizations (NGO), contractors, international  organizations, and private sector representatives to gather information  and assess the impact of the Dodd-Frank Act and the implementation of  the conflict minerals strategy. In addition, we visited three conflict  minerals sites—a tantalum mine in the DRC, a tin mine in Rwanda, and a  gold mine in Burundi—to observe operations and artisanal mining  activities and to gain an understanding of mine certification processes  and the challenges that mines must overcome to export minerals. We  also reviewed documents from officials working in the region that detailed  the various programs State and USAID are implementing.
In response to a mandate in the Dodd-Frank Wall Street Reform and  Consumer Protection Act that GAO submit an annual report that  assesses the rate of sexual violence in war-torn areas of the DRC and  adjoining countries, we identified and assessed any additional published  information available on sexual violence in war-torn eastern DRC, as well  as three adjoining countries that border eastern DRC—Rwanda, Uganda,  and Burundi—since our June 2014 report on sexual violence in these  areas. During the course of our review, we interviewed officials from  USAID to discuss the collection of sexual violence-related data—including  population-based surveys and case file data—in the DRC and adjoining  countries. We contacted researchers and representatives from groups we  interviewed from our prior review on sexual violence rates in eastern DRC  and adjoining countries. We also traveled to New York City to meet with  officials from the United Nations (UN) Population Fund, United Nations  High Commissioner for Refugees, United Nations Special Representative  of the Secretary-General on Sexual Violence in Conflict, and the United  Nations Children’s Fund. In addition, we reviewed relevant  documentation, such as reports and technical briefs, from various UN  entities. To determine whether sexual violence data from the last two  Demographic Health Survey (DHS) published reports for the DRC were  comparable, we corresponded with and interviewed officials at ICF  International, a firm providing technical assistance for survey design and  implementation. Because data from the published 2008 and 2014 DHS  for DRC were not comparable, we reported on data that ICF International  generated at our request for the two time periods, which it determined to  be comparable. We also conducted Internet literature searches to identify  new academic articles containing any additional information on sexual  violence since our 2014 report.
We conducted this performance audit from September 2014 to August  2015 in accordance with generally accepted government auditing  standards. Those standards require we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Description of Litigation and Resulting Guidance Related to the “DRC Conflict Undeterminable” Classification
paragraphs: In response to the appeals court’s April 2014 decision, the Securities and  Exchange Commission (SEC) staff, on April 29, 2014, issued a statement  that it expects companies to file any reports required under Rule 13p-1  subject to any further action that may be taken by either the commission  or a court. The SEC staff’s statement contains guidance to companies,  which provides, among other things, that no company is required to  describe its products as having “not been found to be ‘DRC [Democratic  Republic of the Congo] conflict free’,” or as “DRC conflict undeterminable”  in their reports. The guidance also states that, although the rule does not  require any company to describe its products as “DRC conflict free,” a  company may voluntarily elect to describe any of its applicable products  that way in its report if it had obtained an independent private sector audit  as required by the rule. In addition, the guidance states that, pending  further action, an independent private sector audit will not be required  unless a company voluntarily elects to describe a product as DRC conflict  free in its Conflict Minerals Report. On May 2, 2014, SEC issued an order  staying the effective date for compliance with the portions of Rule 13p-1  and Form SD subject to the appeals court’s First Amendment holding  pending the completion of judicial review. On May 5, 2014, the plaintiffs  filed a motion with the appeals court asking the court to stay the entire  rule pending the completion of judicial review, which the commission  opposed, and on May 14, 2014, the appeals court denied the motion.
section_title: Appendix III: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Godwin Agbara (Assistant  Director), Marc Castellano, Tina Cheng, Debbie Chung, Justin Fisher,  Julia Jebo Grant, Emily Gupta, Stephanie Heiken, Jill Lacey, Grace Lui,  and Andrea Riba Miller made key contributions to this report.