WASHINGTON – Federal regulators on Wednesday proposed new reporting requirements for public companies that operate mines, pull oil or gas out of the ground or use certain minerals from Africa in their products.
The Securities and Exchange Commission voted to propose the new rules under the financial overhaul law enacted in July. The regulators' goal is to make companies engaged in potentially controversial activities more accountable about them to shareholders.
In the case of companies that use so-called "conflict" minerals from Congo and neighboring countries in electronics and other products, the idea is that stricter reporting requirements would help curb the widespread violence in Congo, where minerals are produced in mines controlled by rebel groups. The goal is to cut off funds to the rebels.
Public companies that operate mines would be required to provide information in periodic SEC reports on health and safety violations as well as any notices from the U.S. Labor Department indicating that a mine has a pattern of violating health or safety standards.
Companies that produce oil, natural gas or minerals would be required to detail in an annual report all payments related to commercial development that were made to the U.S. or a foreign government. They would include taxes, royalties and licensing fees.
The information would have to be provided in an interactive data format, with electronic tags.
An increasing number of companies have been charged by the SEC and the Justice Department in recent years with violating the Foreign Corrupt Practices Act, which prohibits bribery of foreign government officials or company executives to secure or retain business.
And companies that use "conflict" minerals from the Congo and neighboring countries in their products would have to file each year a report including a description of the research the company did to trace the minerals back to their sources. Descriptions of the manufactured products and the factories that processed the minerals would have to be included.
Conflict minerals are defined as gold, cassiterite, wolframite and columbite-tantalite, also called coltan. Cassiterite and coltan are used to make cell phones, computers and other electronics. Wolframite is used in metal seals and other components.
The United Nations has imposed sanctions on armed rebel groups in Congo, who are accused of committing widespread rape, murder and other violence in the course of their illicit minerals trafficking.
"Congress was concerned that the exploitation and trade of conflict minerals originating in (Congo) is helping to finance conflict that is characterized by extreme levels of violence, particularly sexual- and gender-based violence, and is contributing to an emergency humanitarian situation," SEC Chairman Mary Schapiro said before the vote.
The SEC opened the proposed rules to public comment until Jan. 31. They could be formally adopted sometime after that possibly with changes.