The Democratic Republic of Congo is generally perceived to be one of the most corrupt countries in the world.
Several Foreign Corrupt Practices Act enforcement actions have concerned conduct in the DRC (see here, here, here, here, here, here, here and here) including against companies in the mining / resource extraction sectors.
Given the above dynamics, it just doesn’t seem like a good idea for U.S. government agencies to actively encourage U.S. companies to do business in the DRC mining sector.
Yet that is exactly what is happening – presumably to help accomplish a domestic policy goal of the current administration.
As highlighted in a recent Wall Street Journal article titled U.S. Turns To Congo in Quest for Cobalt
“The U.S. is turning to a much-criticized source as it races to secure supplies of battery metals to meet the growing demand for electric vehicles.
To do so, it is homing in on cobalt from the Democratic Republic of Congo’s informal mining sector, where miners, sometimes including children, often work with no safety equipment in dangerous, hand-dug mines. Congo supplies around 70% of the world’s cobalt, a key metal in the lithium-ion batteries used in EVs, with about a third of that coming from these so-called artisanal miners.
The U.S. Agency for International Development said earlier this year that it would issue grants to companies that source critical minerals from Congo and were willing to support artisanal miners. Meanwhile, the Labor Department has been working with officials in the country to help improve working conditions and oversight.
…
We are building a pipeline of Congolese investment opportunities to attract more U.S. investment into the DRC. said John Dunlop, mission director for Congo at the U.S. Agency for International Development, at an industry conference in June.
USAID has launched a $20 million program to give grants ranging from $100,000 to $4 million to U.S. companies and other mining entities interested in sourcing critical minerals from Congo if they agree to support the integration of local companies and artisanal miners into the global supply chain.”
The above situation is the latest example (see here, here and here for prior posts) of the U.S. government encouraging investment in a country – because it advances the U.S. government’s current foreign or domestic policy interests – while knowing full well that the country has corruption problems that could expose U.S. companies to FCPA issues.
This dynamic is as old as the FCPA itself (passed in 1977).
Actually, older than that.
As highlighted in this prior post, one of the more insightful things found in the FCPA’s extensive legislative history is an October 1975 article by Milton Gwirtzman published by the New York Times Magazine. At this point in time, Congress was in the midst of its investigations into the so-called foreign corporate payments problem and Gwirtzman noted:
“If corporate bribery abroad has offended the post-Watergate morality, the companies implicated have nevertheless taken a greater share of the blame than they deserve. […] The responsibility for present practices must also be shared by our Government, which not only encouraged investment in countries whose ethical standards differ from ours, but also in many respects set the pattern for the graft under censure today. […] The rapid acceleration of American private investment in foreign lands, which began in the mid-nineteen-sixties, was seen by our foreign policy makers as a welcome opportunity. If U.S. firms could build a nation’s infrastructure, supply its consumer goods and hire a portion of its workers, the greater the likelihood the nation would be bound to ours by the safest and strongest of ties, economic self-interest. As a result, our Government wrote the foreign investment laws of several developing countries and urged our multinationals to make use of them. New programs were established to insure foreign investment against the risks of war and expropriation. Embassy personnel were ordered to scout out export possibilities for American firms, which were published in Commerce Business Daily, the Government’s daily list of business opportunities.”
Gwirtzman then stated as follows. “For all these reasons, it would be unwise, as well as unfair, simply to write off bribery abroad to corporate lust. It is a symbol of far deeper issues that really involve America’s role in the world.”
This was true nearly 50 years ago, and as the recent example highlighted at the beginning of this post demonstrates, remains true today.
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As highlighted in this prior post, there have been several FCPA enforcement actions which have occurred in the context of U.S. government aid or assistance programs.
