Conflict Minerals in the Democratic Republic of Congo. Dylan Scudder

       Figure 1.1: Office locations of Speedy Devices and Pentalemma Inc.

      Based in a small town just north of San Francisco, Speedy Devices is the second-largest producer of consumer electronics in the world. Founded in 1973, SD employs nearly 120,000 people all over the world and has an estimated value of $600 billion.

      SD has two main product lines; consumer electronics and computer software. Its main hardware products are personal computers and smartphones. Since the 1980s, the company’s customer base has continued to grow at a swift pace. SD reports that “Nearly 20% of the human population uses one of our products every day.”

      SD is a global leader in Corporate Social Responsibility (CSR). It currently has just over 300 retail stores in 15 countries. The company ←2 | 3→also has a strong commitment to society and the environment. SD states in its annual report that its mission is “to manage the triple bottom line so that people, planet and profit are always in balance.”

      The basic idea of CSR is that a business is part of the community, so the business must act as a member of the community, with rights and responsibilities. The business gains from the community, so it understands that it is important to give something back. It wants to do something good for the community. This means that it should be possible to make a profit and be a responsible corporate citizen at the same time.

      However, SD is also one of the world’s largest buyers of the rare “conflict mineral” called coltan, which is vital for the assembly of microchip-based electronic devices. Over the last 20 years, more and more people have complained that consumer electronics companies, including SD, are guilty of allowing a range of serious abuses in the coltan business. SD has asked Pentalemma Inc. for advice on the next steps.

      Setting

      As a Pentalemma consultant, you will focus on South Kivu, a mineral-rich province in the southeast of the Democratic Republic of the Congo. SD secures most of its coltan from South Kivu, where it employs a largely expatriate team of buyers and managers.

      Although the province is one of the most unstable regions in the world, the immediate dilemma facing SD concerns child labor. Simply put, the use of young children as labor in appalling conditions is common in the local coltan mining industry. Western criticism of such practices is mounting, with the arrival of an Australian pressure group and recent legislation in the United States of America (USA) requiring firms to use only “clean” coltan. Many of the mining companies themselves are controlled directly or indirectly by a violent militia. It is an environment in which it seems almost impossible to conduct business without being complicit in some way.

      To what extent can SD’s critical strategic need for coltan be reconciled with this moral and legal challenge? This situation is complicated by ongoing security concerns and the sense that the child labor question may not be as important for local people as western observers imagine.

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      In meetings with SD managers, you will help them explore and understand:

      1. The notion of a complex risk environment, in which diverse and evolving risks overlap and compete for attention.

      2. Attitudes to morality and profit, complicated by the notion that ethical issues may be shaped by culture and local circumstances.

      3. The potential for cooperation with competitors to address shared risks.

      The many issues for discussion include child exploitation, the US Dodd-Frank Act, complex multi-factional security environments, corruption and graft, reputation management and working with Non-Governmental Organizations (NGOs).

      Scenario Design

      The South Kivu region is arguably the most unstable and dangerous of those covered in the current Pentalemma series. The scenario seeks to demonstrate the complexity of this environment for business, rather than to plunge the readers into the more obvious challenge of dealing with a war. Thus, the war—or its threat—forms a brooding backdrop to the more immediate challenge of child labor. Similarly, there are hints of another dimension of risk; the plight of the lowland gorilla. This is dealt with in a later scenario, but in Chapter One is part of the risk “clutter.” Other questions, such as the problem of staff turnover, affect the bottom line and nag at management teams as they wrestle with the central problem.

      Two of the options included appear very similar, but are completely different in substance. For while the suggestion for a wide-ranging review is no more than that, and has at its core an ambition to at least scope some options for addressing Kivu’s problems, the “business as usual” choice is also couched in nebulous terms of “encouraging dialogue.” The intention is to show how language may obfuscate but also to suggest that a decision to effectively ignore substantial risks will hit the bottom line in due course.

      The best option here is rooted in real engagement under local conditions, as understood by the local people. By supporting initiatives and business models that make a start at tackling their issues (primarily security, in this case) a better business environment can begin to emerge. Only then can the thorny question of child labor, considering the opposing perspectives held by local people and the NGO’s, begin to be meaningfully addressed. In this way, what seems to be the center-stage risk is, in fact, contingent on broader concerns.

      The main learning points here are, therefore, about complexity and risk. In addition, readers should appreciate that morality for business, as anywhere else, appears in shades of grey, depending on the context and viewpoint. To simply insist that SD should have no further involvement in a trade tainted by child exploitation will not solve the problem. In hazardous environments, it can be helpful to cooperate with competitors. The Dodd-Frank Act Section 1502, signed into law in July 2010, requires publicly traded companies to ensure that the raw materials they use to make their products are not tied to the conflict in Congo. Since 2016 the US government has threatened to water down or repeal the act. Even with added uncertainty, the intrusion of such legislation serves as a reminder that political events on the other side of the planet may have a real bearing on businesses trading in Africa. There is a useful analysis of this subject in the “DRC Country Profile” made available by Connie Bernstein.² Connie is Pentalemma’s main contact at Rapid Response Inc.,³ the company’s worldwide source of intelligence on local developments.

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      Questions to Consider

      The following are some suggested questions for use in your sessions with the SD management team. You will devise your own questions, ←5 | 6→including those for individual managers involved in specific areas.

      1. Should companies try to find ways to work around the requirements of the Dodd-Frank Act, or is genuine compliance a moral imperative?

      2. Are there ways to turn security risks into opportunities to improve the situation?

      3.