Report

Companies Disclose Use of Gold From North Korea

New rule forces businesses to trace their supply chains.

A broad swath of companies including IBM, Hewlett-Packard, and Ralph Lauren revealed in new financial filings that some of their products include gold from North Korea.

A new rule aimed at making companies reveal connections to mines in war-torn African countries has turned up a link to another despotic regime: the Democratic People's Republic of Korea.

The "Central Bank of the DPR of Korea" is listed among dozens of smelters and refiners used by U.S. companies. Tractor-maker Deere & Co., hunting outfitter Cabela's, kitchen store Williams-Sonoma, and GPS-maker Garmin also listed North Korea. The companies did not immediately respond to requests for comment.

Sanctions against North Korea bar U.S. companies from doing business with Pyongyang, but it's unlikely that any of the companies have direct dealings with North Korean companies. New reporting requirements force companies to trace the minerals in their products back through several layers of their supply chains.

North Korea expert Marcus Noland with the Peterson Institute for International Economics said there may be a simple explanation. American companies buy a lot of parts from Chinese companies, which, in turn, do business with North Korea.

"If you trace the supply chain back, some of these minerals are coming from North Korea," said Noland. China accounts for 90 percent of North Korea's trade, he added.

Companies that use gold, tin, and other minerals that could be sourced from the Democratic Republic of the Congo had to file disclosures with the Securities and Exchange Commission Monday. The minerals are used in everything from jewelry to aerospace equipment and found in everything from light bulbs and cellphones to tin cans. Mining groups, jewelers' associations, and trade groups for makers of cars, semiconductors, and medical devices all weighed in on the rule while the SEC was writing it.

Advocates for the provision argued that trade in gold, tin, and other minerals from the DRC supports armed groups that terrorize, rape, and kill civilians. The provision was written into the 2010 financial reform law, most of which aimed to fix regulations after the 2008 financial crisis. To implement the provision, the SEC issued a rule requiring U.S. public companies to annually disclose the origins of the minerals used in their products. Three trade groups -- the National Association of Manufacturers, the Chamber of Commerce, and the Business Roundtable -- challenged the rule and notched a partial victory. A federal appeals court ruled in April that companies don't have to declare whether their minerals are "conflict free," but they do have to investigate their supply chains and make that information public via the SEC.

Julie Schindall, a spokeswoman for the Conflict-Free Sourcing Initiative, which developed a minerals-disclosure template for companies to use, said the connection to North Korea could be very far removed.

Gold bars are like dollar bills, rapidly changing hands after the refiner mints and stamps them. And North Korea's central bank no longer produces gold bars, according to Schindall. Companies ended up with gold bars stamped with "DPR of Korea" that could have been in circulation for years.

How the companies got North Korean gold is unclear because the disclosure law only applies to the Democratic Republic of the Congo and its neighbors.

"If you got your gold from a terrible war-torn place, but it's not DRC, then you can declare it 'conflict-free,'" Schindall said.

MICHAL CIZEK/ AFP/ GETTY IMAGES

Report

How to Bleed a Country

Guatemala’s government continues to deny a genocide, violently repress activists, and undermine the rule of law. Has anything really changed since civil war ended nearly 20 years ago?

Jesús Tecú Osorio was 10 years old and living in the rural Guatemalan village of Río Negro in March 1982 when soldiers and civil defense patrollers from a neighboring village raided his community. They bound and marched 177 women and children up a steep path to a clearing and savagely raped and slaughtered them. Tecú's father had been killed weeks earlier, and his mother was murdered that day. The infant brother he tried desperately to protect was wrested from his arms and brutally killed as he watched helplessly.

Tecú was among a handful of ethnic Maya Achi children spared, only to be enslaved by those who murdered their families. Thirty-two years later, a simple white cross marks a tree in memory of the people killed in the raid. The tree bears a haunting dent created by the repeated crushing of skulls, still visible to visitors who come to pay homage to the dead.

Río Negro and 32 other villages were slated for forced eviction to make way for the Chixoy hydroelectric dam, funded by the World Bank and Inter-American Development Bank in partnership with successive U.S.-backed Guatemalan military regimes. The project's proponents claimed it would bring electricity and other benefits to the locals. But the promises of reasonable relocation were hollow: The gritty and squalid relocation village of Pacux offered a poor substitute for Maya Achi communities and deprived them of their ancestral ways. The residents of Río Negro resisted being illegally and forcibly displaced, and so their village was violently emptied by five massacres that, in all, killed 440 people.

In recent years, a handful of families have returned to Río Negro to reclaim their land and their history, rebuilding a small cluster of modest houses above the water line from where their ancestral homes were submerged by the dam. Although the dam was completed decades ago, the villagers still have no electricity. And despite a 2010 governmental reparations plan for those affected by the project, the communities have received nothing to help them heal and rebuild.

The eviction of Río Negro's inhabitants occurred in the midst of a "scorched earth" counterinsurgency campaign by Guatemala's military dictatorship against Marxist insurgents in the course of the country's 1960-1996 civil war. Frustrated by its inability to suppress the guerrillas, government forces increasingly targeted civilians and their communities, including those it believed were sympathetic to the rebels and standing in the way of state interests.

During the conflict, more than 200,000 people were killed and more than a million were dispossessed. The vast majority of victims were indigenous. The Guatemalan military perpetrated more than 400 massacres during the conflict and destroyed more than 600 villages. The United Nations later found that the state had committed genocide in at least four separate regions, including the area where Río Negro sits.

Yet today, 18 years after the conflict ended, hopes that the architects of state terror will be brought to justice are fading fast. On May 13, the Guatemalan Congress passed a resolution denying that genocide ever occurred. It stated, "It is legally impossible … that genocide could have occurred in our country's territory during the armed conflict." The resolution, which won the support of the vast majority of legislators present during the vote, noted that a recent, high-profile genocide trial undermined "national reconciliation." Survivors of genocide and other state repression responded with a fervent plea "that this resolution be retracted."

The congressional decree has no binding impact on the country's judiciary, but it still impugns the country's separation of powers. And its message is unmistakable: The powerful military, economic, and political sectors in Guatemala are unwilling to acknowledge and make amends for the atrocities committed by the state. The grisly internal conflict is still polarizing, and there is genuine debate in Guatemala about how to address the past. The Congress, however, is composed mostly of the country's economic and political elite and is not representative of the general population -- including the indigenous majority whose communities were systematically destroyed.

Sadly, the decree is only one piece of a growing problem: Guatemala's once-tentative progress toward reconciling with its bloody past has suffered other alarming setbacks in recent months.

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Guatemala's war and the silence and impunity that shroud it must be contextualized in the country's colonial and post-colonial legacy. Writer Eduardo Galeano described the Open Veins of Latin America -- that is, centuries of plunder, social exclusion, and crushing economic deprivation. It was against this historical backdrop of economic and social injustice that Jacobo Arbenz won an overwhelming majority of the vote in 1950 on a progressive platform, including his centerpiece of agrarian reform. But the land expropriation and social mobilization that followed threatened powerful U.S. geopolitical and economic interests, and Arbenz was ousted in a U.S.-sponsored coup in 1954. By 1960, simmering conflict had escalated into armed insurrection, and a cycle of resistance and repression intensified until 1982, when José Efraín Ríos Montt's 17-month rein comprised the bloodiest years of violence.

Guatemala's conflict formally ended in 1996 with a series of agreements outlining social, economic, and political reforms, collectively termed the Peace Accords. Among its mandates was the creation of the Commission for Historical Clarification, a truth commission, which collected harrowing testimony and concluded that conditions of exclusion and inequality had been reinforced by authoritarian rule -- and that those conditions should be dismantled in order to achieve lasting peace and justice. Moreover, shortly after the final accord was signed, Congress passed the Law of National Reconciliation, an amnesty statute covering political crimes but explicitly excluding torture, genocide, and other violations of international law.

These were all positive signs that Guatemala wanted to cope openly and fairly with its violent past and build a better future. But today, almost two decades after the conflict ended, Guatemala is still afflicted by violence, corruption, impunity, pervasive poverty, inequality, racism, and a fragile democracy. Human rights defenders, trade unionists, journalists, indigenous leaders, environmentalists, lawyers, judges, and others are at grave risk of intimidation and violent repression.

Amid this crisis, just over a year ago the global community hailed the conviction of Ríos Montt for committing genocide and crimes against humanity. Judge Yassmin Barrios electrified the courtroom as she read the court's verdict convicting Ríos Montt for the deaths of 1,771 Maya Ixil men, women, and children during the military's brutal rampage calculated to destroy the indigenous communities that the military presumed were sympathetic to the insurgents. The campaign included murder, rape, torture, slaughtering animals, burning houses and crops, and desecrating sacred sites. After attempting to block the trial through an endless series of procedural challenges, Ríos Montt's defense team argued that culpability did not ascend the chain of command and that any wrongdoing was solely in the province of his field commanders. That argument was powerfully repudiated by both military documents and Ríos Montt's own words and video images from 30 years earlier, in which he claimed to control the military.

Unfortunately, however, in a signal of a backslide of Guatemala's commitment to peace and justice, the verdict was annulled 10 days later in a widely questioned ruling by the Constitutional Court. The trial is now scheduled to start up again in January 2015, though it seems increasingly unlikely that Guatemala can muster the political will to send Ríos Montt or any of the authors of the genocide and other state violence to jail.

Subsequent signs that justice will remain elusive have been inauspicious. Guatemala's internationally acclaimed attorney general, Claudia Paz y Paz, who helped pave the way for Ríos Montt's indictment and made real progress against impunity and corruption, was ousted in May. Many observers believe that Paz y Paz ran afoul of the elite in her steadfast defense of human rights and commitment to ending impunity for the country's wartime atrocities. Paz y Paz, who was nominated for a Nobel Peace Prize, was pushed from office. Amid claims of corruption and manipulation, President Otto Pérez Molina selected her replacement: a lawyer, Thelma Aldana, with no prosecutorial experience who is closely aligned with entrenched economic and military elites and who has openly criticized Paz y Paz's tenure.

Moreover, the mandate of the United Nations-sponsored International Commission Against Impunity in Guatemala, widely credited with ferreting out corruption and impunity in the country, will not be renewed after its term ends in September 2015. And Barrios, the courageous judge who oversaw the contentious genocide trial, was sanctioned for her conduct during the proceedings at the behest of powerful interests.

Other powerful figures have evaded a reckoning as well. Allegations that Pérez Molina (who took office in January 2012 after an "iron fist" campaign) was himself a war criminal have long circulated among human rights advocates. Evidence includes video footage of Pérez Molina, who served as a military commander under the nom de guerre Tito Arias, standing over the battered bodies of insurgents who had reportedly been tortured prior to their extrajudicial killing. Ríos Montt's trial provided a more public airing of accusations against the president: Hugo Ramiro Leonardo Reyes, a former Army mechanic, elicited gasps when he testified that Pérez Molina had instructed soldiers to destroy villages and execute villagers even as they fled.

rez Molina, however, supported prominent signatories to a letter alleging that genocide charges against the military were fabrications that imperiled peace and stability in the country.

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Meanwhile, present-day development projects, often funded by transnational companies, evoke the enduring anguish of people from places like Río Negro. Mining projects face vociferous community opposition, particularly from indigenous populations whose land is under threat, but this is often met with repression. Resistance against El Tambor mine, run by the Nevada-based mining company Kappes, Cassiday & Associates, developed into an organized, peaceful anti-mining blockade that lasted for two years. But the mining company's patience wore thin, and on May 23, heavily armed Guatemalan military officers descended on the occupation, dispensing tear gas and violently evicting the unarmed protesters. They injured at least 20 civilians.

Hudbay Minerals, a Canadian company, is being sued for human rights abuses associated with its Fenix mine project; the company's security guards stand accused of murdering anti-mining activist Adolfo Ich in 2009, in an unprovoked attack, leaving his widow to raise their five children in their impoverished Maya Q'eqchi community. Another man was shot and paralyzed, and 11 women accuse the mine's guards of raping them.

Proponents of these development projects, which also include sugar cane and palm plantations, tout their benefit for local communities. But these claims are belied by reality. For instance, under Pérez Molina, companies pay the government only 1 percent of the value of the minerals extracted from their projects, little of which trickles down.

The transformative reconciliation envisioned by Guatemala's peace process has utterly failed to materialize. The country demonstrates the difficulty in achieving accountability when entrenched interests refuse to relinquish their tight control over the machinery of economic and institutional power. In other words, the forces that engendered misery during the country's conflict continue to do the same today. Without justice, democratization, and accountability, resources will continue to be seized, lives threatened, and communities marginalized.

The veins of Guatemala will continue to bleed.

The author's legal clinic, along with other organizations, has filed an appeal with the Inter-American Commission on Human Rights seeking reparations for Chixoy dam survivors.

Photo by JOHAN ORDONEZ/AFP/Getty Images