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Country Was Source of Metal Used in Variety of Products
As companies scrambled to meet a deadline to report whether their suppliers used minerals from mines controlled by armed groups in the Congo region, they stumbled on something even more troubling: Many of their products may contain North Korean gold.
Dozens of companies disclosed over the past week that their suppliers used gold refined by North Korea’s central bank. These companies include Hewlett-Packard Co., Ralph Lauren Corp., International Business Machines Corp. IBM, Rockwell Automation Corp. and Williams-Sonoma Inc. IBM, for example, revealed the North Korean gold was used to make its memory-storage systems.
U.S. sanctions law bars importing materials from North Korea even if they come from deep within a supply chain and are in a completely different form by the time they reach the end user, sanctions experts said. “It’s a problem even if the raw materials are coming very indirectly through suppliers,” said Alexandra Lopez-Casero, an attorney at Nixon Peabody LLP who specializes in sanctions.
North Korea’s central bank provides currency for the regime and refines gold. Until 2006, the bank refined gold bars that were certified by the London Bullion Market Association, a gold marketplace, according to public records. The bank’s refinery likely continues to produce gold, said Bruce Calder, vice president of Claigan Environmental Inc., a supply-compliance consulting firm that tracks suppliers.
Many of the companies apparently uncovered the North Korean connection for the first time as they searched their supply chains for so-called ” minerals.” A provision of the Dodd-Frank Act compelled companies to question their suppliers and disclose by Monday whether gold, tungsten, tantalum or tin used in their products came from mines controlled by armed groups in the war-torn Congo region.
An H-P spokeswoman said the company learned that “a small number” of its suppliers may have used the North Korean refiner as it rooted through its supply chain in January. As part of its disclosure, H-P listed every refiner its suppliers used rather than trying to determine which facilities made metal that ultimately went into H-P products.
But after some of its suppliers reported they were using the North Korean facility, the company began an investigation. “The responses we have received from our suppliers have told us it hasn’t been used in H-P production….We are relying on our suppliers—we haven’t been on the ground,” the spokeswoman said. “We were aware there may be a question, and we wanted to disclose what we have done rather than try to hide it.”
In an emailed statement, an IBM spokesman said the company expects its suppliers to follow conflict-mineral guidelines and “procure minerals from responsible sources.”
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