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What does this Apple disclosure mean?

Apple published its annual Conflict Minerals Reports last week that said the company is reviewing information about alleged activities involving the Democratic Republic of the Congo that include bribery and illegal payments.

According to the disclosure, up to six investigations are still ongoing related to “potential incidents involving the police in the DRC, the DRC national army, and/or non-state armed groups.”

Here is the excerpt from the Apple Inc. February 6, 2020 Form SD filed with the SEC:

Incident Review: 2019 ITSCI High-Risk Incidents

In 2019, Apple reviewed over 1,400 ITSCI incidents and identified nine potential incidents involving the police in the DRC, the DRC national army, and/or non-state armed groups in connection with a variety of alleged illicit activities. Based on information received to date, these alleged illicit activities ranged from fraud, bribery, and illegal payments and taxation, including at mining sites and checkpoints or road barriers, to corruption and other criminal activity, potentially for personal gain. Of the nine identified incidents, three have been closed and six remain open with investigations or corrective actions still in progress. Apple intends to continue to monitor these incidents with ITSCI.

Apple made a similar disclosure last year. When it was published on FCPA Tracker, a representative from Apple sent the following note:

It has come to our attention that the FCPA Tracker sent out a communication and included Apple Inc. in a list of FCPA investigations on your website.

This is untrue, and the the disclosure referenced has no connection to the FCPA, nor is there an investigation. As such, this should be removed from your website immediately. In addition, we request that the FCPA Tracker issue a retraction of the email sent on 2/15/19.

FCPA Tracker removed Apple’s disclosure and sent out a retraction to the email in question.

Here is the excerpt from the Apple Inc. February 15, 2019 Form SD filed with the SEC:

Review of 2018 High-Risk Incidents

In 2018, Apple monitored over 1,300 ITSCI [International Tin Supply Chain Initiative] incidents opened from January to December. Of the ITSCI incidents reviewed, Apple identified eight potential incidents involving the police in the DRC and/or the DRC national army in connection with a variety of alleged illicit activities. Based on information received to date, these alleged illicit activities ranged from fraud and bribery or illegal payments or taxation, including at mining sites and checkpoints or road barriers, to corruption and other criminal activity, potentially for personal gain. Of the eight identified incidents, three have been closed and five remain open with investigations or corrective actions still in progress, which Apple intends to continue to monitor. In one of the closed incidents, members of the DRC national army had been paid to provide security at the mine site but, following an investigation, were removed from the area, while representatives of the DRC national army were retrained on appropriate security and human rights practices. For the remaining two closed incidents, in one instance, the risk of impacted minerals entering the supply chain is believed to be limited under the circumstances, and in the other instance, efforts were made to have any affected minerals set aside, while the affected mining site and transport route were discontinued from use.

We reached out to Apple Friday for comment about this year’s disclosure. The company has not yet responded.

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