Gibson Guitar fined $300,000 by Obama administration

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Update, 8/6, "Henry Juszkiewicz, the CEO of Gibson Guitar Corp., in a WSJ column last month," "Without warning, 30 federal agents with guns and bulletproof vests stormed our guitar factories in Tennessee." via Althouse blog
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8/6/12, "Gibson Guitar To Pay $300,000 in Penalties and Lose Seized Tropical Hardwood," Dot Earth, Andrew Revkin

"The Justice Department has closed its criminal investigation against the Gibson Guitar Company after the company agreed to a series of steps, including payment of $300,000 in penalties and forfeiture of seized rosewood and ebony shipments from India and ebony from Madagascar with an estimated value of more than $419,000.* [3:12 p.m. | Updated | The company may be able to get the Indian wood back, under the terms of the complicated agreement. ]

It’s vital to find ways to curb illegal trafficking in tropical hardwoods. I criticized last year’s raid of one of the company’s factories as heavy handed (the company was also raided in 2009). Instrument makers are a tiny fraction of the global trade in such woods. But the law is the law.

The Wall Street Journal article on the case aptly summarizes the issues facing musical instrument manufacturers, large and small:

"Gibson’s predicament, which raises concerns for musical-instrument makers and other importers of wood, illustrates the pitfalls of complying with U.S. law while dealing with middlemen in faraway countries whose legal systems can be murky.

The Lacey Act of 1900, originally passed to regulate trade in bird feathers used for hats and amended in 2008 to cover wood and other plant products, requires companies to make detailed disclosures about wood imports and bars the purchase of goods exported in violation of a foreign country’s laws." [Read the rest.]

To ease pressure on the sources of the most coveted woods, like pure black ebony from Madagascar, Taylor Guitars, a top competitor of Gibson, bought a lumber mill for ebony in Cameroon and the company’s president, Bob Taylor, launched a campaign to convince the industry, and guitar buyers, to get more comfortable with the streaked varieties of this wood from sustainably managed forests there. See his fascinating YouTube statement on the company’s ebony commitment for more.

The details of the settlement of the Gibson case can be read in a Justice Department news release. Here’s a core section:

"The criminal enforcement agreement defers prosecution for criminal violations of the Lacey Act and requires Gibson to pay a penalty amount of $300,000. The agreement further provides for a community service payment of $50,000 to the National Fish and Wildlife Foundation to be used to promote the conservation, identification and propagation of protected tree species used in the musical instrument industry and the forests where those species are found. Gibson will also implement a compliance program designed to strengthen its compliance controls and procedures. In related civil forfeiture actions, Gibson will withdraw its claims to the wood seized in the course of the criminal investigation, including Madagascar ebony from shipments with a total invoice value of $261,844.

In light of Gibson’s acknowledgement of its conduct, its duties under the Lacey Act and its promised cooperation and remedial actions, the government will decline charging Gibson criminally in connection with Gibson’s order, purchase or importation of ebony from Madagascar and ebony and rosewood from India, provided that Gibson fully carries out its obligations under the agreement, and commits no future violations of law, including Lacey Act violations.

“As a result of this investigation and criminal enforcement agreement, Gibson has acknowledged that it failed to act on information that the Madagascar ebony it was purchasing may have violated laws intended to limit overharvesting and conserve valuable wood species from Madagascar, a country which has been severely impacted by deforestation,” said Assistant Attorney General Moreno.

“Gibson has ceased acquisitions of wood species from Madagascar and recognizes its duty under the U.S. Lacey Act to guard against the acquisition of wood of illegal origin by verifying the circumstances of its harvest and export, which is good for American business and American consumers.”"

[3:12 p.m. | Updated | I originally wrote $261,000, but that was just the value of the wood from Madagascar. The Indian seizures were valued by the government at $155,000.]" via Tom Nelson

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