Tuesday, August 7, 2012

Gibson Acknowledges Lacey Act Violations in Federal Settlement

Posted By on Tue, Aug 7, 2012 at 1:28 PM

Less than a year after federal agents raided contraband wood from Gibson Guitar Corporation's Tennessee facilities, the beef between the Nashville-based company and the United States government reached a conclusion yesterday in which the company settled with federal prosecutors, acknowledging violations of the Lacey Act and agreeing to pay $350,000 in fines.

The settlement stems from the Aug. 24, 2011 seizure of exotic woods by federal authorities. The U.S. Department of Justice claimed that the wood in Gibson's possession was imported from Madagascar in an unfinished state in violation of the Lacey Act, a century-old conservation law amended in 2008 to prohibit the illegal sourcing and transport of endangered plant species. The raids sparked the ire of libertarians and tea party types across the nation, with Gibson CEO Henry Juszkiewicz emergent as a cause célèbre among the right wing punditburo.

The deal, announced yesterday by the office of U.S. Attorney Jerry Martin, reveals that Gibson acknowledges its responsibility in its dealings with the Madagascar timber trade outlined in an Oct. 20, 2011 Scene cover story. As a result, Gibson must pay $300,000 in penalties and shell out an additional $50,000 to the National Fish and Wildlife Foundation for the promotion of conservation efforts of exotic tree species like ebony and rosewood. Additionally, Gibson must also forfeit $261,844 worth of exotic woods seized by authorities in the 2011 raids. In exchange, the DoJ will cease criminal prosecution of the world-renowned luthier, provided the company does not violate endangered species laws in the future.

“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,” Assistant U.S. Attorney General Moreno said in a prepared statement. “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.”

According to The New York Times, Juszkiewicz maintains his company's innocence, and only agreed to the deal because it allows Gibson to import wood from India.

For the last year, he said, the criminal proceedings in court had effectively cut off Gibson from sources of hardwood in both Madagascar and India, and its luthiers were forced to make guitars with laminated fret-boards or fingerboards made of woods not traditionally used in guitars, which some customers did not like.

“The alternative was pretty onerous,” he said. “We would have had to have gone to trial and we would have been precluded from buying wood from our major source country. For the ability to carry on with the business and remove this onerous Sword of Damocles, if you will, we feel this is about as good a settlement as we can get.”

Here's a summation of the charges that Gibson acknowledged, per a press release from Martin's office:

The criminal enforcement agreement includes a detailed statement of facts describing the conduct for which Gibson accepts and acknowledges responsibility. The facts establish the following:

Madagascar Ebony is a slow-growing tree species and supplies are considered threatened in its native environment due to over-exploitation. Both legal and illegal logging of Madagascar Ebony and other tree species have significantly reduced Madagascar’s forest cover. Madagascar’s forests are home to many rare endemic species of plants and animals. The harvest of ebony in and export of unfinished ebony from, Madagascar has been banned since 2006.

Gibson purchased “fingerboard blanks,” consisting of sawn boards of Madagascar ebony, for use in manufacturing guitars. The Madagascar ebony fingerboard blanks were ordered from a supplier who obtained them from an exporter in Madagascar. Gibson’s supplier continued to receive Madagascar ebony fingerboard blanks from its Madagascar exporter after the 2006 ban. The Madagascar exporter did not have authority to export ebony fingerboard blanks after the law issued in Madagascar in 2006.

In 2008, an employee of Gibson participated in a trip to Madagascar, sponsored by a non-profit organization. Participants on the trip, including the Gibson employee, were told that a law passed in 2006 in Madagascar banned the harvest of ebony and the export of any ebony products that were not in finished form. They were further told by trip organizers that instrument parts, such as fingerboard blanks, would be considered unfinished and therefore illegal to export under the 2006 law. Participants also visited the facility of the exporter in Madagascar, from which Gibson’s supplier sourced its Madagascar ebony, and were informed that the wood at the facility was under seizure at that time and could not be moved.

After the Gibson employee returned from Madagascar with this information, he conveyed the information to superiors and others at Gibson. The information received by the Gibson employee during the June 2008 trip, and sent to company management by the employee and others following the June 2008 trip, was not further investigated or acted upon prior to Gibson continuing to place orders with its supplier. Gibson received four shipments of Madagascar ebony fingerboard blanks from its supplier between October 2008 and September 2009.

You can read the entire settlement (PDF) here.

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