US guitar maker Gibson has agreed to pay $350,000 in penalties for buying illegally-sourced hardwoods, but maintains the company was unfairly targeted by US authorities
The iconic Nashville-based company has signed an agreement with the US department of justice admitting it purchased ebony and rosewood that had been illegally exported from Madagascar. The deal means Gibson avoids criminal charges
Following raids on its premises in Nashville and Memphis in August 2011, in which hundreds of thousands of dollars worth of hardwood from India and Madagascar were seized, the company has been embroiled in a legal dispute with the US authorities.
Gibson was facing prosecution under the Lacey Act, a 100-year old conservation law, which was amended in 2008 making it illegal for US firms to “trade in any plant taken, possessed, transported or sold in violation of … any foreign law that protects plants”.
An investigation by the US Fish and Wildlife Service revealed that Gibson was buying ebony grown in Madagascar for its guitars, contravening local laws introduced in 2006 banning the export of unfinished wood.
However, the firm argued that it had been “inappropriately targeted” by the authorities and that the raids were “violent and hostile”.
After protracted negotiations, the company agreed to a “criminal enforcement agreement” to settle the case and to pay $300,000 in penalties, a $50,000 community service payment and to forfeit any claim to the Madagascan wood impounded by the government – worth $262,000.
In the agreement, Gibson admits that despite a member of its staff visiting Madagascar in June 2008 and the firm being aware of the legal restrictions over timber exports, it continued to order and take delivery of wood from the country via a third party until September 2009. Gibson also concedes that it “should have taken a more active role and exercised additional diligence with respect to documentation of legal forestry practices in the areas of Madagascar.”
Alongside the financial penalties, Gibson must also implement a new compliance programme designed to strengthen its controls and procedures.
“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 Ignacia Moreno.
“Gibson has ceased acquisitions of wood species from Madagascar and recognises its duty under the Lacey Act to guard against the acquisition of wood of illegal origin by verifying the circumstances of its harvest and export.”
However, in a statement following the publication of the agreement, Henry Juszkiewicz, CEO at Gibson, said that the company had settled the case to avoid the costs of litigation.
“We felt compelled to settle as the costs of proving our case at trial would have cost millions of dollars and taken a very long time to resolve,” he commented “This allows us to get back to the business of making guitars.”
Juszkiewicz did, however, reiterate his complaints that the raids on Gibson’s properties were unnecessary and that “the matter that could have been addressed with a simple contact by a caring human representing the government”.
He also highlighted that rosewood and ebony imported from India and seized in the raids would be returned to the company, and that Gibson would be allowed to continue to import wood from that country.