‘Sending a SWAT Team to Collect a Parking Ticket’
Brian T. Majeski has written a thoughtful and considered editorial on Gibson’s settlement with the Department of Justice for the esteemed industry monthly, Music Trades.
Majeski writes: “Gibson's agreement to pay $350,000 to settle with the Department of Justice over alleged Lacey Act violations prompted a flood of press releases from environmental groups, lawmakers, and U.S. wood manufacturers. In unison, they hailed the settlement as a win for the world's forests, a blow against slave labor, a victory for American jobs, and a triumph of diligent law enforcement. The actual settlement agreement, jointly signed by justice officials and the Gibson legal team, paints a far different picture. Presenting facts both sides agree on, it depicts overzealous and poorly informed enforcement officials in hot pursuit of a company that was trying in good faith to comply with contradictory foreign statutes. It also inadvertently sums up all that is wrong with the Lacey Act provision that holds U.S. firms criminally liable for violations of foreign laws.
“Suspecting a Lacey Act violation, in 2009, the Environmental Crimes unit of the Justice Department, aided by the FBI and Fish and Wildlife service, raided Gibson's Nashville factory and seized pallets of ebony fingerboard blanks that had been imported from Madagascar. In 2006, Madagascar issued an edict banning the export of unfinished ebony, and two years later had further restricted ebony exports, so the DOJ felt they had a strong case. On closer reading of Madagascar law, however, the case started to unravel. The order banning "unfinished" ebony contained a provision specifically permitting the export of guitar fingerboards, though it didn't specify whether ‘fingerboard’ meant rough blanks, blanks with fret slots and inlay pockets, or fully finished, fretted fingerboards.
“Upon banning ebony exports in 2008, the Madagascar government simultaneously issued licenses permitting select forest operators to legally ship wood that had been cut previously. The DOJ acknowledges that Gibson's ebony came from a logger who had obtained one of the coveted export licenses. Documents seized during the raid also showed that Gibson had acquired the wood from a Forest Stewardship Council certified broker, who had provided ample assurances that it was in compliance with all relevant statutes. So, the DOJ case against Gibson came down to how Madagascar officials defined ‘fingerboard,’ and the validity of documents filed at various points in the supply chain.
“The charges arising from the 2011 Department of Justice raid, when DOJ seized Indian rosewood fingerboard blanks from plants in Memphis and Nashville, were even flimsier. The DOJ claimed that the wood was "unprocessed" under Indian law and unlawful to export because it was several millimeters too thick. The Indian Foreign Trade office, along with several local industry groups, pushed back immediately and said that the DOJ had misread the law, noting that millions of similar fingerboard blanks had been exported without issue over the past three decades to guitar makers around the world.
“Faced with such a potent rebuke, the DOJ returned the seized rosewood and gave Gibson the green light to continue importing it as they had in the past. So three years and two armed raids later, the Justice Department admitted that Gibson did nothing wrong in importing Indian rosewood, and "may have" violated some unspecified Madagascar statutes. This ‘may have’ cost Gibson $350,000 in fines, the loss of wood valued at $261,000, and $2.4 million in legal fees. Not to mention the costs associated with disruptions in production and having its reputation tarred by a government agency. Furthermore, the DOJ apparently used its limitless resources and the threat of ongoing prosecution to coerce Gibson to settle. Both sides apparently won: Gibson limited its legal expenses, and the DOJ was spared the potential embarrassment of trying to make its case in court.
“The biggest argument against the amended Lacey Act is that it holds U.S. companies liable for violations of the laws of all the world's 200 countries. But, if the U.S. Department of Justice, the arbiter of right and wrong, has a demonstrated problem grasping the nuance of foreign law, is it fair to hold private enterprises like Gibson to a higher standard? Furthermore, should arguments over how Madagascar defines a fingerboard be elevated to criminal status? In comprehensive coverage of the settlement within the September issue of ‘The Music Trades,’ Gibson CEO Henry Juszkiewicz rightly states, ‘We feel that Gibson was inappropriately targeted [in] a matter that could have been addressed with a simple contact by a caring human being representing the government.’ Instead, the government used violent and hostile means with the full force of the U.S. government and several armed law enforcement agencies costing the taxpayer millions of dollars.
“But what's worst about this case is how an unlikely coalition of environmental groups, U.S. wood manufacturers (whose wood consumption dwarfs that of the music industry) and the Department of Justice can transform the use of raw coercion on flimsy legal grounds into some kind of a victory. For anyone who thinks our assessment is overly harsh, we suggest they go to Gibson’s website where they can read the Department of Justice settlement for themselves.
“There is no argument against proper stewardship of finite wood resources. However, there is something wrong about abandoning basic concepts of due process, proportionality, and creating scapegoats in the name of even a worthy cause.”