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Guitar maker's CEO vows fight, says feds' raids went too far
Henry Juszkiewicz, chairman and CEO of Gibson Guitar Corp., points out the types of wood used on the fretboards and bodies of the companys guitars, some of which were confiscated in raids last month at two factories in Nashville and one in Memphis. / Dipti Vaidya / The Tennessean
Written by
Anita Wadhwani | The Tennessean
Filed Under
Business
At issue is
Whether Nashville-based Gibson Guitars has illegally imported endangered rain-forest hardwoods to use in making its guitars.
The law
The Lacey Act, passed a century ago, bars imports of endangered species. In 2008, it was amended to include protections for plants and woods. The law also makes it illegal to import protected materials in violation of another countrys laws.
U.S. response
U.S. Fish and Wildlife Service agents raided Gibson factories and corporate offices in Nashville and Memphis on Aug. 24, seizing pallets of Indian ebony woods, guitars, computers and paperwork. In 2009, federal officials made a similar raid on Gibson facilities, seizing wood from Madagascar. No charges have been filed.
Gibson says
Gibson CEO Henry Juszkiewicz denies breaking any laws and has embarked on a media campaign criticizing government overreach and claiming Gibson is being singled out.
Eleven days ago, Gibson Guitar CEO Henry Juszkiewicz was getting ready for work when he got a phone call at home from his assistant, whose voice sounded panicky.
Half a dozen armed federal agents with the U.S. Fish and Wildlife Service were searching the Gibson executive suite. Two of the companys South Nashville guitar factories also had just been raided, along with one in Memphis.
By the time Juszkiewicz (pronounced Juss-ka-witz) reached his office, agents were forensically imaging his computer and carting out boxes of paperwork and company hard drives. At the factories, agents were loading trucks with pallets of rosewood and ebony, guitars, guitar necks, computers and shipping documents.
It was the second time in the past two years Gibson had been raided by federal agents in search of illegal imported woods. A 2009 case hasnt led to any charges against the 117-year-old guitar maker, although it is continuing.
In both instances, federal authorities spelled out in search warrants that they suspect the company was illegally importing protected hardwoods from rapidly dwindling rain forests to make prized Gibson guitars.
In recent days, Gibsons CEO has gone on a counterattack, telling various talk radio and TV news programs that the raids are an outrageous abuse of federal power that have unfairly singled out his company, perhaps for political reasons.
Theres no doubt were being persecuted, Juszkiewicz said. But while I was sitting in my conference room, while agents blocked the door to my office, I decided two things. One, we were going to try and fight this in court. Secondly, we were going to give this issue visibility.
Juszkiewiczs impassioned message of government overreach into the affairs of private business has resonated, particularly with audiences of conservative talk programs he has appeared on in the past week: Glenn Beck, Fox News Neil Cavuto, NRA News Radio and programs on regional conservative talk radio stations. (He also has spoken to CNN, National Public Radio, The Wall Street Journal, The New York Times and The Tennessean.)
Gibson also has tapped into an active anti-big-government audience online, where its Twitter campaign hashtagged #ThisWillNotStand has been finding ready re-tweeters such as raywilie, who was one of dozens who tweeted on Friday: They can pry my Gibson from my cold, dead hands.
Environmentalists with whom Gibson has tried to work since the 2009 investigation have had a muted response to the most recent episode.
A statement from the Rainforest Alliance said Gibson has made a good effort to locate and import legal woods since the earlier raid, but added that the effort also must be accompanied by a clear commitment to eliminating any volume, no matter how small, of illegal wood that may contaminate its supply chain.
Feds cite illegal woods
The Justice Department and U.S. Fish and Wildlife agents declined to comment last week, citing the ongoing investigations.
Gibsons Juszkiewicz said the only update he has had is a letter he received from federal authorities two days after the Aug. 24 raid, stating that the Indian rosewood and ebony the company imported were illegal.
Four search warrants spell out federal suspicions that Gibson, for a second time, has violated the Lacey Act, a century-old law that bars imports of endangered species and was amended in 2008 to include plants as well as animals. The law also makes it illegal to import wood that was unlawfully exported under another countrys laws.
On June 27, a shipment containing 1,250 pieces of Indian ebony wood that agents determined was bound for Gibsons Nashville factories was intercepted in Dallas, according to a warrant in court records.
The search warrant said the shipment was improperly labeled as finished or veneered wood, which is legal to export from India. Inside the boxes, however, agents found unfinished ebony wood, they said.
The distinction is important in Indian law, which requires ebony to be finished by Indian workers as part of an effort to add value to diminishing natural resources leaving that country. The Lacey Act requires companies to comply with the laws of the country from which they are exporting the protected materials.
Juszkiewicz said last week that the materials, used for the fingerboards basically the top layer of guitar necks were simply mislabeled. He disputes the federal agents interpretation of both Indian law and the Lacey Act that requires the wood he imports to be finished.
Weve been importing the same wood from India for 17 years, he said. All these came in exactly the same way.
2009 case is different
Gibson faced a different sort of dispute after the November 2009 raid on its Nashville factory.
In that instance, the government confiscated $76,000 worth of ebony fingerboards from Madagascar. The company, which has not been charged in the case, is still seeking to get those materials back, most recently in a hearing in a Nashville federal courtroom. Last week, attorney Steven Riley, who represents Gibson, argued that the fingerboards had been finished by Madagascar workers in accordance with Madagascan and U.S. federal laws and should be returned to Gibson.
Meanwhile, the issue that foreign workers rather than Gibson employees are required to do finishing work has resonated strongly in social media, where Gibsons Facebook page has been filled with angry comments that the government is keeping American workers from doing the same job.
Some in the music industry are beginning to line up behind Juszkiewicz.
The Gibson raid has created fear and uncertainty for all those involved in the manufacturing, distribution and retailing of instruments and increasingly, artists and owners of musical instruments, read a letter sent Thursday to members of Congress and President Barack Obama from the chairman and president of NAMM, the musical instrument industry umbrella group.
Other companies in the sometimes fiercely competitive industry say they support federal efforts such as the Lacey Act.
Every industry has its challenges and responsibilities, including making sure that business practices are in line with legal regulations on local, national and international levels, said Chris Martin, CEO of C.F. Martin & Co., the oldest guitar maker in the world.
This includes the Lacey Act, which, while tedious, is also essential to address very serious issues such as illegal logging, he said. We take this responsibility seriously.
The issue is sure to remain a big one for the guitar industry, with consumers driving the demand for scarce woods.
Rosewood, ebony and mahogany have been the woods of choice for guitars for a century, but those raw materials are rapidly depleting and take a long time to grow, according to luthier Joe Glaser.
That puts companies such as Gibson in a tough spot.
If you wont use ebony and someone else will, they wont buy your stuff, he said. A company like Gibson, which is a great brand, has to use things that sell, and ebony and rosewood are what sells.
Henry Juszkiewicz, chairman and CEO of Gibson Guitar Corp., points out the types of wood used on the fretboards and bodies of the companys guitars, some of which were confiscated in raids last month at two factories in Nashville and one in Memphis. / Dipti Vaidya / The Tennessean
Written by
Anita Wadhwani | The Tennessean
Filed Under
Business
At issue is
Whether Nashville-based Gibson Guitars has illegally imported endangered rain-forest hardwoods to use in making its guitars.
The law
The Lacey Act, passed a century ago, bars imports of endangered species. In 2008, it was amended to include protections for plants and woods. The law also makes it illegal to import protected materials in violation of another countrys laws.
U.S. response
U.S. Fish and Wildlife Service agents raided Gibson factories and corporate offices in Nashville and Memphis on Aug. 24, seizing pallets of Indian ebony woods, guitars, computers and paperwork. In 2009, federal officials made a similar raid on Gibson facilities, seizing wood from Madagascar. No charges have been filed.
Gibson says
Gibson CEO Henry Juszkiewicz denies breaking any laws and has embarked on a media campaign criticizing government overreach and claiming Gibson is being singled out.
Eleven days ago, Gibson Guitar CEO Henry Juszkiewicz was getting ready for work when he got a phone call at home from his assistant, whose voice sounded panicky.
Half a dozen armed federal agents with the U.S. Fish and Wildlife Service were searching the Gibson executive suite. Two of the companys South Nashville guitar factories also had just been raided, along with one in Memphis.
By the time Juszkiewicz (pronounced Juss-ka-witz) reached his office, agents were forensically imaging his computer and carting out boxes of paperwork and company hard drives. At the factories, agents were loading trucks with pallets of rosewood and ebony, guitars, guitar necks, computers and shipping documents.
It was the second time in the past two years Gibson had been raided by federal agents in search of illegal imported woods. A 2009 case hasnt led to any charges against the 117-year-old guitar maker, although it is continuing.
In both instances, federal authorities spelled out in search warrants that they suspect the company was illegally importing protected hardwoods from rapidly dwindling rain forests to make prized Gibson guitars.
In recent days, Gibsons CEO has gone on a counterattack, telling various talk radio and TV news programs that the raids are an outrageous abuse of federal power that have unfairly singled out his company, perhaps for political reasons.
Theres no doubt were being persecuted, Juszkiewicz said. But while I was sitting in my conference room, while agents blocked the door to my office, I decided two things. One, we were going to try and fight this in court. Secondly, we were going to give this issue visibility.
Juszkiewiczs impassioned message of government overreach into the affairs of private business has resonated, particularly with audiences of conservative talk programs he has appeared on in the past week: Glenn Beck, Fox News Neil Cavuto, NRA News Radio and programs on regional conservative talk radio stations. (He also has spoken to CNN, National Public Radio, The Wall Street Journal, The New York Times and The Tennessean.)
Gibson also has tapped into an active anti-big-government audience online, where its Twitter campaign hashtagged #ThisWillNotStand has been finding ready re-tweeters such as raywilie, who was one of dozens who tweeted on Friday: They can pry my Gibson from my cold, dead hands.
Environmentalists with whom Gibson has tried to work since the 2009 investigation have had a muted response to the most recent episode.
A statement from the Rainforest Alliance said Gibson has made a good effort to locate and import legal woods since the earlier raid, but added that the effort also must be accompanied by a clear commitment to eliminating any volume, no matter how small, of illegal wood that may contaminate its supply chain.
Feds cite illegal woods
The Justice Department and U.S. Fish and Wildlife agents declined to comment last week, citing the ongoing investigations.
Gibsons Juszkiewicz said the only update he has had is a letter he received from federal authorities two days after the Aug. 24 raid, stating that the Indian rosewood and ebony the company imported were illegal.
Four search warrants spell out federal suspicions that Gibson, for a second time, has violated the Lacey Act, a century-old law that bars imports of endangered species and was amended in 2008 to include plants as well as animals. The law also makes it illegal to import wood that was unlawfully exported under another countrys laws.
On June 27, a shipment containing 1,250 pieces of Indian ebony wood that agents determined was bound for Gibsons Nashville factories was intercepted in Dallas, according to a warrant in court records.
The search warrant said the shipment was improperly labeled as finished or veneered wood, which is legal to export from India. Inside the boxes, however, agents found unfinished ebony wood, they said.
The distinction is important in Indian law, which requires ebony to be finished by Indian workers as part of an effort to add value to diminishing natural resources leaving that country. The Lacey Act requires companies to comply with the laws of the country from which they are exporting the protected materials.
Juszkiewicz said last week that the materials, used for the fingerboards basically the top layer of guitar necks were simply mislabeled. He disputes the federal agents interpretation of both Indian law and the Lacey Act that requires the wood he imports to be finished.
Weve been importing the same wood from India for 17 years, he said. All these came in exactly the same way.
2009 case is different
Gibson faced a different sort of dispute after the November 2009 raid on its Nashville factory.
In that instance, the government confiscated $76,000 worth of ebony fingerboards from Madagascar. The company, which has not been charged in the case, is still seeking to get those materials back, most recently in a hearing in a Nashville federal courtroom. Last week, attorney Steven Riley, who represents Gibson, argued that the fingerboards had been finished by Madagascar workers in accordance with Madagascan and U.S. federal laws and should be returned to Gibson.
Meanwhile, the issue that foreign workers rather than Gibson employees are required to do finishing work has resonated strongly in social media, where Gibsons Facebook page has been filled with angry comments that the government is keeping American workers from doing the same job.
Some in the music industry are beginning to line up behind Juszkiewicz.
The Gibson raid has created fear and uncertainty for all those involved in the manufacturing, distribution and retailing of instruments and increasingly, artists and owners of musical instruments, read a letter sent Thursday to members of Congress and President Barack Obama from the chairman and president of NAMM, the musical instrument industry umbrella group.
Other companies in the sometimes fiercely competitive industry say they support federal efforts such as the Lacey Act.
Every industry has its challenges and responsibilities, including making sure that business practices are in line with legal regulations on local, national and international levels, said Chris Martin, CEO of C.F. Martin & Co., the oldest guitar maker in the world.
This includes the Lacey Act, which, while tedious, is also essential to address very serious issues such as illegal logging, he said. We take this responsibility seriously.
The issue is sure to remain a big one for the guitar industry, with consumers driving the demand for scarce woods.
Rosewood, ebony and mahogany have been the woods of choice for guitars for a century, but those raw materials are rapidly depleting and take a long time to grow, according to luthier Joe Glaser.
That puts companies such as Gibson in a tough spot.
If you wont use ebony and someone else will, they wont buy your stuff, he said. A company like Gibson, which is a great brand, has to use things that sell, and ebony and rosewood are what sells.
