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Gibson Guitar: Settling Away Bad Publicity

Posted By Paul J. Larkin, Jr. On August 7, 2012 @ 2:30 pm In Legal | Comments Disabled

It’s another August in Washington. It’s hot and humid. Most people not already at the beach are indoors watching the Olympics or in the water at a pool. The Redskins have started their preseason camp. The Nationals are in first place. The political parties’ conventions are weeks away, school even more so. And Congress is out of town. That last fact means that this is a good time for the executive branch to take actions that otherwise might rile up Congress, since the members are scattered to their home states.

The U.S. Department of Justice (DOJ) announced yesterday that the Gibson Guitar Corporation had accepted a deferred prosecution agreement regarding DOJ’s allegation that Gibson had imported wood for its guitars in violation of the Lacey Act, a federal law that makes it a crime to import flora or fauna in violation of a foreign nation’s laws. As a result, DOJ will not charge Gibson with a crime (except, perhaps, for a tax offense; that’s left open) for illegally importing “ebony from Madagascar and ebony and rosewood from India” through a German intermediary “from June 2008 through September 2009.” In return, Gibson must pay a $300,000 fine, make “a community service payment of $50,000 to the National Fish and Wildlife Foundation [NFWF],” bulk up its internal procedures, and generally grovel whenever the government asks it to do anything related to this matter.

There are several features of this agreement worth noting.

First: The government acknowledges in the agreement that “certain questions and inconsistencies now exist regarding the tariff classification of ebony and rosewood fingerboard blanks pursuant to the Indian government’s Foreign Trade Policy.” In other words, the government acknowledges that the relevant law—not just our law, but a foreign nation’s law—is unclear. Ordinarily, that conclusion should lead the government to drop any charge that Gibson violated the law, especially the law of a foreign nation.

Second: The government’s case is no better regarding Madagascar. The agreement cites (1) “Madagascar Interministerial Order 16.030/2006,” and (2) some other equally well-known “laws”—all of which may have been written in a foreign language. The agreement alleges that Gibson received a translation (from whom is not stated) of the first whatever-it-is saying that “‘fingerboards’ are considered ‘finished’ under Madagascar law” and therefore may be exported. But, according to the government, “trip organizers”—who, for all we know, could have been Gibson’s trip companions “Greenpeace and other non-profit environmental groups”; the agreement does not say—informed Gibson that “under the organizers’ interpretation of [Madagascar’s] 2006 Interministerial Order, the harvest of ebony was illegal and that instrument part ‘blanks’ would be considered ‘unfinished’ and, therefore, considered illegal to export.” Put aside the obvious problems with government’s reliance on the opinion by the trip’s “organizers” of a foreign order written in a foreign tongue—Gibson was given conflicting views of the law. That should have ended the matter entirely. Remember: Gibson imported wood, not heroin.

Third: The press release is full of all of the chest-puffing that we are accustomed to see the federal government display: The government has enforced the law, prosecuted the wicked, protected the environment, cured the common cold, etc. But the government has made a federal case out of “fretboards” or “fingerboards.” (For the uninitiated, the agreement even contains pictures of both.) Is that how we want federal tax dollars spent—punishing domestic companies that purchase a valuable, harmless product from foreign companies that, in turn, purchase it from an exporter in a foreign land, where the alleged illegality is the violation of an ambiguous order written in a foreign language? All that not to prevent the import of toxic waste but guitar fretboards?

Fourth: Gibson must pay the NFWF $50,000 for its (or its designee’s) use for the environment. Really? Fines paid to the government go into the U.S. Treasury and belong to the public; the NFWF is a private organization. In essence, the taxpayers are subsidizing the NFWF. And why just the NFWF? Why not the Boys and Girls Clubs? The Lighthouse for the Blind? The ASPCA? Why not The Heritage Foundation? It’s a charitable organization, too. It seems that the DOJ is using this agreement to send money that should belong to taxpayers to a favored organization of its choosing.

Gibson probably made a dollars-and-cents decision to put this matter behind it. DOJ probably made the decision to end this case to try to avoid having Congress repeal the criminal provisions of the Lacey Act. Two bills before Congress would have had just that result. The government and environmental groups will say that garage bands across the United States can rest easy tonight. But the people who work at Gibson Guitar or at any other company subject to the Lacey Act still are at risk of imprisonment for not knowing India’s or Madagascar’s laws—and that is the biggest crime of all.


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