Monday, November 30, 2009

Gibson Guitars Raided Under Lacey Act

Just when I thought there was nothing new to blog about . . . .

According to news reports, the Gibson Guitar company has been raided by federal agents of the Fish and Wildlife Service enforcing the Lacey Act amendments. The underlying investigation appears to be focused on imports of rosewood from Madagascar. Under the Lacey Act, importers of many products that are or include plant materials are required complete a declaration identifing the botanical genus and species being imported and to certify that the plant materials were harvested and exported legally.

From a corporate compliance stand point, that can be difficult because the direct supplier often will not know the origin or legal status of the wood it purchased. This requires that importers set up a system a tracking the plant material back to it's origin. It is not unlike NAFTA tracing for automotive companies.


Anonymous said...

My understanding is that Gibson is a leading supporter of sustainable forestry as evidenced by their fiscal & time support of FSC and Rainforest Alliance - and unlike many they are NOT one of the likely "bad" importers who knowingly utilize a high % of low cost illegal wood.

Based on a sealed affidafit by an NGO (EIA in this case) the feds seized records, raw wood & finished products. Under the Lacey Act they now have the rights to use the records to go after the guitars at retailers and then also at those consumers who bought them and now seize them from both.

Now under Lacey it is up to Gibson to prove conclusively to the Feds that ALL wood in those guitars is legally harvested. Even if Gibson used third party certifiers of their supply chain (Rain forest Alliance (RA))ultimately there is NO way to prove that EVERY piece of wood in Gibson's supply chain is legal as RA was not with the loggers in each forest as each and every tree was cut.

So if an NGO provides "proof" (which is in a SEALED affidafit) that they have "evidence" that an illegal log got into the supply chain and the FEDS say that is good enough then they have the rights to seize the goods. Musch easier for the NGO to prove this or even orchestrate it.

So even if Gibson did everything correct, and in fact, more than 99% of wood importers are now doing to verify their supply chain, they can and did have their goods seized based on a sealed affidafit.

And unlike what I believe is in the US Constitution - that is supposed to presume one innocent unless proven guilty and also protects one against seizure of property w/o compensation - in fact Gibson now finds itself in just this position. My question here is how does Lacey allow for this and how is this legal vs the Constitution ?

And now you come to the part about civil and criminal penalties. Under Lacey you must exercize "reasonable due care" in managing your supply chain for legality - WHATEVER that means. If the Feds say you didn't act "reasonable" then you (meaning individual employees) are liable for 5 years in jail and $250K fines. My question here is which employees are liable or is it just owners or ???

And if you can get 5 years hard time and huge fines for now importing wood how do these penalties compare to importing cocaine or heroin ? - at least something where you can make real $$ vs wood ?

And in that it is apparent that the Feds are relying on competitors and NGO's for affidafits what are the agenda's of those giving the affidafits - Perhaps EIA believes that no trees should ever be cut and doesn't believe in FSC and RA and EIA is against their missions to create better forestry practices worldwide and hence they choose to embarass & discredit FSC and RA - hence choosing Gibson.

And then why is wood up against these legal requirements when its one of the greenest materials their is and regenerates naturally. What about the US's soy & beef imports which are largely responsible for the conversion of forest for agriculture ?

And then again what about oil imports - shouldn't we setup the same legal requirements - making sure that the oil firms are not illegally paying off Nigerian officials etc ? Why wood only ?

And then what about lets say (Pick any of the Big Box or Mega Retailers) - as one of the biggest importers of wood products, who in their relentless push for lower prices, moves their supply chain to China where they push their hundreds of suppliers into ever lower prices - does anyone think that their just might be some illegal wood creeping into their supply chain ?

So why Gibson first ?

Anonymous said...

The third paragraph is plain wrong - it is always the government's burden of proof to show beyond a reasonable doubt that this wood was harvested illegally. Gibson will have to defend its imports, and there are always problems with sealed affidavits, but this commenter's statements are incorrect as to the burden of proof.

Moreover, for the forfeiture, the government still has to prove beyond a reasonable doubt that this wood was harvested illegally, and Gibson then would have to forfeit it. This has precedent throughout the country - if you have a car that was stolen, you may have to forfeit it, even though you had no idea it was stolen.

Larry said...

The first comment raises some good policy questions but is based also on some false premises. The second comment takes care of the burden of proof at least as far as a criminal case goes.

It is important to keep in mind the legal chestnut that no one has a constitutional right to import. Importing is a privilege that comes with lots of strings attached including the payment of duties and fees, proper documentation, and the admissibility of the merchandise. It is up to the importer to prove that the goods are admissible. For purposes of the Lacey Act, that means having the required documentation and being able to prove it is true, which may be quite difficult.

One other point, there are plenty of other similar laws. In specific, the commenter's lament that there should be law prohibiting the bribing of Nigerian officials in the oil trade shows a lack of familiarity with the Foreign Corrupt Practices Act. Under that law, giving a free coffee mug to the wrong guy could result in millions of dollars in penalties and lost profits.

Anonymous said...

Are you sure that a coffee mug as a gift to a public official would raise an FCPA red flag? I sort of understood there to be a "reasonableness" test (granted, if one paid $1000 for "coffee mugs" in the "gift account" - and failed to account for more than 5-6 mugs, that could raise a problem...)

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