Gibson Guitar Settles Claim Over Imported Ebony

By JAMES C. MCKINLEY JR.

Gibson Guitar Corporation has agreed to pay $350,000 in penalties to settle Federal charges that it illegally imported ebony Madagascar to use for fret boards, ending a criminal investigation that had drawn fire from conservatives as an example of over-reaching by the government, the Justice Department announced on Monday.

The guitar maker agreed to pay a $300,000 fine and to donate $50,000 to the National Fish and Wildlife Foundation to promote the protection of endangered hardwood trees, like ebony and rosewood.  In return, the government deferred prosecution of the company for criminal violations of the Lacey Act, which since May 2008 has made it illegal to import wood that was harvested and exported illegally under another country's laws.

“Gibson has acknowledged that it failed to act on information that the Madagascar ebony it was purchasing may have violated laws intended to limit over-harvesting and c onserve valuable wood species from Madagascar, a country which has been severely impacted by deforestration,” said Ignacia S. Moreno, an assistant attorney general.

Henry E. Juszkiewicz, Gibson's chief executive, who last year called the charges “baloney,” did not immediately respond to a request for an interview.

The federal investigation drew fire from conservatives after agents raided Gibson offices and factories in Nashville on Aug. 24 last year and seized pallets of fretboard blanks imported from India.  That raid came two years after more than a dozen agents with automatic weapons burst into a Gibson factory in Nashville to seize ebony fingerboards from Madagascar.   The raids became a cause for Tea Party activists and some Republican lawmakers, including House Speaker John Boehner, who questioned whether the government was overstepping its bounds.

Gibson said the shipments were legal and disputed the government's interpretation of Indian and Madagascar laws, which the company maintains allow the exportation of “fingerboard blanks,” which are in essence a piece of hardwood cut to the dimensions of a guitar fret board.  But Federal officials defended the raids, saying the company had failed to comply with the Lacey Act and its officials had willfully turned a blind eye to evidence the exports were in fact illegal.

The settlement announced on Monday is a compromise that frees Gibson from the criminal charges as long as the company doesn't violate the agreement over the next year and a half.  As part of the deal, Gibson agreed to withdraw a suit seeking to recover about $261,000 worth of ebony and rosewood that was seized during the investigation.