UPDATE EIA Statement Regarding 24 August 2011 Gibson Guitars Raid by US Fish & Wildlife Service

WASHINGTON, D.C. - Much of the media coverage regarding the latest enforcement action contains factual errors and misinformation about both the Lacey Act and the cases in question. Below, EIA has attempted to address some common questions in the wake of the 24 August action, from our own perspective as experts on illegal logging and trade.

Why does the Fish & Wildlife Service care about an Indian export law? What does this case have to do with conservation of forests or wildlife?

The Lacey Act is a U.S. law that supports the rule of law around the world concerning the sourcing, harvest and trade of wildlife, plants and wood products. If a company were to have bought something that violated an Indian law governing natural resources and imports it into the United States, it breaks a U.S. law. The most basic step in protecting the worlds’ forests is to have laws governing their management, harvest and trade, and to ensure that these laws matter. Removing illegalities from the system, and supporting proper protection and sustainable management of these forests is essential not only for the biodiversity and local people, but for the sustainability and future of industries in the United States that rely upon specific species for their products. A Lacey Act violation is not triggered by “any law”, but by laws concerning the way in which animals, plants or plant products are taken, possessed, transported, sold, imported or exported. The U.S. government expects companies buying from India to respect the sovereign right of the Indian government to decide what laws are best for management of its natural resources. Bans and restrictions on export of logs and sawnwood are common laws in tropical forest countries and are directly linked to forest management and protection efforts. They are an important tool to help countries control large export flows of illegally logged timber, as well as to ensure that these often poor countries benefit and develop from the processing of their own natural resources. Is enforcement of the Lacey Act harming American companies and workers?

To the contrary, the law has been strongly supported by the US forest products industry precisely because global trade in illegal wood products dramatically undercuts US forest producers and wood products industry. The industry itself estimated that illegal trade did economic damage in the US to the tune of 1 billion dollars annually in lowered prices and lost markets. Enforcing the Lacey Act is not undercutting US workers and hurting jobs, it is ensuring their long term survival. Over 50 trade associations, non-profits, and unions, representing the entire range of the US economy, have signed statements supporting the Lacey Act’s passage and proper implementation. The 2008 Lacey Act amendments were passed during the Bush administration with bipartisan Congressional support. Today’s music instrument industry is heavily reliant on rare hardwoods from foreign countries. Music makers assert that these species have characteristics necessary to producing optimal sound. However, encouraging the unsustainable exploitation of scarce and valuable species will only lead to their commercial extinction, depriving future musicians and their audiences from optimal sound. The legal and sustainable harvest of these vulnerable species can also be complemented by exploring greater use of appropriate US domestic woods.
According to Gibson, this shipment was of “Controlled Wood” according to the Forest Stewardship Council (FSC). How could it be illegal?

The FSC has issued a statement in response to the 24 August action in which it states, “Not all the wood Gibson Guitar Corporation uses is FSC certified. This story is about the non-certified wood.” The FSC Controlled Wood Standard exists to ensure that manufacturers and traders of products with FSC labels are avoiding “unacceptable timber and timber products” even when they are not meeting the full set of FSC principles and criteria. (see http://www.fsc.org/cw.html) EIA’s analysis of the Controlled Wood standard suggests that its legality criteria are focused on harvest regulations rather than trade or export laws. If the wood seized is indeed compliant with FSC Controlled Wood standards, EIA hopes that FSC and Gibson can clarify the problem and if necessary address shortcomings to the Controlled Wood standard. EIA recognizes the value and importance of Gibson’s efforts to source FSC wood products. Given the variety of precious woods in guitar supply chains, EIA encourages Gibson and all other musical instrument manufacturers to continue to seek this kind of outside assurance of legality.
Should individuals who own Gibson guitars, or other musical instrument companies, be worried that they are next?

The government has always stated its intent to investigate and shut down networks of illegal smuggling and trade, not individuals. There is no precedent whatsoever in the Lacey Act’s long enforcement history of the government targeting end users of individual products. There is no indication that the government has the interest or resources to investigate professional or amateur musicians who have purchased Gibson Guitar products, whether or not they contain Indian and Malagasy precious woods. The US government has been extremely responsive to industry calls for more time and a phased-in approach to Lacey Act enforcement. A variety of exemptions and guidance for Lacey exist that are directly applicable to the music industry, including those that make allowances for instruments manufactured prior to the 2008 amendments. See more here. Companies that have used or are considering use of the same kind of wood material that has been the target of a Lacey Act enforcement action should determine the legal status of this material to their satisfaction before proceeding to use it commercially. Ebony (Diospyros spp.) itself is not currently a regulated genus under the Convention on International Trade in Endangered Species or the Endangered Species Act, nor are most rosewoods (with exceptions including Brazilian rosewood, Dalbergia nigra). No additional paperwork is required for use or transport of wood from these species. Compliance with Lacey only means “make sure it’s legal” – not “don’t use it”.
Why has the government conducted another raid on Gibson, which was the target of the first public enforcement action under the 2008 Lacey Act amendments? Is this company being unfairly targeted?

While involving many of the same actors, it appears that the two cases are unrelated. The facts in the affidavit suggest that the government, rather than choosing to focus on Gibson, discovered a continuing pattern of problematic activity in the course of regular port enforcement activities. The affidavit indicates that the government did not realize that Gibson was the recipient of the ebony shipment in question when it was first held in Dallas due to irregular paperwork and suspicion of a Lacey Act violation; only upon investigation they found the parties in this shipment to be the same as those involved in the Madagascar ebony case already in process. In recent days it has been suggested in the media that Gibson is not the only company to be buying Indian sawnwood, that this is relatively common practice. While it may be the case that “everyone’s been doing it this way,” that does not make it legal. It will be important to follow developments in this case closely.

Washington, D.C. - On 24 August 2011, agents of the Fish & Wildlife Service (FWS) raided Gibson Guitar facilities in Nashville and Memphis, Tennessee, seizing ebony and rosewood material, guitars and guitar parts as evidence of suspected violation(s) of the U.S. Lacey Act. The Lacey Act is a long-standing anti-trafficking statute which prohibits commerce of illegally-sourced wildlife, plants and wood products from either the U.S. or other countries.

The government has not yet released a statement to the public on the case, but the affidavit filed to obtain the search warrants has been unsealed and is circulating (ref: “Affidavit in Support of Search Warrant #11-MJ-1067 A,B,C,D”). The facts referred to below are based on information contained in this affidavit. The Environmental Investigation Agency urges the FWS to issue further statements in order to help calm the confusion and concern generated among many companies and individuals in the musical instruments industry, other businesses and the media.

The Lacey Act violation in question concerns Gibson’s import of pieces of rosewood and ebony that the government alleges to have been falsely declared both during export from India and during import to the U.S. The sawnwood in question had been exported from India under an incorrect tariff code (HS 9209), allegedly to avoid the Indian government’s prohibition on export of sawnwood products (HS 4407); and had been declared upon import as veneer (HS 4408). The affidavit states that this description “fraudulently presents as a shipment that would be legal to export from India, and, in turn, would not be a violation of the Lacey Act.” According to the affidavit, discrepancies among the paperwork accompanying the shipment suggest that the recipients knew they were purchasing sawnwood.

The affidavit describes eleven shipments of Indian ebony and rosewood imported in this manner over the past two years, despite what appears to be a publicly available Indian law prohibiting it. The facts in the affidavit appear to have been sufficient for a judge to approve search warrants on probable cause.

EIA trusts that the current case will receive due process through the U.S. justice system. It is important to be clear, in general terms, that the Lacey Act is a U.S. law that reinforces and supports the laws of other countries concerning the sourcing, harvest and trade of wildlife, plants and wood products. It is common for countries to have bans and restrictions on export of logs or sawnwood; these laws are directly linked to forest management and protection efforts. They are often an important tool to help control export flows of illegally logged timber, and to ensure that the benefits of value-added processing contribute to development within these often poor countries.

The Lacey Act’s intent is to support the rule of law through mutual respect, and to ensure that American businesses and consumers are not contributing to illegal activity or environmental harm in our own country or overseas. The law also helps ensure that U.S. producers are operating on a level playing field and not being undersold by illegal supply, which has been estimated to cost U.S. industry $1 billion annually. Like many new procedures, these measures may create confusion and even fear in the short term, as companies adapt their practices and mindset. However, media messages that promote this fear do businesses and people a disservice. There is no indication that the government has interest in professional or amateur musicians, whether or not their instruments contain Indian or Malagasy precious woods. The FWS has always stated its intent to investigate and shut down networks of illegal smuggling and trade, not individuals.

Laws like Lacey are necessary security measures for the protection of the world’ forests, and this adjustment process is part of creating a “new normal” that will prevent the trees so important to musical instrument makers and other wood industries from disappearing. Ebony and rosewood species, for example, are overharvested and threatened throughout most of their global range. However, it is possible to source them legally. No music maker wants his or her instruments to be produced in a manner that is bad for forests, wildlife or people, or that may well preclude future generations from enjoying the same joy and quality.

Why was Gibson raided in 2009?
Madagascar’s national parks, full of wildlife and trees found nowhere else on earth, have been invaded over the past few years by illegal loggers seeking rosewood and ebony. A network of corrupt timber barons controls this trade in Madagascar; the wood is sold onwards to Europe, China and the United States. A researcher at the Missouri Botanical Gardens described Madagascar precious woods to the Wall Street Journal as “the equivalent of Africa’s blood diamonds.” Gibson was raided in 2009 in connection with its import of ebony from Madagascar, in violation of bans on this species’ export.

The case is currently in civil proceedings and the Department of Justice has stated publicly that it expects to file criminal charges, although no charges have been filed yet. Information released in affidavits and motions over the past year include excerpts from internal emails indicating that Gibson decided to buy illegal wood knowing the risks involved.

In the current civil case, in the District Court of Tennessee, Gibson asserts that the wood seized in 2009 was legally exported under Madagascar law and no law has been violated. The government asserts that the seized Madagascar ebony wood is property illegal to possess, “both because it was unfinished wood and because Claimants’ source for ebony in Madagascar was not authorized to sell it.”

The June 4th filing in the current civil case, states that:
“Gibson sourced its unfinished ebony wood in the form of blanks (for use in the manufacture of fingerboards for Gibson guitars) from Nagel (in Germany), which obtained it exclusively from Roger Thunam (a supplier in Madagascar). Madagascar prohibits the harvest of ebony wood as well as the exportation of unfinished ebony wood.”

The filing also refers to internal Gibson emails:
“[A] Gibson employee…wrote that ‘[t]he true Ebony species preferred by Gibson Musical Instruments is found only in Madagascar (Diospyros perrieri). This is a slow-growing tree species with very little conservation protection and supplies are considered to be highly threatened in its native environment due to over exploitation.’ In fact, [he] ‘spent two and a half weeks in Madagascar this June [2008],’ writing on his return, ‘I represented our company along with two other guitar manufacturers.... All legal timber and wood exports are prohibited because of wide spread corruption and theft of valuable woods like rosewood and ebony.’ (Emphasis added.)”

“On February 25, 2009, in a reference to the potential long term solution, [he] wrote…that the company Maderas Barber ‘has been in the business a long time and may be able to help begin some legitimate harvests. Mr. [Roger] Thunam on the other hand should now be able to supply Nagel with all the rosewood and ebony for the grey market.’” (Emphasis added.)

The procedures of the U.S. judicial system give defendants and the government both ample opportunities to make their arguments and ensure all information is brought to light. New developments in this case are expected soon.

Environmental Investigation Agency
PO Box 53343, Washington, DC 20009 www.eia-global.org
Tel: +1 202 483 6621/ Fax: +1 202 986 8626