Recent Raid by U.S. Justice Department on Gibson Guitar Company Over Wood Shipment Raises Questions about Lacey Act

09/03/11

Last week, U.S. Justice Department officials raided the Gibson Guitar Corp. to investigate, under provisions of the Lacey Act, per the September 2^nd wsj.com article, ''whether Indian ebony was shipped to the company in violation of Indian laws requiring that the wood be processed inside India. The company says the sale was legal.''

The raid has made the entire wood and wood products industry wary. But does the entire industry need to be concerned or just certain segments?

Laura Duncan, a San Francisco attorney who specializes in the Lacey act was quoted as saying in the September 2^nd wsj.com article: ''The Justice Department has made it fairly clear that this is a law that they intend to enforce, and they will partner with other agencies on the ground to enforce the law.''

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However, Steve Chercover, a wood-products analyst with D.A. Davidson in Portland, Ore., was quoted as saying in the September 2^nd wsj.com article: ''What we're talking about here are exotics. In all honesty, it's only musical instruments and high-end furniture where this is ever going to have an impact.''

Per Duncan, it's the due care provision that's got people worried, because it's vague.

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In essence, the question is, does the benefit outweigh the cost?

Leonard Krause, a consultant who advises companies on staying in compliance with the Lacey Act, tells clients, per the September 1st wsj.com article, ''Gibson Guitar Wails on Federal Raid Over Wood'' to consult attorneys in the countries where they want to purchase wood products. He was quoted as saying: ''The net effect is that it raises everybody's cost of doing business.''

Henry Juszkiewicz, CEO of Gibson Guitar Corp., was quoted as saying in the September 1st
wsj.com article: ‘Can you imagine a federal agent saying, 'You're going to jail for five years' and what you do is sort wood in the factory? I think that's way over the top.'' He was also quoted as saying that employees of Gibson were being ''treated like drug criminals.''

And perhaps he has a valid point. With so many other problems afoot in the world today, does a raid on a company who manufactures musical instruments warrant such attention from the U.S. Department of Justice? It's like using a chainsaw to cut grass. Or in this case, perhaps, a toothpick.

However, certainly, real problems and consequences exist because of illegal logging and the amendment to the Lacey Act has effectively worked to curtail these practices. Perhaps what's needed is a common sense, middle ground, based on a company's volume of production or other select criteria, versus a ‘what's good for the goose is good for the gander' type approach.