it seems that Gibson is being used to get at the real targets, LMI and Nagel. Is that correct (assuming no evidence showing direct involvement-- instructions from Gibson to evade the laws) surfaces?I think (think) the owners of Nagel and LMI are the big fish. Theodor Nagel GmbH and Luthiers Mercantile International supply lots of wood to the U.S. - to big companies like Gibson, to small luthiers (and there are hundreds of small companies that make guitars, banjos, mandolins, and other instruments), individuals who are buying 'build-your-own-guitar' kits, and woodworkers who are buying exotic woods and veneers. Some of it is supplied through LMI and some through Nagel (both are owned by the same people). I think Nagel, LMI, and their owners are most likely targets of the criminal investigation simply based on the quantity of wood that flows through them.
Where Gibson may get in trouble is where Gibson got in trouble in 2009 - that's if the seized computers show that Gibson knew it was involved in an illegal or highly questionable deal. When it comes to this simple difference between a HS 4407 and HS 9902 coding, I doubt there's anything particularly damning in Gibson's computers. I could be wrong.
I'll post details on the 2009 Madagascar ebony incident tomorrow - with links to documents. Gibson knew what it was doing in 2009 based on Gibson internal reports, Gibson emails, and statements of those who put together the trip that Gene Nix took to Madagascar.
Is Gibson legally obliged to know the intricacies of Indian export law?
I think the way customs law works is that as a buyer, you have to rely on your importer. If your importer makes a mistake or breaks the law, then that's between you and your importer. If Importer A tells you it can import a six-toed Siberian fig-eating sloth for you, and it turns out that's illegal, then your recourse is to sue Importer A to get your money back. The government doesn't let you keep the sloth because Siberian export law is complicated and only five-toed sloths can be exported. The Lacey Act works the same way - you are responsible for making certain that the person you buy from has all of the necessary permits for export. If they don't, your recourse is against the person you bought from. You don't get to say "the birth certificate turned out to be a Hawaiian forgery, but I still get to keep this President, because I thought the BC was real when I bought him." (Sorry, I had to say that).
So, no, Gibson's not legally obligated to know - but if a mistake is made, Gibson's recourse is against the importer. Otherwise, everybody just breaks import/export laws and says "oops, I made a mistake, so I get to keep the illegal stuff I bought."
I'll write later about Madagascar. I'm not a solid environmentalist. When they didn't build a dam because it was going to cause the snail darter to go extinct, I say "it's one species of fish; hand me a syphon and I'll help drain the lake."
Madagascar is a island like the "Land of the Lost." Biologists call it the Eighth Continent because it's so unique. If it lives or grows in Madagascar, odds are it doesn't live or grow anywhere else in the world. A lot of zoos have a section of the zoo that's devoted to nothing but the island of Madagascar.
90% of Madagascar's forests have been cut down; 70% since the 1970s.
Rosewood and ebony trees take a couple of hundred years to mature. They don't grow in groves. To get to an ebony tree, you have to cut down a lot of forest.
Brazilian rosewood has been CITES-listed since 1992. There's less Madagascar ebony now than Brazilian rosewood. There's less Madagascar rosewood now than Brazilian rosewood. The forests that the trees are in are CITES protected, but not the trees. The trees are being logged in national forests by armed poachers. And it's Africa. Bribes are no doubt being paid.
I realize all of that wasn't a complete answer.
Give me a little bit and by the end of the day tomorrow, I give you some full answers with some links.
I’ve repeatedly said, in so many words, that what I knew about Gibson’s actions related to the 2011 raid don’t concern me as much as the 2009 raid. The 2009 raid requires a little background. Some of you haven’t been in on this threads but expressed an interest in the details on other threads. In the past, I’ve only touched on a few of Gene Nix’s emails and reports on behalf of Gibson. This still doesn’t include all of them, but I’ve tried to pull more from the various filings in the first civil forfeiture case. Plus I added a link where I uploaded a few substantive court documents in .pdf form.
Acoustic guitar makers have been looking for a substitute for Brazilian rosewood since 1992, when it became incredibly difficult to acquire the tonewood due to the Convention on International Trade in Endangered Species. In the late 1990s, they thought they found it in Madagascar rosewood. Madagascar rosewood had a tone, as well as a color and grain, similar to Brazilian rosewood. It became the ‘must-have’ wood for acoustic guitars and, combined with an Adirondack spruce top with forward-shifted bracing, gave a sound similar to a pre-WWII guitar.
Madagascar was also the source for Madagascar ebony, a dense, black, close-grained wood used primarily for fingerboards. Unlike African ebony, Madagascar ebony generally does not have white streaks that require dyeing with alcohol or aniline stains.
Gibson was actually more interested in Madagascar ebony than rosewood. With the exception of the J-45 (and a few special edition J-200s), Gibson’s iconic acoustic guitars are primarily made with either mahogany (Hummingbird, Southern Jumbo, J-160e – although it was mahogany plywood during the days that John Lennon made it famous) or maple (Dove, J-200).
However, Madagascar rosewood was also sought for furniture, boxes, and other items. Today, there’s massive demand from China.
Madagascar was facing a number of problems. Ebony and rosewood is slow-growing and relatively rare, even in Madagascar’s forests. Large amounts of forest must be cut down to harvest an ebony or rosewood tree. Due to Madagascar’s truly unique ecology (read post above), thousands of plant and animal species found nowhere else in the world were in danger. This wasn’t a case of endangering a snail darter or a single species of lichen. 90% of Madagascar’s forests have disappeared; 70% since 1970. There’s a lot of worldwide pressure to end both legal and illegal logging of Madagascar rosewood and ebony, not so much because of the trees, but because of the animals and other plants.
The Malagasy government issues a number of different Inter-Governmental orders. Madagascar Inter-Ministerial Order No. 16.030/2006 bans all harvesting of ebony and rosewood in Madagascar. However, there’s a limited procedure to export finished wood if it can be shown that the wood was harvested before 2006. Inter-Governmental Order No. 10885/2007 bans the export of wood from natural forests in their raw or semi-finished states in every category. Madagascar Inter-Ministerial Order No. 003/2009 gives a man named Thierry Body the sole concession to export natural forest [ebony] wood in its raw state in accordance with the quantities and types of rare woods that were inventoried, with approval of the government.
It’s an African government. I’m certain corruption is involved. A small group of millionaire ‘timber barons’ emerges, who are involved in the shipping of wood allegedly harvested before 2006. However, environmentalists are busy photographing and videotaping ongoing logging and the delivery of these logs to the barons (carefully photographing and videotaping from a distance, as the loggers are frequently armed, and the logging is going on in national parks). The illegal wood is being shipped on French ships, laundered through one of a couple of countries, including Mauritius, and then goes generally to China or Europe – notably Germany.
Enter Roger Thunam. A timber baron in Madagascar dealing rosewood and ebony, he was found guilty in 2008 Malagasy courts of illegal trade in rosewood – one of only two timber barons ever found guilty of illegal trade. In 2009 he was on trial for illegal timber trade again, but found not guilty. National Geographic has an article on him in its October 2011 issue, including observation of illegal rosewood lumber in his lumberyard and his admission that the lumber has come from illegal cutting. As one Malagasy official tells National Geographic "Thunam isn't a businessman—he's a trafficker." In his interview with National Geographic, Thunam admits to buying illegally harvested wood. The Madagascar Journal of Conservation details illegal logging and refers to Thunam as the “deputy head” of illegal trafficking.
So where does Gibson fit into the picture?
I’ll link to a few of the 68 filings from U.S. v. Ebony Wood in Assorted Forms, Case No. 3-10-cv-00747 (U.S. Dist. Ct., Mid. Dist. Tenn: Link.. The government makes it clear that it is not presenting all of its evidence, nor is it presenting evidence in chronological fashion. It’s only dropping little bits and pieces of information as necessary to make points in different filings.
In September, 2007 Gibson is aware that there “[t]here are no certified sources of [Madagascar] ebony at Present . . . “ This is stated in a Trip Justification contained in a September 20, 2007 email from Gibson employee and wood specialist Gene Nix and also contained in Gibson’s SmartSource Action Plan of the same period. “Certified” is important, because it refers to the FSC certification procedure that Gibson has helped pioneer through the Rainforest Commission, which Gibson CEO Henry Juszkiewicz helped found and on whose Board of Directors Juszkiewicz sits. No certification means there is no ebony with a source that can receive a FSC certification as to its source – and without a source, there’s no way to prove the wood was harvested prior to 2006. If it’s not harvested prior to 2006, it’s not legal to export under Inter-Ministerial Order No. 16.030/2006.
At this point, Gibson is interested in obtaining wood legally. In the Trip Justification, Nix writes:
One of the challenges facing Gibson Musical Instruments in the company’s quest for increasing FSC certified wood input is the use of Ebony and Indian Rosewood in production. . . . Ebony and Rosewood are sourced from countries and regions that have poorly established forest management guidelines, institutional oversight or illegal logging controls.”
The Gibson SmartSource Action Plan talks about developing a legal sustainable management and conservation measure which would be a supply chain progressing to FSC-certification, to be implemented as a long-term solution. In June 2008. Gibson employee and wood specialist Gene Nix spends 2-1/2 weeks in Madagascar along with representatives of Taylor Guitars, C.F. Martin, and the Forest Stewardship Council (FSC). One of the hosts is the JariAla Project, a U.S.-promoted group to develop long-term sustainable solutions. One of the sites that the parties visit on the trip is the ‘factory’ of Roger Thunam. There, Nix either videotapes the factory or obtains a videotape of the factory of Thunam.
Andrew Keck, the Director, tells the WI inspectors in October 2009 that, while touring Thunam’s factory, Nix and the others discussed Thunam’s illegal logging, discussed that Theodor Nagel GmbH’s supply chain of Madagascar ebony and rosewood was through Thunam, and discussed that Thunam could not legally export any of his wood to Nagel for sale to Gibson, Taylor, or Martin.
The Forest Trust also helped organize the trip to Madagascar. The Forest Trust is a group consulted by companies, including Gibson to locate sources of sustainable rare wood supplies for the manufacture of musical instruments. Phil Guillery, the Director of the Forest Trust, states that the companies on the trip were interested in collecting facts to plan the establishment of a low-yield, high-value managed forest on Madagascar, legalized for managed harvest and export of precious woods for musical instrument manufacturing, especially rosewood and ebony. Guillery says that he advised Nix and the others that harvest and export of Madagascar ebony was illegal. He also says that he provided Nix with a copy of the Madagascar orders criminalizing the harvest and export, including an English translation. (There are also emails to Nix with a copy of that order and others).
When Nix returns from Madagascar, he submits a trip report to Gibson executives, including President, David Berryman, and the CEO, Henry Juszkiewicz. In the email, Nix states:
“All legal timber and wood exports are prohibited because of widespread corruption and theft of valuable woods like rosewood and ebony."
On February 25, 2009, JariAla Project Director Andrew Keck emails to Nix a file that showed that Thierry Body was the only person the Malagasy government had given the right to export ebony under special exception.
Nix appears to be contemplating a long-term potential solutions for legitimate harvest of Madagascar ebony through Thierry Body, but the solutions were long term, and Gibson was in a hurry. Nix sends an email to Gibson executives, including the President, David Berryman, and the CEO, Henry Juszkiewicz:
"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."
"Grey market" means one thing when you're buying Nikon cameras that don't have a U.S. warranty. The terms probably means something else entirely when you've said there's no current legal source, said that Barber may be a 'legitimate' source, but that Thunam is a 'grey market' source. It sounds - at least to me - that grey market is a term that's much closer to black market.
Mr. Nix described in an email to these executives what he had seen at Nagel’s business in Madagascar:
Key things we saw [at Thunam’s Madagascar business]- large yard, wood in yard not properly stored; it is under temporary seizure and cannot be moved: substantial stored quantities of cut items for export including blanks for various instruments. Mostly ebony ...
Gibson then buys Madagascar ebony from Thunam, through Theodor Nagel GmbH. Nagel is the company that Nix and others discussed with JarAla Director Andrew Keck while in Madagascar; the company that the parties agreed could not legally sell Thunam’s wood to any of them.
In September 2009, a ‘cooperating organization’ (at this point, a confidential informant, although Gibson was trying to discover the name of the organization through discovery) notifies Fish and Wildlife that Theodor Nagel GmbH had purchased three containers of Madagascar ebony from Roger Thunam in March. Fish and Wildlife also receives a transcript of a recorded interview with Thunam in which he says he has an exclusive relationship with Nagel and admits that the wood he has cannot be legally exported from Madagascar. Thunam says he has travelled to Germany on several occasions to speak with the executives of Nagel about the legal situation, and this has delayed timely export of wood to Germany.
Customs is apparently placed on alert for any U.S. imports of Madagascar ebony coming from Theodor Nagel GmbH.
On October 5, 2009, a shipment of wood arrives at the Port of Newark, NJ, from Theodor Nagel addressed to Hunter Trading Corporation of Connecticut (an affiliate of Nagel), with Gibson as the final consignee. (Just for the record, it turns out that this is Gibson’s third purchase of wood from Thunam through Nagel since Nix’s trip and the decision to go grey market; Gibson isn’t caught until the confidential informant in Madagascar alerts Fish and Wildlife to be on the lookout for ebony shipments coming from Theodor Nagel GmbH coming to anyone). The customs paperwork states that the wood is Madagascar ebony. There’s no Lacey Act declaration.
Fish and Wildlife is notified. Hunter Trading is required to complete a Lacey Act declaration.
The feds let the shipment go through and then raid Gibson to confiscate the ebony, which is contraband because it cannot be legally exported from Madagascar. They also confiscate Gibson’s computers and interview Gene Nix, who is responsible for purchasing Gibson’s wood.
It’s only after they interview Gene Nix and pull the emails, after-trip reports, trip proposal, and other documents from the computers that Gibson is in hot water.
After the raid, Gibson CEO Henry Juszkiewicz resigns from the Board of Directors of the Rainforest Alliance. Gibson quietly asks the Rainforest Alliance to help it design new wood procurement protocols. The new protocols specifically prohibit the importation of Madagascar ebony or rosewood. Theodor Nagel adopts a new policy and posts it on its website, stating it will not deal in Madagascar wood unless a third party has verified the documentation from the exporter (hmmmm . . . do you mean . . . Thuman’s documentation may not have been legitimate?).
During the raid on Gibson, the feds interview Gene Nix, the Gibson employee who spent 2-1/2 weeks in Madagascar, who wrote the emails about the legality of the wood, who wrote about Nagel and the grey market, and about Nagel’s wood being under temporary seizure. Before beginning the interview, they apparently told him the penalty for giving false statements could include imprisonment for up to five years. Gibson CEO Juszkiewicz talks to the press and spins it this way: "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."
I think Gene Nix did more than ‘sort wood in the factory.”
Statements like these are why I don't take Juszkiewicz's statements for the press at face value and try to research the underlying facts.
However, this is the same Juszkiewicz whose statements in the current Indian ebony raid are being treated as The Gospel by bloggers and posters on this site – including Juszkiewicz’s statement that the government told Gibson “in a pleading” that “if we used Madagascar labor all of our troubles would go away,” but conveniently never produced that damning pleading for the press (because, frankly, it doesn’t exist).
Some other tidbits you probably haven’t heard:
The "paperwork" that Gibson's CEO says Thunam has from the Malagasy government, if not forged, comes from some regional authority - not the Malagasy government. This is in the middle of a military coup. The export paperwork is for cellular wood panels, assembled flooring panels, arches, roof trusses, fabricated structural wood members, prefabricated partitions, and panels for buildings. Not fretboards.
The videotape of Nix’s visit to Roger Thunam’s factory was shown on Channel Four in Nashville after the 2009 raid and Gibson has admitted in the litigation that the video is genuine. The video shows a few people with a table saw. News Anchor Demetria Kalodimas showed photos of some of what was seized in the raid. In response to a Gibson Guitar statement repeated by reporter that even what appeared to be unfinished pieces of wood are not actually ‘unfinished products’, Gibson Guitar CEO Henry Juszkiewicz referred to the imported pieces of Madagascar ebony as ‘fingerboard blanks’ and stated “the law specifically defines a fingerboard blank as a finished good. It is not illegal. It is not illegal under Madagascar law.” Gibson has formally admitted in sworn answers to the authenticity of the video and interview.
Juszkiewicz’s statements to the press that fingerboard blanks were finished goods were contrary to the statements of Madagascar’s Director General of Forests and 1993 U.S. Customs Rulling NY 881630, which established for the guitar industry that fingerboard blanks were import Harmonized Tariff Code Series 4407 (chipped, split, or cut wood over 6mm in thickness) and not a 9902 item (finished part for musical instrument, subject to tariff). More importantly, Juszkiewicz’s statement are contrary to Gibson’s own import forms, which imported the items as HTS 4407 (an unfinished item) rather than HTS 9902.
Through discovery in the litigation, Gibson has formally admitted In sworn answers that Madagascar Inter-Ministerial Order No. 003/2009 does not give Thunam “authorization to export natural forest [ebony] wood in its raw state in accordance with the quantities and types of rare woods that were inventoried” at his factory.
Gibson has formally admitted in sworn answers that Madagascar Inter-Ministerial Order No. 16.030/2006 “banned all harvesting of ebony in Madagascar.”
Gibson has formally admitted in sworn answers that Madagascar Inter-Ministerial Order No. 10885/2007 banned the export of wood from natural forests in their raw or semi-finished states in every category. Gibson has formally admitted in sworn answers that the Madagascar ebony which was seized by the government was, upon first arrival at Gibson’s factory, in the form of blanks, which are blocks of wood in specific dimensions, which can then be cut and otherwise be manufactured into fretboards and other musical instrument parts.
Gibson has formally admitted in sworn answers that Gibson employee and wood specialist Eugene “Gene” Nix recognized as early as August 2008 that “[a]ll legal timber and wood exports [from Madagascar] are prohibited because of widespread corruption and theft of valuable woods like rosewood and ebony.”
Gibson has formally admitted in sworn answers that it was notified on or about June 23, 2008 that only Thierry Body, not Roger Thunam, had been given the right to export ebony from Madagascar under a special exception.
What won't Gibson admit? Gibson won't admit that the wood seized was Madagascar ebony. It's refused to answer that question and the government has continually granted extensions to answer . . . but Gibson has yet to send anyone to the site where the seized wood is stored other than lawyers. No wood experts. If Gibson says "it's Madagascar ebony," then Gibson knows it has lost the civil case. It was delaying the civil case to find out what information the government may have in a possible criminal prosecution.
I’ve gone on too long . . . I’ve left out the 2009 military coup in Madagascar. And the civil case itself has been interesting, particularly Gibson’s litigation tactics. For now, the District Court Judge has placed an indefinite stay on the case on the grounds that it will interfere with an ongoing criminal investigation. Part of the basis for the government’s motion, first filed in June, was that Gibson was not cooperating in discovery. The Judge held a status conference in July at which Gibson agreed to cooperate. The government refilled last week, noting to the Judge that at the first meeting of the parties after the status conference, Gibson’s attorneys said that Gibson would not respond to any of the requests that it told the judge it would cooperate with. The government’s patience wore thin and reported Gibson’s failure to cooperate. The federal District Court judge agreed. All of Gibson’s motions were dismissed and the case has been stayed.
