Government Raids Gibson Guitars - Video Response from CEO

[Bill Mattocks]

Don't really understand why the government is hassling Gibson Guitars. This is nuts!

Henry Juszkiewicz, Chairman and CEO of Gibson Guitar Corp., has responded to the August 24 raid of Gibson facilities in Nashville and Memphis by the Federal Government. In a press release, Juszkiewicz said: "Gibson is innocent and will fight to protect its rights. Gibson has complied with foreign laws and believes it is innocent of ANY wrong doing. We will fight aggressively to prove our innocence."

Seriously, wood from India?

http://online.wsj.com/article/SB10001424053111903895904576542942027859286.html

Federal agents first raided Gibson factories in November 2009 and were back again Aug. 24, seizing guitars, wood and electronic records. Gene Nix, a wood product engineer at Gibson, was questioned by agents after the first raid and told he could face five years in jail.

"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?" said Mr. Juszkiewicz, recounting the incident. "I think that's way over the top." Gibson employees, he said, are being "treated like drug criminals."

Mr. Nix hasn't been accused of any wrongdoing. He couldn't be reached for comment.

 

[cdunn]

I don't have time to watch the video, but from the article, I would expect that they are responding to complaints of corrupt practices from the governments of India and Madagascar. The company I work for frequently reminds us that, by law, we are responsible for the actions of our agents and contractors, because they benefit us. What the truth actually is possibly questionable; I don't have the evidence one way or the other.

 

[granfire]

Don't really understand why the government is hassling Gibson Guitars. This is nuts!

Seriously, wood from India?

http://online.wsj.com/article/SB10001424053111903895904576542942027859286.html

http://www.martialtalk.com/forum/showthread.php?98350-Gibson-Guitars-on-E.P.A.-most-wanted-list

Not aiming to spread billi's hyperbole, but Tez has found a couple of relevant link regarding the wood from india.

 

[Bill Mattocks]

I don't have time to watch the video, but from the article, I would expect that they are responding to complaints of corrupt practices from the governments of India and Madagascar. The company I work for frequently reminds us that, by law, we are responsible for the actions of our agents and contractors, because they benefit us. What the truth actually is possibly questionable; I don't have the evidence one way or the other.

Imagine being an employee on the floor of Gibson and your job is sorting wood as it comes in. So exporter in India falsified some paperwork, so now you have to go to prison for five years. That sound fair to you? I don't care what the law says, a low-level wood-sorter on a plant floor can hardly control - or even know about - what somebody in India did with paperwork to make the wood seem like something it wasn't so it could be exported. How would you, as that employee, have any way of knowing that? And yet it's OK that you go to prison for it? Absurd.

 

[Bill Mattocks]

http://www.martialtalk.com/forum/showthread.php?98350-Gibson-Guitars-on-E.P.A.-most-wanted-list

Not aiming to spread billi's hyperbole, but Tez has found a couple of relevant link regarding the wood from india.

And from my link:

After the 2009 raid, Mr. Juszkiewicz resigned from the board of the Rainforest Alliance, which seeks to preserve tropical forests. He said he didn't want to tar the nonprofit with bad publicity. A Rainforest Alliance spokeswoman said he wasn't pressured to step down, and the group continues to praise Gibson's efforts to promote responsible harvesting of wood.

Scott Paul, a Greenpeace official in New York responsible for forestry issues, said Gibson for years has done "great work" to promote better forestry practices. The question, he said, is whether Gibson did everything possible to avoid buying wood from dubious sources. "We have no idea," he said.

I think accusing Gibson of not being kind to endangered wood species is bollocks. They're all about conservation, and have the highest rating in their efforts, they have for decades. Misleading, smear tactics, and wrong.

 

[cdunn]

Imagine being an employee on the floor of Gibson and your job is sorting wood as it comes in. So exporter in India falsified some paperwork, so now you have to go to prison for five years. That sound fair to you? I don't care what the law says, a low-level wood-sorter on a plant floor can hardly control - or even know about - what somebody in India did with paperwork to make the wood seem like something it wasn't so it could be exported. How would you, as that employee, have any way of knowing that? And yet it's OK that you go to prison for it? Absurd.

I didn't say it was 'right', only that the relevant laws mean that the responsibility of any wrong doing on the part of the exporter carries over to Gibson's management. Whoever made the decision to import that wood is responsible for it. Low level employees are only supposed to be involved if they had reason to report malfeasance, and did not. Raids were probably not justified, that much I'll agree on, though an investigation was probably warranted.

But Nix, the employee in question, isn't a 'low level sorter'. He's management. From the looks of it, he pulled the trigger on the import.

Mr. Nix went to Madagascar in June 2008 on a trip organized by environmental groups to talk to local officials about selling responsibly harvested wood to makers of musical instruments. Afterward, in emails later seized by the government, he referred to "widespread corruption and theft of valuable woods" and the possibility of buying ebony and rosewood from Madagascar on "the grey market."

 

[JohnEdward]

Imagine being an employee on the floor of Gibson and your job is sorting wood as it comes in. So exporter in India falsified some paperwork, so now you have to go to prison for five years. That sound fair to you? I don't care what the law says, a low-level wood-sorter on a plant floor can hardly control - or even know about - what somebody in India did with paperwork to make the wood seem like something it wasn't so it could be exported. How would you, as that employee, have any way of knowing that? And yet it's OK that you go to prison for it? Absurd.

Bill I often agree with you, but here I see it differently. Gibson hires top luthiers who know wood and can recognized it at a glance. There is also quality control and inspectors whose job it is to insure this type of thing will not happen. Gibson has a problem, they have democratic government moles who are sabotaging this fair green republican company. It is a witch hunt lead by the democratic government.

But seriously, someone at Gibson should have caught it. Guitars go through a lot of scrutiny by experts in top manufactures like Gibson. Does it warrant a raid? I don't know. The question is was top management aware of what was going on and did they condone it? I don't know. But I am sure it isn't the issue whether or not the Gibson company doesn't pay taxes.

 

[Bill Mattocks]

Bill I often agree with you, but here I see it differently. Gibson hires top luthiers who know wood and can recognized it at a glance. There is also quality control and inspectors whose job it is to insure this type of thing will not happen. Gibson has a problem, they have democratic government moles who are sabotaging this fair green republican company. It is a witch hunt lead by the democratic government.

But seriously, someone at Gibson should have caught it. Guitars go through a lot of scrutiny by experts in top manufactures like Gibson. Does it warrant a raid? I don't know. Has someone noticed Gibson putting out many guitars with illegal woods, say their competition. Such rare wood relates to a desirable quality of the instrument. Did an employee blow a whistle? Was this just something Gibson failed to recognize, the wood is illegal in what terms? Did they exceed their quota? Did the wood come from the wrong region? Maybe it isn't illegal to have, but being illegal has to do with something else? I don't know. But I am sure it isn't because his company doesn't pay taxes.

The issue, as I understand it, is not recognizing the wood itself. The issue is that Indian law says that certain types of wood can only be exported as a finished product. The exporter cut the wood into lengths and certified it as a finished product, and the Indian government signed off on that, and it was legally exported to the US on that basis. Gibson then received the wood and did additional finishing work on it. The US government appears to be saying that Gibson circumvented Indian export laws by not knowing that an exporter they worked with misrepresented the 'finished' state of the wood.

The wood itself is, as I understand it, legal for harvest, export from India, and import into the USA. We're not talking about illegally harvesting endangered wood here. We're talking about an Indian requirement that the wood be 'finished' before being exported, which probably has more to do with creating jobs in India than anything else - certainly nothing to do with endangered wood or conservation.

I think that's a problem; this is being talked up as Gibson trying to get around prohibitions on rare wood and raping the forests, etc. They don't and they haven't. The argument is whether or not the wood is 'finished' when it leaves India.

 

[JohnEdward]

The issue, as I understand it, is not recognizing the wood itself. The issue is that Indian law says that certain types of wood can only be exported as a finished product. The exporter cut the wood into lengths and certified it as a finished product, and the Indian government signed off on that, and it was legally exported to the US on that basis. Gibson then received the wood and did additional finishing work on it. The US government appears to be saying that Gibson circumvented Indian export laws by not knowing that an exporter they worked with misrepresented the 'finished' state of the wood.

The wood itself is, as I understand it, legal for harvest, export from India, and import into the USA. We're not talking about illegally harvesting endangered wood here. We're talking about an Indian requirement that the wood be 'finished' before being exported, which probably has more to do with creating jobs in India than anything else - certainly nothing to do with endangered wood or conservation.

I think that's a problem; this is being talked up as Gibson trying to get around prohibitions on rare wood and raping the forests, etc. They don't and they haven't. The argument is whether or not the wood is 'finished' when it leaves India.

Bill as logical and highly accurate you assessment is of the situation, I have to disagree. I think India has enough work with US companies employing them for call centers, such as Citibank. We import them too, and they don't have to be in a finished state, I can barely understand their British accent. Really the situation is really a democratic government witch hunt on a republican companies stopping them from getting "wood." If you know what I mean? Maybe it is a government vigara thing.

 

[JohnEdward]

Bill serious, you are probably correct. I don't disagree. I think the raid was too much and 5 years in jail is ridiculous. The worse in this case should be a fine. There are companies who do worse and get a slap on the wrist, or even bailed out, as they are "too big to fail." I suspect there might be something more here than meets the eye.

 

[granfire]

Bill serious, you are probably correct. I don't disagree. I think the raid was too much and 5 years in jail is ridiculous. The worse in this case should be a fine. There are companies who do worse and get a slap on the wrist, or even bailed out, as they are "too big to fail." I suspect there might be something more here than meets the eye.

That is probably it, more than anything.

And I don't even think it's political. But we come to accept this 'Bohoo, you hate me because I am <insert group> ' while the issues are completely different.
No, I don't hate you because you are of so-and-so group, I can't stand you because you are lazy, dishonest, loudmouthed etc....

It has become a popular diversion. and method to shift blame.
poor Gibson is a republican company... yeah, that must be it!

(Maybe it was Ibanez and Fender who ratted on them?)

 

[crushing]

I suspect there might be something more here than meets the eye.

Speaking of bailouts. From local police brutality to heavy handed federal government raids there is always the "more to the story" defense that allows us to move on and feel comfortable, independent if there really was more to the story.

 

[granfire]

Speaking of bailouts. From local police brutality to heavy handed federal government raids there is always the "more to the story" defense that allows us to move on and feel comfortable, independent if there really was more to the story.

Comfortable?
Not really.
I just personally refuse to jump on the first tidbit of info, having seen too many times how slanted and bad 'news' is prepared before administered to the masses.

heavy handed bad governmental actions?
They are bad.

but I want to be SURE that's what I am looking at!

And if that means taking a 2nd and 3rd look when somebody pulls the race or party card, so be it!

I don't want to follow somebody with an axe to grind (and frankly, most of the 'look at poor me, how come they do that to me' are not as squeaky clean as they like to appear)

 

[cdunn]

The issue, as I understand it, is not recognizing the wood itself. The issue is that Indian law says that certain types of wood can only be exported as a finished product. The exporter cut the wood into lengths and certified it as a finished product, and the Indian government signed off on that, and it was legally exported to the US on that basis. Gibson then received the wood and did additional finishing work on it. The US government appears to be saying that Gibson circumvented Indian export laws by not knowing that an exporter they worked with misrepresented the 'finished' state of the wood.

The wood itself is, as I understand it, legal for harvest, export from India, and import into the USA. We're not talking about illegally harvesting endangered wood here. We're talking about an Indian requirement that the wood be 'finished' before being exported, which probably has more to do with creating jobs in India than anything else - certainly nothing to do with endangered wood or conservation.

I think that's a problem; this is being talked up as Gibson trying to get around prohibitions on rare wood and raping the forests, etc. They don't and they haven't. The argument is whether or not the wood is 'finished' when it leaves India.

Well, the issue is: When the wood is harvested with the correct permissions (probably wise environmentalism), and finshed to a certain level in India (trade protectionism), then it is legal for export to the US. A third party exporter may, or may not, have misrepresented one of these pre-conditions to the Indian government, which then would have requested that the US government assist in the investigation and prosecution of their laws being broken. If the third party exporter broke the law in order to meet Gibson's order, Gibson may be found liable, depending on how Indian and American law interact. Without the details of the investigation on the Indian side of the border, it is difficult to say what level of liability Gibson holds, or what the legality of the wood actually is.

Mr. Nix went to Madagascar in June 2008 on a trip organized by environmental groups to talk to local officials about selling responsibly harvested wood to makers of musical instruments. Afterward, in emails later seized by the government, he referred to "widespread corruption and theft of valuable woods" and the possibility of buying ebony and rosewood from Madagascar on "the grey market."

This makes it appear that Nix had some level of responsibility for wood selection and purchase, and was aware of the potential illegalities. What is not answered in this brief quote is who pulled the trigger, or what criterion that Gibson had in place to ensure that the product that they were buying was legal, and if they will be sufficient to absolve them of criminal liability, if the wood was not legal.

An outright raid on Gibson, however, I can't seem to justify, unless you expect that Gibson is prepared to conceal or destroy the illegal product on the spot. -That- I suspect is more likely to be chalkable to the old idle hands, devil's work line.

 

[Omar B]

Bill I often agree with you, but here I see it differently. Gibson hires top luthiers who know wood and can recognized it at a glance. There is also quality control and inspectors whose job it is to insure this type of thing will not happen. Gibson has a problem, they have democratic government moles who are sabotaging this fair green republican company. It is a witch hunt lead by the democratic government.

But seriously, someone at Gibson should have caught it. Guitars go through a lot of scrutiny by experts in top manufactures like Gibson. Does it warrant a raid? I don't know. The question is was top management aware of what was going on and did they condone it? I don't know. But I am sure it isn't the issue whether or not the Gibson company doesn't pay taxes.

You do make good points if Gibson was as hands on as you would assume they are. Most of their top luthiers left the company to Heritage Guitars when Gibson moved a decade ago. Most of their output is factory/machine made now except for individual custom shop pieces that go for over 10 thousand. Ask guitar players you know, Gibsons have not been nearly as good build wise, sound wise for a while because they are not handmade anymore.

 

[Carol]

You do make good points if Gibson was as hands on as you would assume they are. Most of their top luthiers left the company to Heritage Guitars when Gibson moved a decade ago. Most of their output is factory/machine made now except for individual custom shop pieces that go for over 10 thousand. Ask guitar players you know, Gibsons have not been nearly as good build wise, sound wise for a while because they are not handmade anymore.

That's because Gibson is run by not just non-guitarists, but non-musicians.

Henry Juszkiewicz is a Harvard B-school grad who put his MBA to work with a classmate creating a venture capitalist firm in the heartland. They got involved with Gibson when the company was falling on tough times, took it over, and tried to reinvent it as more of a lifestyle brand.

 

[Sukerkin]

Aye, Carol. That's why my SG is a Gordon Smith custom :nods:.

http://www.gordonsmithguitars.com/products/category.php?id=4

 

[Omar B]

That's because Gibson is run by not just non-guitarists, but non-musicians.

Henry Juszkiewicz is a Harvard B-school grad who put his MBA to work with a classmate creating a venture capitalist firm in the heartland. They got involved with Gibson when the company was falling on tough times, took it over, and tried to reinvent it as more of a lifestyle brand.

Yup, I know. Gibson has not made a good guitar in any of their regular lines in years. If you are willing to pay enough to distract a couple of the few good luthiers left to climb down on high and make yet another repro of an outdated design.

This is why I play Carvins and Jacksons. I can get them on the phone and even confer with my own luthier through the build. Takes 6 months, but it's worth it.

 

[granfire]

Yup, I know. Gibson has not made a good guitar in any of their regular lines in years. If you are willing to pay enough to distract a couple of the few good luthiers left to climb down on high and make yet another repro of an outdated design.

This is why I play Carvins and Jacksons. I can get them on the phone and even confer with my own luthier through the build. Takes 6 months, but it's worth it.

so I might as well buy a cheap guitar after all?
boo

 

[Sukerkin]

I wouldn't draw that conclusion, Gran. You could, for example, buy an old Gibson to get the quality that they once had. Or you could order a guitar from a good maker e.g. Gordon Smith (tho' getting it shipped over from Manchester would be an additional cost and risk).