Gibson Guitar settles probe into illegal wood imports

A Chinese rock fan sits in front of a Gibson guitar poster during the four-day MIDI Music Festival at Haidian Park in Beijing May 4, 2006 as the week-long Labour Day holidays continue. REUTERS/Claro Cortes

NASHVILLE, Tennessee (Reuters) - Gibson Guitar Corp, which makes some of the world’s most prized guitars, will pay a $300,000 penalty under a criminal enforcement agreement with federal prosecutors, after it admitted to possible illegal purchases of ebony from Madagascar, authorities said on Monday.

The agreement, announced by Justice Department officials in Washington, caps a probe into the Nashville-based guitar maker that began in 2009 when it came under suspicion of importing banned or protected wood from both Madagascar and India.

“As a result of this investigation and criminal enforcement agreement, 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 conserve valuable wood species from Madagascar, a country which has been severely impacted by deforestation,” said U.S. Assistant Attorney General Ignacia Moreno of the Justice Department’s Environment and Natural Resources Division.

“Gibson has ceased acquisitions of wood species from Madagascar and recognizes its duty under the U.S. Lacey Act to guard against the acquisition of wood of illegal origin by verifying the circumstances of its harvest and export, which is good for American business and American consumers,” Moreno said.

The century-old Lacey Act, originally passed to crack down on a booming trade in bird feathers used to adorn hats, was amended in 2008 to require that U.S. companies make detailed disclosures about wood imports.

Apart from the $300,000 penalty slapped on Gibson as part of the agreement, the legendary guitar maker will forfeit wood valued at $261,844 that was seized in the course of the investigation.

The Justice Department said Gibson would also pay $50,000 to the U.S. National Fish and Wildlife Foundation “to promote the conservation, identification and propagation of protected tree species.”

Gibson Chief Executive Officer Henry Juszkiewicz was not immediately available for comment, the company said.

Editing by Tom Brown and Stacey Joyce