Gibson Guitar has completed its tender offer for almost 55 percent of TEAC Corp., a Japanese company that makes audio and visual equipment as well as data storage equipment. TEAC will be folded into Gibson's operations but remain listed in Tokyo.
On the day his company settled allegations it used protected wood in its operations, Gibson Guitar CEO Henry Juszkiewicz struck a defiant tone about how the process unfolded and how he plans to move forward.
In a statement posted on the company's website, Juszkiewicz said the company would have faced millions in legal expenses defending the alleged Lacey Act violations in court. Juszkiewicz also said he intends to continue to press for changes to the Lacey Act "to avoid systemic criminalization of capitalism."
"I don't retreat from any of my prior commentary, but I am gratified that this resolution puts the matter behind us," he said.
Congressman Marsha Blackburn, who had been one of Gibson's champions in D.C., took a similar tone in reacting to the settlement.
"Given the confusion Washington bureaucrats create with the excessive regulations being heaped on America's small business owners, I am really not surprised by this turn of events," Blackburn said. "I am extremely disappointed with the intimidation tactics used by DOJ and the Fish and Wildlife service in the Gibson case. There is no reason that hard-working employees at the Gibson plants should have been raided by armed federal agents. It didn't have to come to this. Not to mention, the lack of cooperation these agencies have displayed in my efforts to get answers to the circumstances surrounding this raid that took place almost a year ago."
Understandably more upbeat are the people who helped bring to light Gibson's use of the Madagascar woods. The Environmental Investigation Agency called the company's agreement to pay a fine and forfeit the wood "a watershed moment" in the fight against illegal logging.
"This agreement shows that when the Lacey Act is allowed to work, the environment and the economy benefit," said Jameson French, CEO of Northland Forest Products and a board member of the Hardwood Federation. "The Lacey Act is a huge success story for creating jobs in America. This Criminal Enforcement Agreement should be a wake up call for companies thinking about importing illegally logged wood that the government is going to take violations of the Lacey Act very seriously."
After a few months of maintaining a relative quiet on the Lacey Act front, Gibson Guitar CEO Henry Juszkiewicz visited with Fox News this week to provide an outrage-filled update on his company, which still has not been formally charged with any crimes. Among his main points: Gibson in December ran out of the Indian wood it had left following last year's federal raid and it could have serious repercussions.
Since then, they have had to switch to less desirable alternative sources, or alternative products — including composite materials, which many purists reject. Juszkiewicz fears his company may lose market share as a result.
That's a different tone from Juszkiewicz's assessment in November, when he told Blake Farmer sales were holding up just fine. Also different is the fact that Juszkiewicz, who last fall was strident in his crusade against the government and its enforcement of the Lacey Act, offered the feds a deal — as long as he got back his wood.
The campaign by Gibson Guitar CEO Henry Juszkiewicz against the Lacey Act is getting some legislative support from a group of U.S. senators. Kentucky's Rand Paul last week introduced a bill that removes criminal penalties from Lacey Act enforcement and would stop the government from prosecuting companies based on alleged violations of foreign laws.
Paul's press release announcing introduction of the FOCUS Act opines that numerous amendments to the the century-old Lacey Act, including most recently in 2008, "have produced what today is an extremely broad and vague law that contains harsh criminal penalties. Notably, the original Lacey Act, named after Iowa Congressman John Lacey, contained a penalty 'not exceeding two hundred dollars.' There was no provision imposing jail or prison time.
Gibson Guitar CEO Henry Juszkiewicz tells Blake Farmer the big flap about the company's alleged noncompliance with the Lacey Act appears not to have made a dent in sales. But with Gibson now using different materials for its fret boards and other components, Juszkiewicz says the company could still face the loss of some customers.