FSC-Watch

An independent observer of the Forest Stewartship Council

Gibson Guitars fiasco raises new questions about integrity of Rainforest AllianceTags: USA, Legality, Tropical Forest Trust, Controlled wood, Rainforest Alliance SmartWood

The raiding of Gibson Guitars in Tennessee in August by US Federal Fish and Wildlife officials for suspected violations of the Lacey Act - which forbids US companies from importing wood obtained from illegal sources - has once again cast a very hard light on the FSC system, and in particular on the Rainforest Alliance, whose SmartWood scheme is the FSC's most prolific issuer of FSC certificates. An October 2nd article (which we reproduce in full below), published in the 'Tennessean' newspaper, has opened new revelations about the relationship between Gibson and the Alliance, which sound loud alarm bells about the 'independence' of the certifier.

The August raid was the second time USFW had moved in on Gibson, with company materials having been removed in a raid in 2009 - though no prosecutions have yet been brought as a result. But whatever the final outcome of USFW's new investigations into possible importation by Gibson of illegally traded timber, one of the underlying problems seems to have been the company's reliance on FSC certification. According to Gibson "The wood the Government seized on August 24 is from a Forest Stewardship Council certified supplier and is FSC Controlled, meaning that the wood complies with the standards of the Forest Stewardship Council...FSC Controlled Wood standards require, among other things, that the wood not be illegally harvested and not be harvested in violation of traditional and civil rights". But as this website has been pointing out for five years, the problem with FSC 'Controlled Wood' is precisely that it is not actually subject to any independently controlled checks or verification.

The FSC's "requirement" that Controlled Wood is not from an illegal or otherwise unacceptable source is only enforced insofar as certifiers are asked to carry out a 'risk assessment' of the possibility of illegally-sourced wood entering a supply chain which carries other, fully certified wood. Some of the Controlled Wood risk assessments seen by FSC-Watch are laughable in their superficiality, lack of expert knowledge of local circumstances, and do not even draw on published information about specific evidence of illegalities or land conflicts. They are vulnerable to highly subjective assessments of what is a high, medium or low risk. They are, to all intents and purposes, useless as a means of guaranteeing legality of specific parcels of wood or specific supply chains.

Moreover, FSC-Watch has repeatedly questioned the reliability of the Rainforest Alliance, which was responsible for the Controlled Wood certificates on which Gibson depended, in assessing for illegal activities. We warned three years ago that US timber buyers and users should be wary of relying on any FSC certification to ensure compliance with the Lacey Act, bearing in mind the ever-growing list of documented cases of FSC certified wood later proving to be from illegal sources.

But as well as these underlying problems, the Gibson Guitars fiasco has also revealed new information about the relationship between the company and the Rainforest Alliance. The first raid on Gibson in 2009 brought to wider public attention that Gibson's Chairman and CEO, Henry Juszkiewicz, was also a member of the Board of the Rainforest Alliance. Shortly after the raid, the Alliance announced that Juszkiewicz would take "leave of absence" from its board until the USFW investigations had been completed - though it did not address whether it had been appropriate in the first place for the CEO of one of the companies it 'independently' certifies to also be on its own Board of Directors.

The Tennessean article now reveals that, from 2006 onwards, Rainforest Alliance also accepted a number of 'gifts' in cash and donations of expensive guitars from Gibson - estimated to have been worth between $315,000 and $390,000 each year. The Alliance has said that it will now stop accepting some such gifts, and the article reports it's vice-President, Richard Donovan, as saying that its FSC certification business (SmartWood) is 'insulated' from undue influence from donations to the organisation in general. However it is surprising that the Alliance appears not to have considered that the perception of a potential conflict of interest could undermine the credibility of both it's own certification system and of the FSC system more generally. Financial figures given in the the Alliance's 2010 Annual Report (opens pdf, 2.5MB) indicate that the reported value of Gibson's 'gifts' to the Alliance would have represented almost its entire annual operating surplus.

As well as the questionable practice of accepting valuable gifts from companies it was supposedly independently certifying, the story published in the Tennessean also reveals that Rainforest Alliance has been paid by Gibson to provide 'guidance' on its sourcing of timber. According to the article, the Alliance had received $150,000 in 2011 in "expenses related to guidance on sustainable sourcing of wood". In other words, the Alliance has been providing consultancy services to Gibson, as well simultaneously certifying the company. Credible certification schemes prohibit the simultaneous provision of consultancy services with 'independent' certification of the same company, as this can represent a serious conflict of interest.

In the article below, Donovan explains that the Alliance has asked Gibson to take "major corrective action" to retain its FSC accreditation after what he called misstatements by Gibson CEO Juszkiewicz that exaggerated the level of FSC oversight of the wood confiscated in the August raid. Gibson might well be wondering how it comes to be that, with all the gifts, the certification fees, and the consultancy fees paid to the Alliance, as well as a place on the Alliance's Board, it still appears to have misunderstood the nature of the 'oversight' which the Alliance's FSC certificates provided to them. Other companies paying for the Alliance's certificates or advice will no doubt be asking themselves similar questions about the reliability and quality of the service they are receiving.

The case has become a cause celebre, with the company itself and Republican politicians claiming that the raids represent a serious case of "over-reach" of government. But amidst the political mud-slinging, the main lessons for anyone interested in the future of the world's forests, and specifically for independent wood certification, should not be lost.

The FSC International Secretariat has been informed of the latest revelations concerning the relationship between Rainforest Alliance and Gibson Guitars. It would seem to have little choice but to immediately suspend Rainforest Alliance Smartwood's accreditation as an FSC certifier, subject to further investigations. Anything less than this will send a signal that the FSC is incapable of sanctioning even the most egregiously inappropriate behaviour by the certification bodies which it is supposed to regulate. It is not known whether the Rainforest Alliance has taken gifts from other companies that it certifies. The FSC will have to assess whether it's own reputation would be tarnished by any continuing association with Rainforest Alliance Smartwood.

The FSC Secretariat will also have to move quickly to reduce the damage which this affair does to the FSC's credibility, especially amongst the US wood trade. A first step would be to immediately cancel the Controlled Wood policy - which would at least reduce the risk that many more USFW raids on FSC certified companies could follow.

For guitar makers, prized woods pose quandary Gibson case pits rich sounds against ecological concerns

NASHVILLE, Tenn. -- Two weeks ago, Gibson Guitar abruptly canceled plans for what was to have been a major business announcement: the launch of a partnership with Fiji to become the island nation's exclusive buyer of mahogany to make the Nashville company's high-end guitars.

Gibson CEO Henry Juszkiewicz and his supplier had worked for months to pull off the deal, giving a $5,000 guitar to Prime Minister Frank Bainimarama last summer as a gesture of good will.

But the Fijian leader's trip to Nashville didn't materialize, the announcement was canceled and a hurried explanation from Gibson said the negotiations were continuing.

The on-again, off-again deal between Gibson and Bainimarama -- a military strongman who has taken control of many of the island's resources and denied free elections since a 2006 coup, according to human rights groups -- illustrates the uncertainties facing guitar makers such as Gibson.

With worldwide rain-forest acreage dwindling, stronger U.S. and international environmental laws, and consumers snubbing new guitar models made from alternative materials, Gibson and other guitar makers have had to hopscotch the globe in search of new sources for rare tonewoods -- mahogany, rosewood and ebony harvested from 200- and 300-year-old trees -- to deliver the rich sounds musicians treasure.

"A musician can hear the difference when he's playing guitar made from certain woods," Juszkiewicz said. "These are the materials our customers value and expect."

For its efforts, Gibson has run afoul of both environmentalists and federal law enforcement officials. A federal probe continues into whether Gibson has violated environmental laws in its wood import practices, after two separate raids on the company: one on Aug. 24 and one in fall 2009.

The legal cases -- which have spilled over into a conservative cause celebre -- have pitted Tennessee congressional leaders, musicians and others who say the government raids put American jobs at risk versus environmentalists concerned about the sustainability of the world's rain forests.

The case has also served to cast a spotlight on Gibson's financial relationship with the international watchdog group that accredits its wood supplies as legitimate to ship after they're harvested.

The group -- the Rainforest Alliance -- has consistently given Gibson high marks for environmental practices in the form of the widely recognized Forest Stewardship Council (FSC) stamp of approval for its wood imports.

The FSC serves as a sort of Good Housekeeping stamp of approval, issued to companies and forest managers that are found to meet a set of forest management standards. Absent any formal national and international legal standards, the FSC stamp is widely regarded as among the best independent assessments of a company's environmental practices.

Less widely known is Gibson's longtime practice of making large contributions to the alliance.

While the Rainforest Alliance has regularly investigated and audited Gibson, it also has been among the biggest recipients of the Gibson company's charitable efforts, receiving between $315,000 and $390,000 each year since 2006 in cash and donations of expensive guitars for the charity's annual gala dinner, according to a Tennessean review of tax records.

The agency also charges Gibson and other companies annual stewardship council fees between $2,500 and $7,500, according to Richard Donovan, the group's vice president.

Alliance leaders say there's no conflict of interest. The alliance is careful to keep its FSC investigations and review of wood shipments separate from the rest of the organization's environmental work and safe from undue influence, Donovan said.

"One of the things we have done very carefully with all our auditing policies is making sure there are walls between (FSC) auditors and any other Rainforest Alliance offices," he said.

The Rainforest Alliance has nevertheless decided to stop accepting donations from Gibson toward its annual gala fundraising event pending the outcome of the federal probe, Donovan said. Those have amounted to $50,000 this year, according to figures supplied by the organization.

The group will continue to accept other contributions for activities in developing countries ($170,000 in 2011) and for "expenses related to guidance on sustainable sourcing of wood," which has amounted to $150,000 thus far this year, Donovan said.

Still, Donovan said that in recent weeks the Rainforest Alliance has asked Gibson to take "major corrective action" to retain its FSC accreditation after what he called misstatements by CEO Juszkiewicz that exaggerated the level of FSC oversight of the wood confiscated in the August raid.

Meanwhile, other environmental groups continue to criticize Juszkiewicz as unjustly inflaming public opinion against legislation known as the Lacey Act, which bans imports of illegally logged woods. Gibson is being investigated for possibly violating this act.

"This has been politicized in an irrational way, in an almost surreal way, and been twisted into a message around jobs," said Andrea Johnson, forest campaign director for the nonprofit Environmental Investigation Agency.

Johnson's group has publicly pushed back against Juszkiewicz, a near-constant presence on conservative talk and TV shows since federal authorities raided the guitar manufacturers facilities on Aug. 24, seizing wood, guitars, computer hard drives and documents.

It wasn't always this way. At one time environmentalists and guitar makers had forged an alliance that environmentalists called a model for responsible companies in the timber business.

Why wood matters

Guitar enthusiasts swear they can hear a difference in the quality and timbre of music from a guitar whose neck is made from Honduran ebony versus rosewood harvested in Madagascar.

Centuries of instrument-making traditions have led to certain wood source norms for the most valuable guitars. For example, Sitka spruce is best suited as a guitar top, says Joe Glaser, a Nashville-based luthier.

Mahogany and ebony are often the woods of choice for guitar backs.

For the fingerboard -- the overlay of the guitar neck where fingers press strings for notes -- players have come to expect ebony, an extremely dense wood that doesn't wear from constant finger pressure.

But sources of such woods are increasingly tough to find.

By 2006, when environmental groups including Greenpeace made their first overtures to major U.S. guitar makers, traditional sources of some of those woods had already begun to dry up.

Brazilian rosewood, valued for sides, had been placed on an endangered species list and was illegal to import.

Adirondack Sitka trees had been all but logged to extinction to supply makers of Adirondack-style furniture. The Canadian government was closing British Columbia's Sitka forests to loggers. And environmentalists were looking at data that suggested the rate of Sitka spruce logging in the Alaskan panhandle would decimate the forests and timber supplies if not responsibly managed.

When Greenpeace approached the nation's largest guitar makers with an invitation for a trip to Alaska to meet with Native American logging interests, most accepted. In addition to Gibson, the activist group invited the U.S.'s other longtime guitar manufacturers -- Fender, Taylor and Martin.

Confronted with clear-cut forests and data on depletion rates, the guitar executives appeared alarmed by what they saw, said Scott Paul, Greenpeace director of forest projects.

The episode created the beginnings of a working coalition among environmentalists and music instrument makers to ensure long-term supplies of old-growth forests to satisfy both industry interests and environmental ones.

In fact, the cooperative model was considered so successful that two years later a Switzerland-based international group -- concerned about illegal logging in Africa -- organized a fact-finding trip to Madagascar, an island nation off the coast of southern Africa.

The Tropical Forest Trust (TFT) took representatives from the same guitar companies (Fender was absent this time) on a two-week trip.

Madagascar was a mecca for tonewoods, with old-growth rosewood and ebony scattered in forests across the country.

It was also a place of critical concern to environmentalists. It is one of the most biodiverse places on Earth, with numerous unique species that exist nowhere else on the planet.

Guitar makers were taken on drive-bys past illegal logging operations inside what should have been protected national forests. They also were exposed to the lives of poverty of island people who had seen little benefit from illegal logging, according to TFT executive Scott Poynton.

Shortly after the trip, a military coup in Madagascar further soured some guitar makers on doing business there.

C.F. Martin Guitars CEO Chris Martin said his company immediately halted imports of wood from Madagascar.

Taylor Guitars CEO Bob Taylor said his company had never imported wood from Madagascar and decided not to start.

What he saw was "ravaged land and a tangle of national laws that made it impossible to figure out what was legal and illegal to export, even though it appeared that people were desperate to have us there," Taylor said.

Gibson Guitars, however, continued to import from the country, according to the federal case against the company.

Then, in November 2009, a year after the Madagascar trip, U.S. Fish and Wildlife Service agents raided Gibson's factories in Nashville, confiscating pallets of Madagascan ebony on suspicion that Gibson had violated the Lacey Act.

In federal court filings since the seizure, U.S. attorneys have submitted emails from Gibson staffer Gene Nix, who went on the TFT trip, as evidence the company knew the wood had been illegally extracted.

"The true Ebony species preferred by Gibson Musical Instruments is found only in Madagascar," Nix had written soon after his trip.

"This is a slow-growing tree species with very little conservation protection and supplies are considered to be highly threatened in its native environment due to over exploitation. ... All legal timber and wood exports are PROHIBITED because of widespread corruption and theft of valuable woods like rosewood and ebony," the email said.

But, Nix wrote, a Chinese wood dealer living in Madagascar, Roger Thunam, might be able to help supply wood for the "grey market," a phrase that federal investigators said in court records means the material was contraband.

"Mr. Thunam on the other hand should now be able to supply Nagel (Gibson's German middleman) with all the rosewood and ebony for the grey market," Nix said.

Thunam has been singled out in separate investigative reports by National Geographic magazine and by international groups Global Witness and the Environmental Investigation Agency as engaging in questionable logging practices. According to the U.S. case against Gibson, Thunam's business dealt "almost exclusively in sawn wood or logs which at least as of 2006 were illegal to export from Madagascar."

Gibson denies any wrongdoing, and its attorneys say the Nix emails are being taken out of context. No criminal charges have been filed as a result of the 2009 raid or in the August case.

'We all bear responsibility'

While Gibson remains under federal scrutiny -- it's the only American guitar maker currently the subject of Lacey Act probes -- the quest for the best-sounding woods continues.

Bob Taylor of Taylor Guitars said his company hopes to be able to announce a new sustainable foresting project in Africa in short order, but he could offer no new details last week.

There may be more news on the Fiji deal soon, Gibson spokesman Ed James said.

The challenge for American guitar makers, Taylor said, lies in the fact that the the most valuable species for guitars often grow in the most politically unstable places, leaving companies little option but to make the best deals they can.

"We're not environmentalists, or lawmakers or policy people or forestry experts," Taylor said. "We're just guitar makers who now have to be more involved in our sources."

Meanwhile, musicians continue to value high-end guitars made from imported hardwoods.

British singer James Blunt said he believes those guitars can still be made without cost to the environment. He posted a clip on the Gibson Guitar UK Facebook page in support of the company, saying, "Not only do they make beautiful guitars, but on an environmental level, they do so with sustainable woods certified by the Forest Stewardship Council."

Some environmentalists say they are sympathetic to the guitar makers' challenges as they search for woods that musicians demand.

"While everyone might be pointing the finger at Gibson as the dodgy guys, the question is why is everyone buying this stuff?" said Poynton of the Tropical Forest Trust. "We all bear responsibility. Musicians bear responsibility."

Comments

http://www.duediligencetimber.eu/Index.htm provides links to briefing notes about the production and trade of illegal wood-based products in China and each of the tropical countries around the southwestern rim of the Pacific.

The explicit focus of the website is the EU's Illegal Timber Regulation. Although under construction, the initial content of the webpages which describe relevant illegalities in particular supplying countries might well help those carrying out due diligence (/due care) for Controlled Wood or compliance with the USA's amended Lacey Act.

The site contrasts with the Global Forest Risk Registry - being compiled by the FSC, the Rainforest Alliance and others - currently does little more than indicate that there is unspecified risk of illegality in China and most tropical countries (including both India and Madagascar...) which export timber, albeit only because those countries' score in Transparency International's Corruption Perceptions Index is less than 5. The Registry does however present some detailed information about some countries, notably Chile and Peru.

It seems the FSC "controlled wood" in this case really has been controlled - by the Feds, who have seized it...

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