Fri November 4, 2011
Gibson Gambles on Going Public
There’s a cardinal rule for corporations under criminal investigation – say nothing, at least publicly. But Nashville-based Gibson Guitar took off the mute button this year in a big way. It’s been publicizing its plight under an environmental law known as the Lacey Act. The PR campaign has gotten members of Congress talking about changes. But Blake Farmer of WPLN in Nashville reports Gibson’s strategy could still backfire.
Over the last few months, Gibson Guitar has used social media, op-eds, talk radio and cable news to tell the world an iconic American company is under attack by the Justice Department. Fox News has been particularly interested, making Gibson’s gregarious CEO almost a regular guest.
The name “Juszkiewicz” is becoming a little more familiar after the company tried to stay out of the news following a raid in 2009. That’s when federal agents seized imported ebony from Madagascar. Henry Juszkiewicz followed the advice of his attorneys and said nothing.
“I didn’t feel good about it,” Juszkiewicz explains. “There were a couple of times I almost went off.”
Then in August of this year, armed federal agents barged in to Gibson’s factories again. They confiscated more ebony and this time rosewood imported from India as well as finished guitars and computer hard drives. Juszkiewicz stopped listening to his lawyers.
“I said, ‘man, that is just really beyond my personal tolerance,’ ok. I really believe in right and in truth, which is a little bit naïve to some people and a lot naïve to lawyers,” Juszkiewicz said.
Almost impulsively, Juszkiewicz called a press conference outside Gibson’s plant in Nashville. He said the Department of Justice doesn’t think Gibson is complying with an Indian law, which requires certain hardwoods to be finished there before being exported. Juszkiewicz basically called it a bunch of baloney.
“We believe the arrogance of federal power is impacting me personally, our company personally. And it’s just plain wrong.” Juszkiewicz continues, “I’d be happy to answer any questions.”
Juszkiewicz took questions in the late summer sun until sweaty reporters couldn’t think of anything else to ask. Since then, he’s kept up a full-on media blitz.
“Fly high old bird, you’ve got to land sometime,” Ed Yarbrough said.
Yarbrough was the federal prosecutor in Nashville when the Gibson investigation began. The word of caution comes from a judge Yarbrough looked up to as a young defense attorney.
“And what he meant by that was that people who make grandiose statements may eventually be called upon to back those up. So you better be careful what you say,” Yarbrough cautions.
Contrary to Gibson, the U.S. Attorney’s office isn’t saying anything.
“It’s not unusual for the Department of Justice to be quiet here,” says Marcus Asner, former assistant U.S. Attorney in New York who prosecuted the largest-ever case under the Lacey Act. As applied to Gibson, it essentially requires the company to follow all the laws of the countries where the wood is harvested.
Asner says the Justice Department’s case will come out in court. But until then the government is definitely listening. And Asner says if Gibson is charged and ultimately convicted, Juszkiewicz could regret going public.
“Often times people will try and argue for a lower sentence by saying that they’ve demonstrated contrition,” Asner explains. “So if people are saying things in the press, that can often backfire for them.”
But going public has hardly backfired. It’s fanned the flame for conservative activists who’ve embrace Gibson and made the company a poster child for government over regulation.
On a sunny fall afternoon, a Gibson Les Paul guitar sings out the national anthem over hundreds gathered for a rally.
“The federal government, going into Gibson Guitars, raiding them with guns drawn. It’s absurd,” Tea Party Express leader Amy Kremer.
Judging from her and others, Gibson may be winning in the court of public opinion. And lawmakers like Republican Marsha Blackburn of Brentwood are also sympathetic.
“The thing we’re asked more often than anything else is why Gibson? And if it could happen to Gibson it could happen to me,” Blackburn exclaims. “This is an iconic American company.”
Blackburn is co-sponsoring changes to the wide-reaching Lacey Act to help clarify the law and back off some of the penalties. Right now, executives can go to jail.
“I definitely could,” Juzskiewicz admits.
Henry Juszkiewicz says his lawyers remind him every time he opens his mouth. It’s enough to start second guessing the strategy.
“I wake up and am fearful that I have made a mistake,” Juszkiewicz says.
But at this point, Juszkiewicz says he has no plans to turn down the volume. As recently as this week Gibson published an op-ed in the Huffington Post and signed onto a group called Right on Crime that says the federal criminal code has grown too large.