Informant (37 page)

A lot of lawyers distinguish between prosecutors and antitrust division lawyers.

By the time everyone had digested the article, the agents could not help but worry about what this meant for the ADM case. Was the Antitrust Division up to the job?

•   •   •

In Springfield, a train slowly pulled into the station. Rodger Heaton stood nearby, watching passengers step onto the platform. Finally, he saw them: Robin Mann, Susan Booker, and the new prosecutor on the team, Jim Mutchnik. The antitrust lawyers had arrived for their latest meeting with Whitacre.

Heaton greeted them and escorted them to his car. Popping open the trunk, he shoved some tennis balls and a racquet aside to make room for their luggage. The lawyers traveled to an inexpensive restaurant for lunch before driving to the Decatur Resident Agency to find Shepard and Herndon.

The meeting on this day was intended to help the lawyers write a search warrant in preparation for the raid of ADM. They needed descriptions of the office layout and details about the computer system. Whitacre had been preparing for days to answer their questions.

When the group arrived at the FBI offices, Shepard and Herndon were waiting for them. Mutchnik introduced himself, and the agents welcomed him. The lawyers walked into Shepard’s office, and Mutchnik slid into the seat behind the desk. A spot in the center of the room was reserved for their star witness.

Whitacre arrived shortly afterward. The lawyers wanted to meet with him alone this time; Shepard and Herndon took him to another room for a few minutes to make sure he was comfortable with the idea. Afterward, they escorted Whitacre back to the office where the lawyers were waiting.

“Okay, Mark,’’ Shepard said. “Just talk to these guys, and we’ll be right next door if you need us.’’

Shepard and Herndon left, closing the door behind them. Whitacre sat down, looking confident. The lawyers greeted him; Mutchnik introduced himself.

The questioning began, with Heaton taking the lead. Whitacre was astonishingly prepared. He had even brought some ADM documents with him, spelling out internal details of the company.

Mutchnik sat silently behind the desk, impressed with Whitacre. He seemed to be a top-notch executive, involved in an array of important areas at ADM. As Mutchnik listened, he thought about Whitacre’s salary—a few hundred thousand dollars a year, from what he understood. It seemed ridiculous, given the value Whitacre brought to ADM. As far as Mutchnik was concerned, Mark Whitacre was tremendously underpaid.

•   •   •

Herndon popped the latest tape into his TASCAM playback unit with a sense of anticipation. After weeks of being pressed by the agents, Whitacre had finally recorded a conversation with his friend Kuno Sommer from Hoffman-LaRoche. Herndon was eager to hear the man suspected of being at the center of the citric-acid conspiracy.

The conversation began at counter 123. Herndon listened as Sommer talked about a recent trip to China. Sommer mentioned that Terry Wilson had given him a tour of ADM’s vitamin C plant and said that he wanted the two companies to talk about their situations with that business. Herndon listened, curious. What was Terry Wilson from the corn-products division doing involved in ADM’s vitamin business?

The tape rambled on, with Sommer saying next to nothing about citric acid. Sommer also expressed concerns about talking on the phone—it was easier, he said, to speak in person.

Herndon shut off the TASCAM. Sommer wasn’t going to trip up easily.

It was becoming obvious that there wouldn’t be a simple way to crack open the citric conspiracy. There were still months of planning necessary before the lysine case could go overt. Other attempts to pursue price-fixing in citric or any other product might risk the secrecy of the lysine case. And right now, secrecy was paramount; if anyone learned what the government was doing, the whole investigation could be endangered.

Whitacre smiled as he walked into Howard Buffett’s office on the sixth floor of ADM headquarters. The office was unlike any other in the building. Corporate toys decorated the room, from trucks emblazoned with logos from Coca-Cola or ADM to a plastic Coca-Cola bottle that played music.

“Hey, Howard,’’ Whitacre said, leaning against a credenza behind Buffet’s desk. “How’s it going?’’

Buffett looked at Whitacre, clasping his hands behind his head.

“Not so well, Mark,’’ he said. “I’m thinking of leaving the company.’’

The news was a shock. Whitacre liked Buffett and considered him a good friend at ADM. They talked all the time.

Whitacre pressed him, hoping to change his mind. But Buffett was fairly well decided. He had been talking about the idea with his father, Warren. He didn’t like handling investor relations or watching the way the company was run, Buffett said. The atmosphere at ADM made him uncomfortable.

Beyond that, even though Buffett was an ADM director, Dwayne Andreas often dealt with him like a child. He handled work for ADM in Mexico, where his title “assistant to the Chairman,’’ had about the same prestige as “chief janitor.’’ To gain credibility, he had asked for a new title—one beneath his true role. But Dwayne had refused.

Whitacre argued to no avail. Buffett’s frustrations with the company and the Andreases were running too deep. But Whitacre was certain that as soon as the investigation went public, the Andreases would be gone. It was only a matter of months.

Taking a breath, Whitacre glanced at the office door. It was closed.

“I wouldn’t leave if I was you,’’ he said. “Things are going to be changing.’’

“Why?’’ Buffett asked. “What do you mean?’’

Whitacre leaned forward.

“You never know what will happen, Howard,’’ he said softly. “Not too long from now, you and I might be running this place.’’

C
HAPTER
11

M
ark, are you an idiot?’’

Ginger Whitacre sat on a couch in the family room, cradling a cool drink and staring at her husband in disbelief. For days, he had been endlessly upbeat, almost unreasonably so. But now he was going over the edge. For the past few minutes, as logs crackled in the fireplace, Ginger had listened to Mark describe the glorious future he saw for himself—at ADM.

“No, really,’’ Mark replied earnestly. “When all this goes down, I’m going to be the only one left. Dwayne will be gone, Mick will be gone, Terry will be gone. I’m going to be the only one who can run ADM.’’

Ginger threw up her hands. “That’s totally illogical,’’ she said. “How can you possibly stay there when you’ve just taken down the company? You think they’re going to pat you on the back?’’

Mark shook his head. His pep talk with Howard Buffett had emboldened his own expectations. If someone like Buffett—an ADM director—was dissatisfied, other directors almost certainly would feel the same way. Buffett had postponed his resignation plans, so now Whitacre felt he was guaranteed at least one ally on the board. Once ADM’s crimes were exposed, Whitacre was convinced, everything would change. He was sure his name would be high on the list of candidates for the permanent chief executive of the company—perhaps even the only one there.

“Ginger, they need me,’’ Mark said. “They need me to run this company. I’m valuable to them. And I did the right thing. The board is going to understand that. They’re going to respect that.’’

Ginger kept arguing, trying to persuade Mark of how irrational his beliefs were. But he wouldn’t budge. He was convinced that he would soon be running ADM as a reward for his work with the FBI. He had expressed these thoughts in the first days of the investigation, but had dropped the foolish ideas. Now, somehow, the same unreasonable expectations had crept back into his mind.

The more Ginger saw that glint of excitement in Mark’s eyes, the angrier she became. This sudden pipe dream could not have come from nowhere; something had to have triggered it. He was acting as if he had been brainwashed. As Mark argued about his bright destiny, she became certain of who was to blame.

Brian Shepard
.

Ginger seethed at the FBI. They were lying to her husband just to keep him in line. They didn’t care about him at all. Of that she was convinced.

“We’re worried about our guy,’’ Herndon said. “We want to make sure we look out for him.’’

On the other end of the phone, Jack Cordes from the FBI’s contract review unit asked a few questions. What Herndon wanted was not unprecedented but would take time. There were lots of bureaucratic hurdles to clear before the FBI could pay someone who lost his job after working as a cooperating witness.

It was January 10, 1995. With planning under way for the raids on ADM, Shepard and Herndon were beginning to worry about Whitacre. He had become unrealistic, talking all the time about becoming a hero and running ADM. The agents did their best to brace him for the probability that he would be fired, but didn’t press. At this point, Whitacre’s feelings were bound to be complex. If he needed to believe in a bright future to get through the day, the agents couldn’t rip that away. But they could make sure Whitacre wasn’t abandoned if he ended up unemployed.

Shepard and Herndon had expressed their concerns to the prosecutors, who were split on the issue. Some wanted the matter resolved by the FBI; others vehemently opposed paying anything. Whitacre wasn’t some drug dealer, they argued; he would find another job. But a jury would always look askance at a witness who had been given money by the government.

In the end, the matter was left to the FBI’s discretion. By the end of the call with the contract unit, the agents felt more at ease. At least they had gotten the ball rolling.

Six days later, Shepard and Herndon flew to Atlanta to prepare for the price-fixing meeting scheduled for January 18 at the Atlanta Airport Marriott. When they arrived, the sixteen-story hotel was exceptionally busy. The Cobb Room, where the lysine executives were planning to meet, was booked until 11:00 the next night, leaving Shepard and Herndon cooling their heels for hours. When the agents finally gained access to the room, they saw it had problems, as always. It was spacious enough, with a wood veneer conference table, plenty of padded chairs, and a small buffet cart against a wall. But there was no end table for the lamp; the only furnishing that could hold the camera was a large dresser in the wrong part of the room. Shepard and Herndon moved heavy furniture late into the night.

The room reserved for the command center also made the agents uneasy. It was connected by an inside door to the Cobb Room, meaning that the agents might be heard. Herndon grabbed a towel and stuffed it under the connecting door. It was hardly a high-tech solution. But it would work, so long as the agents whispered.

Early the next morning, Whitacre appeared at Shepard’s hotel room, ready for the day. Herndon handled the briefing, again reminding Whitacre to announce if he was leaving the room and to let other executives do as much of the talking as possible.

As Herndon spoke, Shepard walked across the room to check the briefcase recorder one more time. He placed it on the bed and turned it on.

Nothing.

He tried again. Still nothing.

“We might have a problem here,’’ he said evenly.

Herndon came over to look, and the two agents struggled with the case for several minutes. Shepard couldn’t understand it. He had tested the device in Decatur, just before they had flown to Atlanta.

Whitacre stood by watching helplessly. Finally, he checked his watch.

“Hey, guys,’’ Whitacre said with an uncomfortable urgency to his voice. “I should probably be in the room when everybody else arrives.’’

The agents agreed and Whitacre headed down to the meeting room. A few minutes later, the frustrated agents swept up the briefcase and hurried to the command center. Shepard dropped into the seat in front of the monitor, while Herndon called the Atlanta FBI in search of the agents assigned to provide backup.

The Atlanta agents arrived a few minutes later, and Herndon showed them the briefcase unit. After studying it, the group agreed that somehow, the new batteries had died. One of the Atlanta agents, Jay Spadafore, said he had a spare set in his car and rushed to get them. He needed to hurry—the meeting next door was starting. Shepard turned on the camera.

A Korean executive, J. E. Kim from Cheil, was laughing. He had just taken a cab to the Marriott from his hotel, the Renaissance. Kim hadn’t realized until he arrived that the hotels were adjacent to each other. Whitacre walked with Kim to the window. The day was sunny and bright, affording a clear view.

“That’s right next door,’’ Whitacre said.

“Yes, I didn’t know,’’ said Kim. “So I only paid two dollars from Renaissance to here.’’

Yamamoto from Kyowa Hakko arrived minutes later, just before nine o’clock. Whitacre greeted him and then picked up the telephone, ordering breakfast and scheduling lunch. He hung up the phone as Yamamoto dropped his coat and other belongings near the camera.

“Here, Massy, I’ll move this stuff out of the way for you,’’ he said, picking up Yamamoto’s belongings. “There has to be a space to hang that.’’

Kim folded himself into a chair. He mentioned hearing about an earthquake the previous day hitting Kobe, a city in western Japan. Yamamoto nodded, saying he had heard that as many as 2,500 people were dead.

“Yeah,’’ Whitacre said. “They blew up a lysine plant there, too.’’

Yamamoto nodded, smiling. “Yeah.’’

Kim was confused. “Lysine plant?’’ he said, looking at Yamamoto. “Your plant?’’

“Yes,’’ Yamamoto said. “And we have to increase the price. A dollar-fifty?’’

Yamamoto laughed.

Kim still did not understand. Was the plant partly destroyed?

Smiling, Yamamoto and Whitacre shook their heads.

“No,’’ Whitacre said. “It’s a—”

“It’s a joke,’’ Yamamoto interrupted.

Everyone laughed heartily.

In the adjoining room, the agents snapped the new batteries into the briefcase. Herndon touched the buttons and the tape started to spin. He hurried over to the phone and dialed the number for the Cobb Room.

•   •   •

Whitacre answered.

“Hey, it’s Bob, I’ve got your briefcase,’’ Herndon whispered.

“I’m sorry?’’

“I’ve got your briefcase. It’s working. I’m going to bring it to you.’’

“Yeah, that’d be great,’’ Whitacre said.

“Now, I’ve got a story for what’s going on.’’

“Yeah,’’ Whitacre said. “I already ordered from the menu the other day.’’

“Good, okay,’’ Herndon whispered. “I’m going to come to the door and say I’m with the hotel staff. I’m going to say I found the briefcase downstairs.’’

“Okay.’’

“Okay? So I’ll see you in a couple of minutes.’’

“Thank you,’’ Whitacre said. “Bye-bye.’’

Whitacre hung up and returned to the table.

By 9:05, the price-fixing meeting was ready to start. Mimoto had arrived and taken a spot at the head of the table. Beside him was a new executive from Ajinomoto, Hisao Shinohara. Jacques Chaudret had scurried in and was at the banquet cart, fixing a cup of coffee. Yamamoto and Kim were on either side. Only Sewon, the Korean company, was not represented.

“We have a couple of other people joinin’ us, I think, don’t we?’’ Whitacre asked.

“At, uh, ten-thirty,’’ said Mimoto.

“Two more at that point?’’ Whitacre asked.

“Two more,’’ Mimoto said.

“Well,’’ Whitacre replied, “we’ve got plenty of space.’’

Kim spoke up. Two more were coming from Sewon?

Chaudret, still at the banquet cart, turned to face the others. “No, no,’’ he said. “Two more from Sewon. One from Tyson. One from ConAgra.’’

The group laughed, amused at the idea of two big lysine customers attending a price-fixing meeting.

Mimoto smiled, staring straight at Whitacre.

“And one from FBI,’’ he said.

Whitacre felt his heart drop, until he heard everyone laughing. It was a joke.

“And seven from the FTC,” Whitacre laughed. The Federal Trade Commission, which also enforced antitrust laws, would be as interested as the FBI in what was happening in the Cobb Room.

“Yeah,’’ Mimoto said, looking at his notes, “FTC.’’

“FBI,’’ Whitacre laughed again, still anxious.

He checked his watch.
Let’s get going.

“Welcome to Atlanta,’’ Whitacre said. “We’ve been so often to Asia, so often to Europe, it’s good that everyone could come here at some point. I think Kanji is going to lead the meeting. And I think the topic here at the beginning would be more volume related.’’

A knock came at the door. The group paused.

“Yes?’’ Mimoto said in response. “FTC?’’

Whitacre walked to the door and opened it. It wasn’t the FTC.

It was the FBI.

Herndon stood in the doorway, briefcase in hand.

“I wonder if I have the right room,’’ he said.

“Yes,’’ Whitacre said.

“This was left down in the cafeteria,’’ Herndon said, holding out the briefcase.

“Okay.”

“The bellman thought it might belong to you.’’

Whitacre took the briefcase. The tape was already running. He shut the door and hurried to the table.

“Uh, the banquet people,’’ Whitacre said as he scooted past Yamamoto. “I left my briefcase in the lobby. When I signed up for food and everything.’’

“You forgot your briefcase there?’’ Chaudret asked.

“Yeah.’’

“Wow!’’ Chaudret said.

“When I signed up for all the food and everything.’’

“Very honest, huh?’’ Chaudret said. “In Paris, it would have already been sold.’’

“Yeah,’’ said Whitacre. “Luckily, I had all my passports and everything still in my room.’’

Yamamoto, his hand on his chin, looked at Whitacre. “You’re keeping all document . . .  in case?’’

Whitacre shook his head. “No, no.”

The group laughed again.

The Atlanta recording was another rousing success. For more than an hour, the executives reviewed their 1994 lysine production, praising one another for sticking to the agreed levels. Later, with the arrival of J. S. Kim from Sewon, more evidence of the illegal agreement piled up. Kim argued that Sewon needed a huge increase in its allotted volume. The others objected, saying the proposal would cause a price collapse. By the end, all but Sewon settled on new production levels for 1995—and every company agreed to hike the price to $1.30 a pound.

Days later, Jim Mutchnik, the new antitrust lawyer on the case, walked into a small conference room with a copy of the Atlanta tape. He was amused at how the meeting had just come and gone. This conspiracy no longer fazed the others; with so much evidence already collected, Atlanta was being treated as almost a bother.

But to Mutchnik, Atlanta was a hoot. The first minutes—with everyone joking about the FBI and the FTC—cracked him up. He couldn’t believe these executives were sitting there, committing a crime, thinking it was the funniest thing in the world.

Mutchnik watched as, late in the meeting, the executives agreed to set the American price at $1.30. On screen, Mimoto looked at the assembled executives.

“Finished,’’ he announced. “Canada is the same?’’

The others wondered, what’s the Canadian exchange rate? Jacques Chaudret fished out a newspaper, scouring the financial tables.

“Canada,’’ he said. “What does it say?’’

He found the number. The group recalculated $1.30 as $1.83 in Canadian dollars. Mimoto announced the new prices would go into effect the following week.

Mutchnik watched, blown away. In a little more than two minutes, the group had used a newspaper to fix the Canadian market—worth about $100 million.

I can’t believe they’re doing that,
Mutchnik thought.
It can’t be that simple.

The J. Edgar Hoover Building sprawls along a full city block on Pennsylvania Avenue, standing out as one of the most hulking and unattractive parts of official Washington. There, in offices along an inner corridor on the seventh floor, the workings of the FBI are overseen by a group of deputies and assistants who report to the man at the end of the hall, the Bureau Director, Louis Freeh.