Whitacre knew the FBI planned to check which executives had frequent calls to Japan. That would be strong evidence of the saboteur’s identity.
“That scared me,’’ Whitacre said. “You check those records, nobody’s going to have more phone calls with Japan than me. That’s the pricefixing.’’
Even though he was acting on ADM’s instructions, Whitacre said, he knew he could have become the fall guy if Shepard stumbled onto the price-fixing.
Shepard thought through what Whitacre was saying.
“Who told you to participate in these talks?’’
Whitacre answered in a clear voice.
“I’m doing this at the direction of Mick Andreas and Dwayne Andreas.’’
Ginger Whitacre, dressed in a nightgown and robe, looked down at her sleeping seven-year-old son, Alex. She rearranged the covers, making sure he stayed warm. Stepping away from his bed, she walked to the window. She could see Shepard’s car from there.
They were still talking. Ginger had heard enough from the doorway Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 52 52
K U R T E I C H E N W A L D
to know Mark was finally ready to tell the truth. Just seeing him out in the car with Shepard lifted her fears from the past few days. She headed out to the hallway. She knew her son probably wouldn’t be sleeping in that bedroom much longer. After tonight, their time in Moweaqua was limited. The family almost certainly would have to move when Mark took a new job.
The conversation continued for hours. Shepard jotted notes as Whitacre spoke, but far fewer than during the previous day’s interview. He had been taken off guard by this sudden confession. In time, Whitacre veered into new topics, describing crimes at ADM beyond just price-fixing.
“We’ve been stealing microorganisms from other companies,’’ he said. “Jim Randall, the president of the company, told me everything about it.’’
One theft, he told Shepard, involved a man named Michael Frein from International Minerals Corporation in Indiana. The story he had heard from Randall, Whitacre said, was that Frein had been paid to steal a bug from IMC and bring it with him to ADM. That, he added, was part of the reason he was so concerned during his first interview with Shepard. He feared Cheviron was there to make sure he didn’t talk.
Other efforts were more involved. Months back, he said, Randall had told him to write up a list of people at Ajinomoto’s plant in Eddyville, Iowa.
“When I gave the list to Randall, he told me Cheviron had arranged for some women to get friendly with these guys. He wanted technical questions the women could ask the guys on the list.’’
Shepard looked up from his notes. Women? Was ADM hiring prostitutes to conduct corporate espionage?
“What did they call these women?”
Whitacre looked at Shepard, puzzled. “They called them ‘the women.’ ”
These conspiracies were the reason ADM was keeping a tight leash on the investigation, Whitacre said. For some reason, they seemed to feel confident that Shepard would never figure any of it out as long as things died down. To accomplish that, Whitacre said that he had been instructed to wave off Fujiwara.
“I called Fujiwara today,’’ he said. “I told him not to call for a while because things were too hot.’’
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 53
T H E I N F O R M A N T
53
Periodically, Shepard turned on his car, letting the heater warm them. At one point, he called his wife to explain that he had been delayed. Then, he returned to Whitacre, who slowly seemed to be transforming from a reluctant witness to an eager cooperator.
“Can you give me a tape recorder?’’ he asked. “I can prove this if you give me a tape recorder.’’
No, Shepard said. He needed approvals before sending someone out to tape. Whitacre persisted, saying he was also willing to take a polygraph test. Finally, after two in the morning, Whitacre finished.
“I want to thank you for being honest with me,’’ Shepard said.
“You’ve done the right thing. I’m going to need to go back and talk to my supervisors. But we’ll be back in touch.’’
Whitacre expressed fears that Shepard would drop by ADM, asking questions about what he had said. No, Shepard said, their conversation was confidential.
“But when you go to work tomorrow, if they ask, tell them I did come here tonight,’’ Shepard said. “Tell them I put the machine on and left.’’ He should just act as if everything else was the same. Whitacre nodded, thanking Shepard before leaving the car. Shepard watched him head inside, then turned the key in his ignition. The agent pulled around the circular driveway. He turned left, heading home to Decatur, the town whose first citizen, Dwayne Andreas, was now the subject of a criminal investigation. Dean Paisley woke first, before his wife. The bedroom telephone on a nearby dresser was ringing. He threw back the covers. Naked, he padded across the bedroom to the dresser and picked up the phone.
“Dean? This is Brian.’’
Paisley quickly shook off sleep. “Yeah, Brian, what’s going on?’’
“I just got back from talking to Whitacre.’’
Shepard paused.
“There’s something much bigger going on here.’’
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 54
CHAPTER 3
The intercom buzzer on the desk of John Hoyt, the Assistant Special Agent in Charge for the Springfield FBI, sounded promptly at 9:30 the next morning, a Friday. It was Don Stukey, with word that Shepard had arrived to brief his bosses on the Whitacre interview. Hoyt scrambled out to the hall. He wanted to collect a few other supervisors to hear what Shepard had to say. The Springfield supervisors were energized that morning. Already they had learned bits and pieces from Dean Paisley, enough to know that Shepard may have stumbled onto something big. It was just what the office needed. Historically, the headline-grabbing cases turned up in Chicago, leaving Springfield with something of an inferiority complex. Over the years, some in the Bureau had even suggested just shutting down Springfield. The case Paisley had described—if true—was sure to silence the critics and give the Springfield agents a muchneeded boost in morale. Hoyt gathered up Kevin Corr, the office’s principal legal advisor, and Bob Anderson, the squad leader in charge of most white-collar cases. In less than a minute, the three men appeared in the doorway of Stukey’s large, wood-paneled office. Shepard was already there, sitting beside Paisley on one end of a dark brown leather couch. Stukey was in a matching chair, talking with the two men.
Stukey looked up as Hoyt and the others walked in. “Why don’t you guys find a spot?’’ he said.
Hoyt glanced at Shepard as he took a seat. The man looked terrible. His usual rumpled appearance had a harried edge to it that morning. Hoyt couldn’t help thinking that the agent looked somewhat like a deer caught in the headlights of an oncoming car.
Paisley opened the meeting.
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 55
T H E I N F O R M A N T
55
“As most of you know, Brian met last night with Mark Whitacre from ADM,’’ he said. “Things didn’t go quite as expected.’’
Paisley looked over to Shepard. “Brian, why don’t you tell everybody what’s going on.’’
Shepard looked at his notes. “Well, as you know, yesterday I was attempting to go to Mark Whitacre’s house to place a recording device on his phone line.’’
For several minutes, the words came tumbling out. Shepard’s lack of sleep worked against him. He had never been given high marks as a briefer, but his effort this morning was particularly rambling. He had trouble focusing on Whitacre’s words, instead drifting repeatedly into the atmospherics of the interview. It was proving immensely frustrating to his supervisors.
“The meeting went on just very, very late,’’ Shepard said. “We were out in the car for three or four hours, and it was really dark. It was hard to take notes. And I knew I
had a meeting this morning . . .’’
Stukey broke in. “Brian, just start at the beginning again and tell us specifically what happened. What did the man say?’’
Under gentle questioning, Shepard recounted the story. He described Whitacre’s uneasiness, his concern about being found out. This was a man, Shepard said, who was scared to death. Shepard listed everything that Whitacre had described, from the price-fixing to the theft of microbes to the effort to mislead the FBI.
The supervisors reeled. They were uncertain what charges all this involved. Probably obstruction of justice for conspiring to lie to the FBI. Maybe interstate transportation of stolen property for the theft of microbes. Regardless, there was little doubt Whitacre was describing something illegal.
One potential problem, Shepard said, was Mark Cheviron. The security chief was pushing to be briefed on developments in the Fujiwara investigation. He had even scheduled an appointment for that afternoon with the Springfield supervisors. Everyone understood they would have to be circumspect, to avoid tipping off the investigation’s new direction. As the supervisors discussed the Cheviron meeting, Shepard glanced out the window, catching a glimpse of the state capitol dome a few blocks away. He was having trouble hiding his anxiety about this case. Whitacre’s statements had bothered him deeply. He knew the case had to be investigated but wasn’t eager for the job. He had lived in Decatur almost ten years; he was part of the community. He went to Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 56 56
K U R T E I C H E N W A L D
church with ADM employees; his kids played with their kids. How could he take on the company and still be part of the company town? What would happen to his family?
Hoyt could see the wheels turning in the agent’s mind. He decided to corner Shepard later and find out what was bothering him. After more than an hour, Shepard finished his briefing. No one spoke for an instant.
The silence was broken by Stukey. “I’ll tell you,’’ he said, “this doesn’t surprise me.’’
Stukey related his experiences as a young agent, when he played a small role in the Watergate investigation. He had never forgotten that it was Dwayne Andreas’s money that had been laundered into the account of a Watergate burglar. While Andreas had known nothing about it, the event had left Stukey suspicious. These were people who worked at the edge of the law, he said. Now, his team had to figure out if they had not just bent, but broken the rules.
Stukey divvied up the assignments.
“Brian, get some rest if you can, but prepare a 302 of your interview,’’ he said. Anderson was given the job of writing a teletype to inform FBI headquarters about what was happening. Shepard and Corr, the legal advisor, were told to examine the price-fixing laws and figure out what role the FBI played in such investigations.
“Once you finish all of that,’’ Stukey said, “let’s take a look at what we get, and we’ll make a decision on exactly how to proceed.’’
The meeting ended, and the agents all scattered. They had a lot of work to do. And the first thing was to learn about price-fixing. For 102 years before that day, American law prohibited price-fixing—
at least on paper.
The law was a logical outcome of the industrial revolution, as capitalism blossomed while also plumbing its worst extremes. The birth of cross-country railroads—and with them, the flourishing of industries from banking to energy—had exacted change at a stomach-churning pace. Never before had possibilities seemed so limitless—for travel, for economic growth, for national supremacy.
But those opportunities came at a terrible price. Vast corporate empires, known as trusts, had been constructed by industrial robber barons such as J. P. Morgan and John D. Rockefeller Sr. Prices were set in backrooms by secret agreements, not by battles in the Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 57
T H E I N F O R M A N T
57
marketplace. The country was quietly being robbed of capitalism’s promise. For the first time, it became evident that a free market left to its own devices would not be free at all, but enslaved to the whims of the powerful.
Shopkeepers and small distributors railed against the trusts. Amid the outcry, Congress stepped in with the Sherman Antitrust Act in 1890, prohibiting conspiracies “in restraint of trade or commerce,’’
with violators subject to fines and imprisonment. The public interest appeared to have defeated the trusts.
But the sense of victory was short-lived; the law quickly became derided for its insignificance. Its language was vague, its enforcement spotty. It was riddled with so many loopholes that it was commonly mocked as “the Swiss Cheese Act.’’ For all the good it did, the law may as well have not been adopted at all.
Then came the turn of the century and with it the onset of the most active period of the Progressive Era. Americans came to realize that the conditions bringing great wealth to the few were also bringing misery to the many. Child labor, grim working conditions, tainted foods—these were the ancillary products of unfettered capitalism and misplaced faith in the benevolence of corporate despots. In the White House, Teddy Roosevelt capitalized on the public sentiment. In February 1902, Roosevelt revived the moribund Sherman Act by filing suit against the Northern Securities Company, a railroad that was part of the J. P. Morgan empire. Four years later, the government filed suit under the Sherman Act to dissolve Rockefeller’s Standard Oil. By 1911, with the Supreme Court’s affirmation that the once powerful oil trust should be broken up, the dominance of the law was unquestioned.
In the years that followed, price-fixing emerged as one of the principal accusations leveled in cases brought under the Sherman Act. The concept was simple enough. Say there are two companies that manufacture washing machines. If the quality of the machines is the same, the companies can compete for customers mostly over price. If one company wants more business, it will drop its price; if the other wants to keep customers, it will match the price. In theory, that competition serves to keep prices low, to the benefit of consumers and the most efficient corporations.
All of that changes with price-fixing. Under such schemes, companies secretly agree on the price for each washing machine. To insure neither loses business, they might divide up markets, planning which Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 58 58
K U R T E I C H E N W A L D
company gets to offer the agreed price to which customer. In the end, the scheme strips consumers of their power. No matter what customers purchase or prefer, prices remain the same, dictated by companies set on evading the rigors of the capitalist system that gave them birth. With price-fixing so corrosive to markets, the Supreme Court ruled in the early twentieth century that all such schemes—regardless of motivation—are illegal. As a result, since the adoption of the Sherman Act, most criminal antitrust prosecutions have been for price-fixing or related charges.
But there is a big difference between charging a violation of the law and proving it. Because of the secret nature of price-fixing, cases pursued by the government often relied on complex economic analyses to confirm the existence of the scheme. Frequently, FBI agents were called in to interview witnesses and review documents. But in the end, proving a price-fixing scheme was often like confirming the existence of black holes in space. Neither could be seen directly; their presence had to be deduced by examining the surrounding environment. Rarely in the history of the Sherman Act had a price-fixing conspirator voluntarily stepped forward, offering to record other participants as the crime was planned. By the time Shepard and Corr finished their review of the antitrust laws on that day in 1992, they knew that this nascent case had the potential to be historic. Mark Whitacre was a rare find. His continued cooperation would have to be cultivated carefully.
Whitacre tried to look natural that morning as he strode into ADM’s hangar at the Decatur Airport. Jim Randall was waiting for him, looking irked. The two were supposed to fly to North Carolina by corporate plane so that they could check
on a new plant. Randall liked an early start and was annoyed that Whitacre hadn’t been there, ready to go. On top of it all, Randall had received a message that Whitacre should call the office before takeoff. There was no telling how delayed this flight was going to be.
“Hey, Mark,’’ Randall growled. “Call Cheviron. He wants to talk to you right away.’’
Whitacre felt his heart drop. Had Cheviron already found out about what he had said to Shepard?
“What does he want?’’
“I don’t know. Just go call him.’’
Whitacre nodded. The walk to the telephone seemed to last an Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 59
T H E I N F O R M A N T
59
eternity. He dialed ADM’s main number and asked for Cheviron, but he couldn’t get through. He called again as Randall stewed. Finally, he was connected to Cheviron’s home.
“What happened last night?’’ Cheviron asked. Whitacre felt relieved. Maybe the security chief didn’t know anything.
“Brian Shepard came over and put a recorder on my line.’’
“Okay. They put a recorder on your line?’’
“Yeah. I was instructed that when Fujiwara calls, I’m to record the conversation.’’
Cheviron paused. He didn’t believe that the FBI would just leave the decision about what to record to Whitacre. He figured there was a good chance the line was tapped so that Shepard could check it out.
“Make sure if Fujiwara calls that you record it,’’ Cheviron said, “because they may be checking to see if you’re going to or not.’’
Cheviron’s message was clear. He didn’t trust Whitacre. He thought the man was up to something.
At almost that very moment in Lund, Sweden, Harald Skogman of ABP International was leafing through a contract from ADM. Under its terms, ABP, a Swedish agricultural firm, would supply the microbe needed by Whitacre’s division to start a new venture—manufacturing threonine, a feed additive. In exchange, ADM would pay $3 million. Skogman flipped the contract closed and placed it on his desk. His company’s president, Lennart Thorstensson, had signed the document two days before. Skogman himself had sent two copies out yesterday by overnight courier to Rick Reising, ADM’s general counsel. Last night, he had personally faxed a note to Whitacre, letting him know that the contract would be on Reising’s desk today, waiting to be signed. Still, he had heard nothing in response.
The Informant Page 8
