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“He was pissed,’’ Whitacre said.
“Kind of hard to keep him from being pissed,’’ Randall replied. Randall raised a few issues regarding lysine, mentioning a technical development used by “the Jews.’’ Eventually, he returned to the Mimoto call and Ajinomoto’s belief that ADM had broken its promise.
“What’d he threaten to do?’’ Randall asked.
“He said there’d never be peace, and the price would stay where it is,’’ Whitacre said.
Randall asked a few more questions, then headed out. Whitacre looked at Wilson, and again mentioned Mimoto’s concern about the agreement.
“He said he’d like to talk to you about it at some point, and I said, well . . .’’
“Be right there lookin’ right at ’em,’’ Wilson muttered. “Say, ‘Listen here you little mousy motherfucker.’ ”
Wilson laughed. Neither of them was much concerned about Mimoto’s complaint. They figured it was all just negotiating strategy. There was no promise.
“They’re tricky, you know,’’ Whitacre said.
“Bet you they are,’’ Wilson responded.
“And you know Ikeda’s right there, telling him what to say.’’
“Yeah,’’ Wilson said. “Plus, in 1992, we did exactly what we said we’d do, volume-wise. Exactly.’’
Whitacre fiddled with a pen, trying to contain his excitement. Wilson had just admitted that ADM had promised Ajinomoto to hold to a set volume in 1992.
The executives brought up an out-of-town sales meeting for the lysine division, questioning whether Wilson should attend.
“It’d be unusual for you to do that, wouldn’t it?’’ Whitacre asked.
“Yeah,’’ Wilson said. “It’s not like I’d get laid or something. That’d be a reason to go.’’
Whitacre set down his pen as the conversation came to an end. Wilson headed out the door; Whitacre said nothing as he watched.
“Just had Jim Randall and Terry Wilson in my office,’’ he announced to the tape recorder. For a few minutes, Whitacre summarized the conversation.
“By the way,’’ he added, “there was no discussion with Mimoto last night. That was for illustration purposes only. That was all that was for. Illustration purposes only. So I wanna make that very clear. There’s no discussion with Mimoto last night.’’
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Whitacre was starting to repeat himself; his excitement was getting to him. But Whitacre was always hyperactive when he threw himself into a new job. Whitacre was at his desk the next morning at 11:00. After turning on the tape recorder in his pocket, he opened a black leather case embossed with a gold ADM logo. A pad of paper was inserted on the right side; a calculator and a world map were affixed to the left. Whitacre pulled a pen out of a holder in the case, at the same time pushing down a tiny white switch. He couldn’t see it, but knew the microcassette that the FBI had hidden behind the map was turning. The previous day had imbued him with an awesome sense of power. He had walked around ADM taping, and no one had suspected. Now, he had an unvarnished portrait of ADM’s corporate ethic for the FBI.
Whitacre headed to Wilson’s office. Mick Andreas was there discussing a recent business deal. For several minutes, the men hashed it through.
“Now, on the lysine thing, totally different subject,’’ Andreas said, looking at Whitacre. “When do the Japanese see you?’’
“The small company wants to see me the fifteenth in Chicago,’’
Whitacre said, referring to Kyowa Hakko.
“That’s a month from now?’’ Andreas asked.
“Yeah. In Chicago.’’
“We got a month to think about it.’’
“Yeah.’’
“In the meantime,’’ Andreas said, “they’re callin’ and dropping hints.’’
“Definitely.’’ The Japanese, Whitacre complained, were pushing on this supposed promise by ADM to cut back. But no such promise had been made, he said.
“I think that’s a good line for you,’’ Andreas said. “When they come to me, I’m just gonna say, ‘Look, first of all, we don’t make deals.’ ”
That, Andreas continued, should be followed up by blaming the Japanese for poor prices in the market. “You should just say to him,
‘Look, these prices are so shitty, and you guys are so disorganized that I don’t know what kind of shit you’re managing.’ ’
Whitacre nodded. “And it’s gotten shittier.’’
Andreas’s words were perfect for the case. ADM’s vice-chairman was telling him to chastise a competitor for bad prices. Whitacre felt excited again. The FBI was sure to believe him now.
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From behind his desk, Wilson spoke. “The market’s bigger than we originally said it was. We just took it. So we’re not in violation of nothin’.’’
“Yeah,’’ Whitacre said.
“Fuck ’em,’’ Wilson said.
The men changed subjects, discussing a request from Howard Buffett, the assistant to the ADM chairman and son of Warren Buffett, the famed Omaha investor. Howard often heard from politicians and their money men when they wanted campaign contributions from ADM.
“Howie called us,’’ Whitacre said, “and asked us for funds for somebody, Tommy Thompson or whatever.’’
Thompson, the governor of Wisconsin, was a rising star in the Republican Party. He was in the midst of a fund-raising drive, ostensibly for his 1994 re-election campaign. But party officials were touting him for national office—maybe even a White House run. A war chest to scare off potential in-state challengers was widely seen as a necessary first step in that effort. But Whitacre said there was a problem.
“Terry and I went up there and told ’em we’re already at our limit and we couldn’t give,’’ he said. “We’re at our limit.’’
Andreas shrugged. “You can go over the limit. Just a small fine.’’
“Yeah,’’ Wilson said, “that’s what we were saying.’’
Whitacre laughed. Andreas was blithely advising that they intentionally violate campaign-finance laws—and Wilson was agreeing. Already, Whitacre was imagining what the world would think about the Andreas family’s political giving if this tape became public.
“If they want a thousand dollars,’’ Wilson said, “you give a thousand dollars.’’
Whitacre laughed again.
“So it costs us nine thousand,’’ Wilson continued, adding an estimated fine for violating election laws.
“Twelve thousand after tax,’’ Whitacre laughed.
Andreas nodded. “That’s true,’’ he said. “You know, if the guy’s up there asking you for money, just don’t give it to him and see what happens.’’
Wilson joined Whitacre in the laughter.
Andreas looked at the two men. “If you wrote a check, you make sure Dad is behind it,’’ he said. “Is Dad asking for ’em?’’
“Oh, yeah,’’ Wilson said, as Whitacre agreed.
“Okay,’’ Andreas said.
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The meeting broke up and Whitacre wandered back to his office. Sitting down, he glanced at his watch.
“Eleven-fifteen a.m.,’’ he said to the tape. “Bingo!’’
Days later, Shepard set down the headphones for the TASCAM device. For hours, he had been listening to the two tapes Whitacre had finally recorded inside ADM. The sound quality was poor, and Whitacre talked too much. Shepard needed to speak to him about that. Still, everything was falling into place. Whitacre’s statements now tended to be corroborated by tapes—devastating tapes. A nonchalant attitude inside ADM about lawb
reaking—whether on price-fixing or campaign finance—was unmistakable. Whatever else could be said for this evidence, it would certainly have impact on a jury. The state of the lysine conspiracy seemed clear from the tapes. A price agreement of sorts had been reached the previous year at meetings in Mexico and Paris. But the conspirators did not trust each other. So when prices faltered, everyone sold more to keep up their revenues. Apparently, Ajinomoto had believed that ADM would unilaterally cut production. The tapes made it clear that was not going to work—
Ajinomoto wanted ADM restricted to forty-five thousand tons a year; ADM wanted every manufacturer to limit production, with its own allocation set at sixty-five thousand tons a year. A production limit was critical to the scheme. Price-fixing often won’t hold unless the manufacturers take control of the market’s natural forces—the laws of supply and demand. The higher a product’s price, the smaller the number of consumers who are willing to buy it. That’s why fewer people buy high-priced steak than low-priced hamburger, even if everyone prefers steak. By setting prices high, companies are limiting their market to the steak buyers—consumers whose purchases are not determined by price. But if the companies manufacture more product than the steak buyers want, problems begin. Warehouses and store shelves overflow with unpurchased items. Steak buyers can’t be forced to buy more, leaving the companies with one choice for unloading the backlog: attract hamburger buyers by cutting the price. In the end, price-fixing without a side agreement to limit production will last only as long as it takes to fill a warehouse with unsold items. Shepard knew that, for the scheme to work long-term, the conspirators were going to have to hammer out a production agreement. And, if everything went well, the FBI would be listening in. Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 137
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Gathering evidence of price-fixing in products other than lysine was going to be difficult. The separate schemes were organized like classic “hub-and-spoke’’ conspiracies. Wilson and probably Mick Andreas were at the center, coordinating the price-fixing of every ADM division involved. Whitacre was only immersed in lysine—other executives played his role for other products. Making it more complicated, different products meant different co-conspirators. So, if there was price-fixing in citric acid, ADM would be meeting with other corporate conspirators, not the Japanese and Korean lysine producers. For now, the only way to develop evidence of those other schemes was through the hub—Whitacre had to push his bosses to talk about other divisions.
Shepard phoned Cudmore. Now that they had a sense of the case’s scope, they agreed the time had come to beef up their resources. They needed to call the government’s top antitrust experts for help. In the southern section of Chicago’s Loop area stands an ensemble of buildings that make up the federal contribution to the city’s architectural rhythm. Encircling a plaza adorned with a fifty-three-foot red steel sculpture by Alexander Calder, the buildings are the epicenter for Chicago’s federal law-enforcement effort, housing everything from the district courts to the United States Attorney’s office. In the spring of 1993, one group of little-known prosecutors worked on the thirty-eighth floor of the John C. Kluczynski Federal Building, the tallest of the steel-and-glass high-rises ringing the plaza. Unlike most federal prosecutors in town, these lawyers were not with the U.S. Attorney’s office and rarely took part in highly publicized cases. They worked instead for the Midwest office of the Justice Department’s Antitrust Division, which enforced the Sherman Act and related laws. Partly because of their complexity, price-fixing and related crimes are often prosecuted by the division, which has the expertise to sift through thousands of documents when piecing together evidence of economic conspiracies.
In March, Cudmore’s request for assistance landed on the desk of Kent Brown, the chief of the Midwest office. In a phone call, Cudmore laid out the history of the ADM case while Brown took notes. Brown said he wanted to talk over the case with one of his lawyers, Robin Mann, and would have her get back to Cudmore.
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had handled a number of price-fixing cases, some involving tapes—
albeit on a far smaller scale than this new case. The daughter of a struggling salesman and a receptionist, Mann grew up in Chicago with little money and drifted into a legal career after years of working in a state welfare office. Her arrival at the Antitrust Division had been almost serendipitous; wary of the stifling atmosphere of law firms, Mann searched for a job after law school by flipping through a book of government agencies and calling the ones that seemed interesting. While she hardly arrived at the office with a fervor for antitrust enforcement, Mann soon became indispensable. She was a stickler for detail, who could drive colleagues to distraction with her concerns. But by fretting over the minutiae, Mann often uncovered weak points in cases that needed to be airtight.
Notes in hand, Brown found Mann. A cooperating witness was turning over evidence of possible price-fixing by ADM, he told her. Would she take the case?
Mann gave Brown a quizzical look.
“What,’’ she asked, “is ‘ADM’?”
Whitacre was back in a hotel room, meeting with the FBI. This time, though, the mood was upbeat.
“Mark, you’re doing a great job,’’ Shepard said. “These are just the kind of tapes we need.’’
Whitacre beamed. He was part of the team.
Still, there were problems, Shepard said. Whitacre shouldn’t narrate what was happening, just let the tape speak for itself. And there was no need to rush; he didn’t have to catch everyone on tape in just a few days. And never make things up, like the Mimoto call—that might cause trouble later.
“We don’t want you to go in and have a conversation unless you would do it normally,’’ Weatherall said. “Let the conversation come to you.’’
“Guys,’’ Whitacre said, “I’m an executive. They want me to handle this. If I don’t go to them, they might not come to me. They’ll figure everything’s under control.’’
The agents thought for a second. What kind of contact would a boss expect from an underling?
“All right, try this,’’ Weatherall said. “Contact them before the big meetings. It would make sense for you to go to them then.’’
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on the idea. “Ask them what they want you to do before a big meeting, then brief them on the results afterwards. That’s perfectly natural.’’
Whitacre nodded. “Okay.’’
There was one other issue, Shepard said. Someone in Springfield had offered a suggestion. Maybe there was another way to gather evidence. Whitacre listened carefully as Shepard described the plan that the FBI wanted to try.
Dusk had changed into night, and the executives from ADM’s headquarters had headed home. A cleaning staff was making its rounds, and a guard stood watch in the lobby. Sometime after seven-thirty, Whitacre came in the front door, accompanied by a man the guard didn’t recognize. The man was dressed in a suit and carried a large briefcase. Probably just another executive.
“Just bringing in one of our clients,’’ Whitacre said to the guard.
“Have some things to show him.’’
The guard nodded with disinterest, and Whitacre signed in. On the next line of the sheet, he wrote a name for his guest: Dwight Armstrong, an executive with Carl S. Akey Inc., an Ohio feed company. The two men walked through the lobby, heading to Whitacre’s office. Shutting the door, Whitacre pulled a curtain across the glass wall at the front and then closed the window drapes. He glanced at his guest.
“Just talk about business,’’ the guest said.
“You k
now, Dwight, our lysine business is really going great,’’
Whitacre began, sitting at his desk. “And I’ve got to tell you, we’re really delighted with Akey’s business. You’re one of our best customers.’’
As Whitacre spoke, his guest stood on a chair and pushed up a ceiling tile. His head disappeared into the ceiling. Whitacre watched as his guest shifted a foot onto his desk.
“And I’m really glad you could come out here, Dwight,’’ he said. “I think you’re going to be impressed with our plans and how they’re going to fit in with your business.’’
The guest replaced the tile and climbed down.
“Now, are you guys going to be growing your business in Ohio more in the swine industry or in poultry?’’ Whitacre asked.
“Oh, we’re growing in swine,’’ the guest said, turning to a wooden Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 140 140
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cabinet in the back of the office. He opened the doors, inspecting everything inside.
“How’s that experimental farm you’re working on?’’ Whitacre asked.
“It’s good. It’s going real well.’’
The guest opened his briefcase, removing an electronic device. Switching it on, he analyzed a radio frequency.
Ten minutes later, the men left Whitacre’s office and headed down the hall to a conference room.
“I’ve got a little slide show that I think will give you a lot of useful information,’’ Whitacre said. He dimmed the lights and turned on a projector. On the screen, yellow letters spelling out ADM Bioproducts Division appeared against a blue background. Whitacre looked out across the room. “This presentation will tell you about ADM’s Bioproducts Division, and how we are vertically integrated in the company.’’
As Whitacre spoke, the guest scrambled up to the ceiling again, lifting several panels and looking inside. Climbing down, he turned on the device he was using to analyze the radio signal. Whitacre droned on, clicking through the slides as he watched his guest maneuver all over the conference room. After about thirty minutes, the man put his equipment away.
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