165
that after all of his early deceptions, Whitacre was finally playing it straight.
Fake steer skulls and plastic cactuses lay scattered beside the multicolored wall at Carlos O’Kelly’s, a popular Mexican café in Decatur. Nearby, Whitacre was enjoying dinner with another executive. Whitacre liked the food; he and his dinner companion, David Page, had also eaten lunch there that same day.
As Mexican music played on a sound system, the two men talked. Page was an operating manager with Vanetta USA, a vitamin K supplier for ADM. The two had met years before, in the early 1980s, when Whitacre worked for Ralston Purina and Page for Heterochemical Corporation. As Whitacre’s career blossomed, Page had kept contact. Now, Whitacre had approached Page with a job offer at the ADM
Bioproducts Division.
Over their meal, Whitacre laid out the terms of Page’s employment: He would be paid $120,000 his first year, along with a signing bonus of $30,000. From then on, he would be considered for raises. Whitacre emphasized that as division president, he had the full authority to make hiring decisions. Page listened carefully. The pay sounded good, and the bonus was particularly nice. But he still did not understand the job that Whitacre had in mind.
“What would my responsibilities be?’’ he asked.
A fleeting smile passed over Whitacre’s face.
“Nothing,’’ he said casually.
Days later, Whitacre was at his desk, filling out his expense reports for the week. He fished out the receipts from his two meals with David Page and wrote them up. At the bottom of the report, he scribbled Page’s name into the blank space under the heading Persons Entertained, mentioning that he had been interviewing Page about a job. The next column was headed Company Represented. There, Whitacre was supposed to write the name of Page’s current employer, Vanetta USA. Instead, he wrote Heterochemical—where his friend had been employed six years before.
But Vanetta was an ADM supplier; Heterochemical was not. Interviewing a supplier’s top employee might have raised questions inside ADM. And the last thing Whitacre wanted was for anyone to ask about what he was doing with David Page.
•
•
•
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 166 166
K U R T E I C H E N W A L D
The FBI brainstorming session thrashed through a single question: What would persuade the foreign lysine producers to come to America? Without a meeting on American soil, there was a good chance that critical price-fixing decisions would never be recorded. But because of the tough American laws on price-fixing, the United States was the last place that any of them wanted to meet.
Weatherall sat up straight. “I’ve got an idea.’’
Most of these executives shared an interest in golf. Asian countries, and Japan in particular, were known for their paucity of good golf courses. But weren’t some of the world’s best courses in Hawaii? The agents tossed around the idea. They would have to start now, using Whitacre to convince the other executives to fly to Hawaii. They could only hope that lush golf courses were enough of an enticement to persuade the foreign lysine executives to risk jail. North of Decatur, at the intersection of Interstate 72 and Route 51, lies the village of Forsyth. Founded in 1854 as the spikes were being driven for the Illinois Central Railroad, Forsyth had long been little more than an appendage to Decatur. But beginning in the late 1970s, a boom in economy hotels there followed the construction of the Hickory Point Mall. Forsyth soon emerged as a frequent stop for budget-minded travelers. By the summer of 1993, the Forsyth hotels had also become popular spots for the FBI’s meetings with Whitacre. Storm clouds were gathering on the evening of July 13 as Herndon drove his Bureau car to Forsyth. After more than a month on the case, tonight he would meet Whitacre for the first time.
Herndon put on his blinker when he saw the brown-and-white sign for the mall. He drove into the entrance and made a quick left. Ahead was the Hampton Inn, his destination. After parking, Herndon threw a floor mat over his red bubble light and stuffed his radio microphone under a seat. He didn’t want passersby to wonder why law enforcement was at the hotel. Upstairs, his partners were waiting. The three agents spent a few minutes testing the telephone-recording equipment they wanted to use that night. Shepard and Herndon took off their guns, putting them in their briefcases. There was no reason to make Whitacre uncomfortable. Their witness arrived about forty-five minutes later. By then, a torrential downpour had begun.
“Hey, how you doin’?’’ Whitacre said as he walked inside the room, shaking off the rain. He glanced around. Weatherall was sitting on a Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 167
T H E I N F O R M A N T
167
couch. On the bed, Whitacre saw a young, athletic-looking man he did not know.
“Mark, this is Special Agent Bob Herndon,’’ Shepard said. “Like I told you, he’s transferred from another office and been assigned to this case.’’
Whitacre broke into a smile.
“Hey, very nice to meet you,’’ Whitacre said. “Great to have you here.’’
The men shook hands. Herndon was impressed. Whitacre commanded a room, just lit it up. He was clearly a salesman, eager for everyone to like him. As he studied his witness, Herndon noticed that Whitacre’s blond hair appeared to be almost two different shades; for a second, he wondered whether it was a toupee. Then he eyed Whitacre’s clothing; his expensive suit and garish tie seemed chosen to attract attention. That struck him as a good icebreaker.
“Hey, that’s a really nice tie,’’ Herndon said.
“Thank you very much,’’ Whitacre replied. “I got this one at Bachrach. That’s a store I like a lot.’’
Herndon nodded.
“You know, you’ve got a nice tie there yourself,’’ Whitacre said. Herndon looked down. “Hey, thanks.’’
Coyly, Whitacre glanced at Shepard, dressed in his usual off-therack sports jacket and drab tie. He looked back at Herndon and the two men smiled. They shared the same thought. We gotta work on that guy.
Shepard picked up his notebook. “So, Mark, do you have any tapes?’’
Whitacre reached into his pocket, removing two microcassetes. For the next few minutes, he recited the information about the tapes; both were of telephone calls with Ajinomoto. Once Shepard finished the paperwork, Whitacre sat at the table in the room. Weatherall took the seat across from him.
“All right, Mark,’’ Weatherall said slowly, “what’s been going on?”
For the most part, Whitacre said, he had been on vacation, traveling in Mexico. But he had spoken with Ikeda that morning; it was one of the conversations he had taped. The Japanese executive wanted to resolve the volume dispute through a meeting of top decision-makers from each company—in this case, Mick Andreas and Kazutoshi Yamada. While the two men had met in April during a visit in Decatur, they had not participated in any large gathering of the lysine produc-Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 168 168
K U R T E I C H E N W A L D
ers. Weatherall told Whitacre that it was important to let the agents know as soon as a meeting was arranged.
Whitacre nodded.
“Mark, there’s something else we need to talk to you about,’’
Weatherall said. “We told you that we need to see if one of these meetings can be held in the United States, and we’ve come up with an idea.’’
Whitacre listened carefully as Weatherall described the golf proposal, and broke into a big smile. The idea might work.
“Put it on my calling card?’’ Whitacre asked as he picked up the telephone.
“Yeah,’’ Shepard said.
It was twenty minutes later. Sitting on the bed, Whitacre dialed the number for Kanji Mimoto at Ajinomoto. He had rehearsed the conversation several times and was ready to suggest the Hawaii proposal. The recording device was hooked up to the phone.
“It’s ringing,’’ Whitacre told the agents.
<
br /> A woman answered.
“Yes, may I speak to Mr. Mimoto, please?”
“I’m sorry, he’s in a meeting now, and he’ll be free at noon.’’
“He told me if he’s in a meeting to call him out of the meeting, that it was very important.’’
The woman asked for his name. Whitacre waited on hold until the phone clicked.
“Hello?’’
“Is this Mr. Tani in New York or Mr. Mimoto?’’ Whitacre was still using Mimoto’s code name.
Mimoto chuckled. “Mr. Tani, yes, speaking.’’
“Well, how are you?’’ Whitacre asked.
“Is it Mark speaking?’’
“This is Mark Tani speaking.’’
“Yeah,’’ Mimoto laughed. “Mark Tani.’’
The two men discussed the possible effects of a planned price increase. ADM, Whitacre said, was concerned about drying up demand.
“Remember in Vancouver,’’ Whitacre continued, “Terry Wilson made this very clear, that we’ll wanna try to keep the levels of lysine usage as high as we can.’’
“Yeah, that’s right.’’
“Not to get the prices too high where we shrink the market.’’
“Yeah,’’ Mimoto said, “if we shrink the market, of course, we have to avoid such a price increase.’’
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 169
T H E I N F O R M A N T
169
Whitacre glanced over at the agents. The time had come to lay the trap.
“Since you guys hosted the Vancouver meeting, I think ADM
should host the next meeting, don’t you?’’
“Yeah,’’ Mimoto said. “That’s fine.’’
“And maybe we host it in, uh, Maui.’’
“Maui?’’
“You know, have the group meeting like we had last time in Vancouver. Have it in Maui, Hawaii.’’
“Maui, Hawaii, is, uh, still in the United States,’’ Mimoto said warily. Whitacre had been told to push Mimoto if he objected, to force him to explain why he didn’t want to meet on American territory. He glanced at Shepard.
“Yeah, but what’s that mean? ‘Still in the United States’?”
“Well,’’ Mimoto said, “ ‘still in the United States’ means, uh, United States is, ah, very severe for the control of antitrust activity, no?’’
Whitacre’s eyes lit up. That statement was going to be almost impossible to explain away. He brushed aside Mimoto’s concerns.
“Hawaii, next to an eighteen-hole golf course?’’
Mimoto laughed. “If your company judges no problem, maybe I will consult with our legal department.’’
Whitacre reminded him that the previous year, when the pricefixing scheme was in its nascent stages, there had been a meeting in Maui.
Well, Mimoto said, maybe the meeting could be held in Hawaii to establish the lysine association. Apparently, Ajinomoto was prepared to accept the idea of using association meetings as a cover.
“Yeah, that’s right,’’ Whitacre said, picking up the theme. “It’d be a formal association meeting.’’
“Hmm.’’
“And also would be a good distance for you and us both together.’’
“Yeah, yeah, that’s right,’’ Mimoto said. “And be on the golf course.’’
“Yeah.’’
“No big problem,’’ Mimoto said.
That was it. Mimoto had taken the bait.
Whitacre hung up the phone a few minutes later.
“You guys gotta hear this tape!’’ he said, his words rushing out. “He let it all out! He knows this is wrong. He talked about American antitrust laws.’’
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 170 170
K U R T E I C H E N W A L D
The agents, already excited from Whitacre’s half of the discussion, removed the tape and punched out the tabs to prevent it from being accidentally erased. Then, after rewinding it, they listened to the conversation. Whitacre paced as the tape played.
“Here it comes, here it comes,’’ he said.
Mimoto’s voice could be heard clearly.
United States is, ah, very severe for the control of antitrust activity, no? Whitacre jumped. “Hey, there it is! Did you hear it, did you hear it?’’
The agents nodded, keeping their cool demeanor. But they knew the statement was big; it clearly established Mimoto’s intent to violate American law.
They finished with the tape, and Whitacre received a round of congratulations. Afterward, everyone checked their schedules and arranged their next meeting. Then they were done.
“Okay, guys, thanks,’’ Whitacre said, shouldering into his raincoat.
“See you next time.’’
At a small restaurant in the historic castle district of Budapest, down the street from Hungary’s Gothic coronation church, a group of lysine executives had just finished an expensive lunch. Wrapping up their discussions on global lysine prices and volumes, the group of Japanese, Korean, and European executives bid one another good-bye and headed off in different directions.
Walking with the group from Kyowa Hakko of Japan, Masaru Yamamoto was speaking with a more junior colleague. The battles that had been waged between the Japanese lysine producers and ADM appeared to be on the wane, Yamamoto said. Prices were rising all over; the cooperative relationship seemed to be working.
“It is all right to talk to ADM now,’’ Yamamoto told his colleague.
“ADM is no longer the enemy.’’
The first fireflies were coming out in Lincoln, Nebraska, as John Hoyt eased himself into a big porch chair beside his brother-in-law, J. R. Hovelsrud. The Springfield ASAC and his wife had taken some days off to visit family, and that night they had enjoyed a big dinner at Hovelsrud’s farm. Everybody was full and content. The outside air was warm and sweet.
Hoyt stared up at the sky, watching as the stars appeared. He enjoyed visiting his brother-in-law and respected him. Hovelsrud had been a farmer most of his life, struggling almost every day to get the crops in. He had been dependent on banks, dependent on weather, Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 171
T H E I N F O R M A N T
171
dependent on feed companies. Then recently, Hovelsrud and a friend had decided to take more control of their futures by opening their own feed business. This was Hoyt’s first chance to ask about the venture.
“So,’’ he said, “how’s the feed business going?’’
“Okay,’’ Hovelsrud said, disappointment in his voice. “But, boy, it’s frustrating. How am I supposed to make ends meet when prices keep going up?’’
“Prices of what?’’
“Oh, it’s this stuff we use called lysine.’’
Hoyt stared ahead. The criminal investigation was still secret. He played dumb.
“What’s lysine?’’ he asked.
“It’s an artificial amino acid that’s used in hog feed and stuff like that,’’ Hovelsrud said. “And, gee whiz, the price has just been going crazy.’’
Hoyt listened as his brother-in-law ticked off how lysine costs had been climbing. He already knew some of the numbers. In June, when the price-fixing scheme was still struggling, lysine had been available for as little as sixty cents a pound. But since Vancouver, when lysine producers sealed their deal, prices had soared to as much as $1.20 a pound by the end of July—a 100 percent increase in a few weeks. As Hovelsrud described his financial difficulties, Hoyt’s anger welled up. He knew that no company in the world was competing for his brother-in-law’s business. No one was going to offer a lower price in hopes of winning a new customer. Everything had been rigged; no matter how hard Hovelsrud worked, the success or failure of his new business was being decided by a bunch of suits in fancy hotel rooms. Just a few weeks before, Hoyt had been watching This Week with David Brinkley on a Sunday morning and saw one of ADM’s ads proclaiming itself as the “Supermarket to the World.’’ The
attempt to project a squeaky-clean image had struck him as outrageous. Now, as he listened to Hovelsrud’s troubles, the reason that the ad had bothered him seemed particularly clear.
Hoyt had heard stories about ADM executives racing up and down the roads of rural Illinois in their Ferraris and other expensive sports cars. He knew the company’s customers, including untold numbers of struggling, middle-income farmers such as his brother-in-law, were being priced out of business. He knew that average Americans were being ripped off, too, paying pennies and dimes more for the weekly groceries just to satisfy the greed of ADM and its competitors. For a while, Hoyt and his fellow agents had understood the Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 172 172
K U R T E I C H E N W A L D
theoretical concept behind antitrust laws, the reason why price-fixing was illegal. But now Hoyt understood that the victims were real. They had a human face. They looked like J.R.
This case was not about some economic theory, he thought. It was about thievery. These executives were stealing. They were little different than some armed thugs who robbed a liquor store, except that they were already far richer than most of their victims.
Hoyt couldn’t tell his brother-in-law that his problems were about to grow worse. The lysine companies were getting ready to reach volume agreements that could push up prices even more. Inwardly, Hoyt vowed to do what he could to solve the problem harming his brotherin-law and so many other farmers and agricultural workers. And as he thought about the true cost of ADM’s crimes, he knew exactly what should happen to the company and its executives.
This bunch of crooks, he thought , all deserve to go to prison. Every major FBI investigation is given a code name, allowing agents to discuss it without tipping off anyone on the outside. But, after more than eight months, the ADM investigation had yet to be named. Shepard had offered a couple of suggestions, but headquarters had rejected both. One had already been used, and the second—a wordplay on ADM’s slogan “Supermarket to the World’’—was too easily identifiable. One summer afternoon, Paisley called in Herndon. They needed to come up with a code name, he said. “I mean, Bobby, this is getting ridiculous. Spend some time and come up with as many names as you can and give them to me tomorrow.’’
The Informant Page 22
