T H E I N F O R M A N T
189
Problems emerged in the first few days. A hotel security official had decided to double-check with the hotel’s corporate parent, the Host Marriott Corporation. In no time, a Marriott lawyer was on the line, demanding that the entire operation be put on hold. The company wanted a briefing to be sure it would not be liable for the FBI’s actions. It seemed like a lousy time for a joust; the FBI complied. The troubles were ironed out with a few phone calls.
By the morning of October 25, a Monday, everything was ready. The Falcon 50 turbojet touched down that morning at John Wayne Airport just before eight-fifty, West Coast time. The sleek jet, one of the fastest in ADM’s fleet, had made good time; besides some fog over Irvine, the weather had been beautiful all the way from Decatur. As the pilot taxied toward an air hangar, Mick Andreas and Mark Whitacre gathered their belongings. Whitacre picked up his briefcase, feeling the extra weight of the Nagra recorder inside. He was wearing his blue suit with the recorder sewn inside the lining. In his pocket, he carried the microcassette device. None of the recorders was running yet; the agents had told him to save the tape for the lengthy meeting. This meeting was too important to miss because of some technical failure. Andreas and Whitacre arrived at the Marriott and headed to the fifteenth floor.
In a nearby room, Brian Shepard sat in front of a black-and-white monitor, holding the camera’s control device. Sony headphones covered his ears. Weatherall was never comfortable with high-tech equipment; he stood in another part of the room, watching. Another agent signaled that Whitacre was in the suite. Shepard hit the VCR switch. It was 9:00.
Whitacre was speaking. “I was talkin’, we just got some crazy guy back in Decatur wants to take this thing up to three hundred and fifty million pounds.’’
Shepard could see both men. An easel that Whitacre had ordered through the hotel soon arrived and was turned to face the camera—
just the way the agents had wanted it positioned.
ADM was paying $24.50 for the easel. Before long, it would probably cost them a lot more than that.
For twenty minutes, Andreas and Whitacre knocked around by themselves, talking about the lysine market. Andreas wanted to be sure Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 190 190
K U R T E I C H E N W A L D
he didn’t make any mistakes when he discussed the business with Yamada.
At 9:22, the door opened. Ikeda stepped in with Yamada, a tall, balding man with glasses.
“Well, there we are,’’ Andreas said.
“Hi,’’ Ikeda said.
“Good morning,’’ Yamada said.
The executives talked about their flights.
“So it’s the middle of the night for you still, isn’t it?’’ Andreas asked. Yamada laughed. “Oh, yes. It is.’’
“Well,’’ Andreas said, “sorry to wake you up.’’
Everyone took seats around the table.
Shepard watched as the four men sat down. Andreas and Whitacre were almost facing the camera, but Shepard could still see Yamada and Ikeda from the side. The shot was perfect.
For more than an hour, the conversation ebbed and flowed through a range of topics: MSG, potential deals, other companies—almost everything except lysine. During the talks, a hotel employee arrived with coffee, tea, juices, breads, and fruit. The executives marveled at the quantities. It was enough, Whitacre laughed, for forty people. At 10:39, Yamada glanced from Ikeda to Andreas.
“May I talk about the lysine association?’’ he asked.
“Um-hum,’’ Andreas said, nodding.
“There is an official association,’’ Whitacre said.
“Official association, yes,’’ Yamada said. “And I think that is good for the development of the market.’’
Whitacre wrote a note on his pad and coughed.
“We already spent more than one year, uh, to getting a better market situation,’’ Yamada said in broken English. The question now was whether they could have an understanding on volume, he added.
“Talked a little bit about it in Paris,’’ Whitacre said, crossing his legs. Andreas sat back. “My understanding of the meetings that have taken place,” he said, “is that the market is larger than most of our competitors think it is.’’
He looked over at Whitacre. “That’s my impression,’’ he said. As Andreas spoke, Shepard pushed the buttons on the control in his hand. The camera zoomed in.
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 191
T H E I N F O R M A N T
191
Shepard looked at the monitor—the camera was centered on a lamp. He pushed the buttons again, moving the image to the right. Once Andreas was in the shot, Shepard used the control to zoom in again. The shot came in too low; the top of Andreas’s head was almost off the monitor. Shepard struggled with the device for several more seconds. After a few adjustments, he had his close-up of Andreas.
“That’s my impression,’’ Shepard heard Andreas say. “Because the numbers that we keep hearing don’t reflect what we’re doing.’’
Shepard listened while Whitacre talked about ADM’s production numbers. The camera stayed focused on Andreas; only Whitacre’s hand was in the shot.
“I’m the vice-chairman of our board,’’ Andreas said. “We have a big board of directors. We have public shareholders.’’
Yamada grunted an acknowledgment.
“Like you, we’ve suffered,’’Andreas continued. “Prices were nowhere near what we hoped they would be, and growth was very difficult.’’
ADM already had the plant capacity to take more than half of the market’s growth if it wanted, Andreas said. But the company understood that it was in no one’s interest for ADM to be greedy.
“If we’re going to have any stability at all, to take seventy percent is probably too much. But for us to shrink is out of the question.’’
ADM’s position had just been thrown out on the table. The company was not going to demand all the growth—but it also would not cut back. The proposal pushed by Ajinomoto for months was not negotiable. Ikeda mentioned the possibility of arriving at a compromise figure. Andreas looked at Whitacre. “Did you get some paper up here?’’ he asked.
Ikeda and Whitacre pointed past Andreas’s head. The easel was behind him.
“Oh, we got it,’’ Andreas said, looking over his shoulder. Ikeda stepped up to the easel, while Andreas visited the buffet, picking up a plate of food and refilling his cup of coffee. Whitacre stood.
“Is there a rest room in here?’’ he asked, hoping Shepard heard the warning that he was about to leave.
Ikeda was looking for the pens to use with the easel. Whitacre picked them up off the table and handed them to the Japanese executive. Ikeda started writing down production numbers. Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 192 192
K U R T E I C H E N W A L D
Whitacre glanced toward the camera. “While you’re writing those, I’ll take a quick rest-room break here,’’ he announced. That should be enough. Whitacre walked out. In the other room, Shepard reached for the VCR and shut if off. He’d missed Whitacre’s first warning. The tape had continued rolling for four seconds after Whitacre left. Fortunately, no one had said a word.
Shepard waited. How long would Whitacre take in the bathroom? A minute and a half later, he turned the system back on. Whitacre was back, and Ikeda was still working. Andreas was in midstatement, discussing ADM’s television advertisements.
“Meet the Press, and the Brinkley show,’’ Andreas said. “Some of those.’’
An uncomfortable pause set in. Whitacre walked over to watch Ikeda at the easel.
Ikeda leaned in toward Andreas. “What is the basic idea of that
‘Supermarket to the World’?’’
Andreas glanced toward a picture on the wall.
“It was a phrase that someone else invented,’’ he said. “But the idea is that we provide the food for peo
ple who sell the food. And really, over our history, that’s what’s been happening.’’
Ikeda turned toward the group.
“Sorry to disturb you,’’ he said politely.
Ikeda had finished writing on the chart. The other executives turned to face him.
For several minutes, Ikeda discussed the production of the two previous years. Those numbers, he said, should be used to determine each company’s 1994 production. Andreas and Whitacre periodically stepped up to the board, arguing over numbers. If all the figures were true, Whitacre said, then the total lysine market had to be bigger than anyone thought.
“And if that’s true,’’ Andreas said, “then the problem is not as great.’’
If everyone accepted the numbers, all they needed to do was estimate the market’s growth for the coming year and divvy up that amount. Ikeda did some calculations and announced his answer. The market would grow by fourteen thousand tons.
“So we’ve got fourteen thousand tons of growth in one year,’’
Andreas said as he wrote down the numbers. “So the question is, who gets that growth?’’
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 193
T H E I N F O R M A N T
193
•
•
•
It was happening. Right in front of Shepard’s eyes. These men were sitting nearby—sitting in a Marriott— dividing up a multibillion-dollar market.
All while they casually drank their coffee.
Settling the first problem took only a few minutes. Kyowa Hakko, Miwon, and Cheil should each be allocated two thousand tons of growth, Andreas said. That left eight thousand tons for ADM and Ajinomoto.
“What would we be willing to accept?’’ Andreas asked. “And what would you be willing to accept? Isn’t that the question?’’
There was more to be considered, Ikeda said. The other producers still did not believe ADM’s production numbers were real. Their projections depended on that number. They would have to come up with some explanation to support the numbers.
Whitacre walked away from the easel and sat down. His briefcase was in front of him on the table.
Wait a minute. What was that?
A click. Whitacre had definitely heard a click in his briefcase. Andreas turned his back to Whitacre, looking at the easel. There it is again.
The briefcase was making a noise. What if the others heard something? Whitacre reached down and turned the case slightly away from the other three executives. He popped open the latches. Shepard watched the monitor intently. Andreas was speaking.
“I would suggest we do the following,’’ Andreas said. Andreas was on the verge of making his proposal. In his excitement, Shepard was paying no attention to Whitacre. The agent didn’t notice that his witness had begun fiddling with the hidden panel in his briefcase.
Whitacre tugged on the panel. A small amount of Velcro pulled apart, but the panel stayed in place, slightly farther from the recorder. Maybe that would stop the noise. He shut the briefcase.
“I’d suggest you tell the people that whatever they have in ninetythree, they can each have two thousand more in ninety-four,’’ Andreas said. “And we get the rest between you and us.’’
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 194 194
K U R T E I C H E N W A L D
Ikeda, still holding the pen, looked confused. “We have to give, uh, some specific number,’’ he said.
“Whatever their number is in ninety-three,’’ Andreas said. “Then we can agree on how we split the rest.’’
There it was.
Shepard had heard it. Andreas had just proclaimed that he was setting volumes for every lysine competitor, dictating sales for companies that weren’t even in the room. This was dynamite evidence.
Click.
There it was again. Whitacre looked up and saw everyone was at the easel. He opened his briefcase and gave the panel another tug. More Velcro tore.
Whitacre shut the case and looked up. Andreas was just a few feet away, walking straight toward him.
Shepard had noticed nothing about Whitacre. His witness sounded calm, in control. He had really come through this time. The group was on the verge of a deal. Shepard watched as Andreas stepped out, toward the bathroom. The two Ajinomoto executives stayed in front of the easel, speaking in Japanese about Andreas’s proposal. Click.
Whitacre decided he had to do something drastic. Somebody would definitely hear this. How in the world would he explain noises coming out of his briefcase?
Whitacre scanned the room. Andreas was still in the bathroom, Ikeda and Yamada were talking with each other. No one was paying attention to him. He opened the briefcase again and pulled hard on the panel. The Velcro tore. Whitacre lifted it and looked at the recording device inside. If anyone came up behind Whitacre at that moment, they would see it.
Shepard could not tell what the Ajinomoto executives were talking about. They were speaking softly, in Japanese. He pushed the buttons on the remote control, making the camera zoom in. He didn’t notice what Whitacre was doing.
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 195
T H E I N F O R M A N T
195
•
•
•
The device looked okay. Whitacre closed the cover.
Click.
Whitacre opened the case again. Something on the back was rubbing against the recorder. He pressed it, and then snapped the panel closed. He shut the briefcase.
Andreas returned to the room, tugging his ear.
No one had noticed anything.
Yamada stepped toward the easel. The Asian companies had great difficulty accepting the argument that ADM deserved any lysine growth in 1994, he said.
“Their ground is, ADM has already eaten all the growth,’’ Yamada explained.
“For the past three years,’’ Whitacre said.
Yamada laughed. “And now ADM is trying to absorb all the growth. That is not fair.’’
The approach was a variation on a classic Japanese negotiating strategy known as naniwabushi. Yamada had adopted a victim mentality, complaining that the other side was unfairly taking advantage of the Asian companies’ weakness. In Tokyo, the method is effective in resolving disputes without confrontation.
But for Andreas and Whitacre, the statement seemed beside the point. Andreas was frustrated. Everyone else was standing, debating the numbers. It was time to make ADM’s position clear.
“There’s another thing you gotta keep in mind,’’ Andreas said, turning to the easel. “We have a lot more capacity than we’re using.’’
This was Ajinomoto’s big fear. Andreas was threatening to flood the market and start another price war.
Ikeda nodded. “Yeah, we understand.’’
“If in fact there becomes a free-for-all,’’ Andreas said, “our numbers are liable to be a lot larger than five thousand tons.’’
Yamada put his hands behind his back. “Hum.’’
“Because we’ll grow at twenty thousand tons instead of five,’’ Andreas said. Yamada nodded.
Two women dressed as waitresses walked into the room, rolling a table that carried lunch for Andreas and Yamada. One was an FBI agent.
“You think they oughta just leave that on that table?’’ Andreas said, glancing at the food.
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 196 196
K U R T E I C H E N W A L D
“We can serve you if you like,’’ a waitress replied. Ikeda and Yamada walked to the easel, again discussing their plans in Japanese. Whitacre and Andreas stepped to the other side of the room as the women cleared the main table, laying out the lunch of salads and steak sandwiches. Shepard knew the meeting was close to breaking up. Yamada and Andreas were scheduled to eat alone; Whitacre and Ikeda would be stepping out of the room for an hour. As soon as Whitacre left, Shepard would have to shut off the recorder. And the two sid
es hadn’t yet reached an agreement.
There might be only minutes left.
Whitacre was signing the bill when Ikeda laid out Ajinomoto’s proposal: ADM would be allocated its recent production—or about sixtyseven thousand tons—plus an amount he called alpha. That word meant, he said, a substantial portion of lysine growth. The proposal was vague, with few specifics.
But it sounded to Whitacre and Andreas as if they had a deal. All ADM wanted was sixty-seven thousand tons plus some growth. Whitacre said that Ajinomoto was now making the same proposal as ADM.
“This is just a way to say it,’’ Ikeda said. “It’s more agreeable to other people.’’
Andreas smiled. He didn’t care what the Japanese called it, so long as ADM got what it wanted.
“You decide how to say it,’’ he said.
Ikeda walked to the easel and tore off the piece of paper that contained all of the production numbers. Andreas laughed. “We better keep that,’’ he said.
Neither side said it out loud, but they seemed to have reached their illegal deal. Right in front of the waitresses, just as they were serving lunch.
Whitacre walked out of the room.
He had what he had come for.
Shepard had heard the words. Just before they broke, the companies had reached their deal. As soon as Whitacre left, the agent reached for the console, and pushed the buttons. The monitor screen went blank.
Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 197
T H E I N F O R M A N T
The Informant Page 25
