The Informant

by Kurt Eichenwald

  both believed that they were being cheated in the volume allocation. Executives from Cheil were so angry that they refused to come to Tokyo. The tussle between ADM and Ajinomoto had been only partly resolved, and both were wary of the other’s honesty. Only Kyowa Hakko had not voiced a direct objection to the allocation. Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 205

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  Still, a stilted friendliness permeated the room as the executives arrived. The last to appear were Ikeda and Mimoto, on behalf of Ajinomoto. They arrived five minutes late, at 9:35, Tokyo time.

  “Good morning,’’ Ikeda said as he opened the door. “We are late.’’

  “No problem, no problem,’’ Whitacre said good-naturedly. “You lost twenty thousand tons, but . . .”

  Everyone laughed.

  For about forty minutes, the men discussed specifics of the lysine market, region by region and at times, customer by customer. It was tedious, but the tensions lowered. They were making progress. Whitacre checked his watch. It was time to flip the tape.

  “Excuse me,’’ he said.

  Whitacre headed to the rest room, walked into a stall, and shut the door. Out of sight, he reached into his jacket and removed the Radio Shack tape recorder. Popping it open, he flipped over the tape and pushed the Record button before dropping it back into his pocket. He flushed the toilet and came out of the stall. Jacques Chaudret, the executive from one of Ajinomoto’s European affiliates, was there. He had come into the bathroom just seconds after Whitacre. Whitacre smiled. “Same idea, a break, huh?’’

  The two headed back. Whitacre had missed only about a minute of the discussions.

  Despite the initial friction, the major lysine producers were finally beginning to read off the same page. Finally, they were settling on volume allocations. A few points were left unresolved, particularly defining what was meant by ADM’s “alpha.’’ But, overall, the executives had reached their strongest agreement yet. Even without Cheil, production could be controlled. The price of lysine could well stay fixed for years. Wilson saw his chance to impose structure on the disorganized scheme. Now was the time, he said, for the lysine producers to finally begin sharing production numbers. The figures could be collected every month by the trade association. Lots of industries did that to legally learn the size of their markets. But, while the trade association could tell them the total, it would have to keep the individual production numbers for each company a secret. Sharing those numbers would almost certainly be illegal.

  That’s where the scheme came in. No one would question why each company had collected monthly sales data if it was turned over to the association. Then secretly, the companies could swap the numbers among themselves to enforce the volume agreement. If one company Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 206 206

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  sold more than it was allotted, it would be forced to purchase lysine from companies lagging behind. That would keep everyone on target, he said.

  “Report every month,’’ Wilson said. “Feedback every month.’’

  Wilson suggested that the companies phone their numbers to Mimoto at Ajinomoto. He would then compile them and alert everyone to the results.

  “So officially by association,’’ Whitacre said, “and unofficially to Mimoto by phone.’’

  Several of the executives were still confused. Whitacre and Wilson tried again.

  “The association will give you one number, which is the total market, but not by company,’’ Whitacre said.

  “That’s a legal number?’’ Mimoto asked.

  Whitacre nodded. “That’s a legal number, that’s right.’’

  “You want it illegally,’’ Mimoto said.

  Whitacre looked at the group. “Mimoto is illegal, and the association is legal.’’

  Everyone laughed again. The idea sounded perfect.

  Wilson reminded the group that there was reason to be cautious when phoning the production numbers in to Mimoto. Wiretaps were possible.

  “We have to watch our telephones,’’ Wilson said. “It can be done, but it must be very careful.’’

  Inside Whitacre’s pocket, the Radio Shack recorder picked up every word.

  The evidence in the price-fixing case was getting better, but the prosecutors couldn’t shake a sense of discomfort. Outside the FBI, the only person in law enforcement who had ever sat down with Whitacre was Cudmore—and he was expected to leave the prosecutor’s office in months. Robin Mann discussed the problem with Rodger Heaton, who had taken over day-to-day responsibility for the case from Cudmore. They both decided to push the agents for a meeting with Whitacre.

  Days later, in a conference call with the agents, Mann was asking questions about a recent tape. The agents’ explanations were not helping much.

  “Well, you know,’’ she sighed, “if I could talk to Mark it would help things. You guys need to think about that. It’s better sooner than later.’’

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  Mann had made the request before. Weatherall and Herndon fell silent.

  “That’s a valid point,’’ Shepard said. “But as you know, we have some concerns about that, and we’re kind of working through those. I’m sure it’s going to happen soon; I just can’t make any promises.’’

  “What are your concerns?’’ Mann asked quickly. After sliding into the topic, she was ready to confront the agents on the issue. For a second, no one spoke. The truth was that the agents didn’t trust the prosecutors with Whitacre. Weatherall in particular feared that the lawyers would mess with his head, upsetting his delicate emotional balance. Whitacre needed kid-glove treatment, and the agents had seen how direct Mann could be. But diplomatically, another explanation was needed. Shepard said that the agents had been using the prosecutors as scapegoats for months. Whenever Whitacre had a question about the future of the case—Would he be a witness in court? What would happen to the Andreas family?—the agents had simply replied that those decisions would be made by the prosecutors.

  “We’d hate to have you all of a sudden be forced to answer questions from him that you’re not ready to answer yet,’’ Shepard said. “It’s better for us to lay the blame on you, and that keeps him satisfied.’’

  Mann remained adamant, but the agents would not bend. They would consider a meeting, Shepard said, sometime later. When the time was right.

  Ginger Whitacre almost didn’t recognize her husband anymore. Throughout their marriage, he had made his family a priority. He always had made time to raise rabbits with their youngest son for 4-H Club, and had attended all of the children’s school shows. But now, between ADM and the FBI, the family seemed last on the list. One night, she argued with him about his absences. He needed to come home more, she told him. His children needed him; she needed him.

  “I’m doing all this for you and the children,’’ he protested. “I want to give you guys everything. That’s why I’m working so much. It’s for the family.’’

  Ginger took a breath. Mark’s tone was snippy. He had always been so bubbly and happy; these days, he was often just unpleasant and tired.

  “Mark, this isn’t for the family,’’ she said. “We don’t need all these things.’’

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  “What, you want to be somebody living in some small house?’’ he snapped. “You want to be like those people who can’t afford cars for their kids?’’

  Ginger felt taken aback. It sounded as if he thought that money made him superior to people with smaller incomes. Something inside him had changed.

  “You’re not better than somebody else because you have more cars or a bigger salary,’’ she said. “It has nothing to do with the kind of person you are.’’

  She paused. “You used to know that,
’’ she said softly. “You used to know what mattered. You need to find that out again. You need to turn back to God.’’

  Mark glared at her.

  “I don’t need God,’’ he said. “I’ve got more power than God.’’

  On February 2, 1994, Whitacre met with Shepard and Weatherall. In the weeks since Tokyo, he had recorded a number of tapes, mostly haggling with the Japanese. Still, the conspiracy was working: Whitacre estimated that ADM would go from a two-million-dollar loss in lysine for 1993 to a fifty-five-million-dollar profit in 1994. That night, Whitacre seemed eager. “Our next price-fixing meeting’s been scheduled,’’ he said. He paused. “It’s gonna happen in Hawaii.’’

  In his conversations with the Japanese in recent weeks, Whitacre had been talking up Hawaii. His message was always the same: the golf, the golf, the golf. Finally, with a new sense of trust emerging among the lysine producers, the Asian companies agreed. They would meet in Hawaii and play golf.

  Everything was arranged, Whitacre said. They would be traveling to Hawaii in early March. A meeting of the official lysine association was scheduled to provide cover for the price-fixing meeting. Shepard and Weatherall were delighted with the news. Their long shot had finally come in. And all thanks to Hawaii’s world-renowned golf.

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  CHAPTER 9

  Outside a terminal at Honolulu International Airport, Weatherall tossed his suitcase in the back of a rented convertible, feeling delighted with his luck. The convertible had been available at no extra charge; now he could soak up some Hawaii sun. Herndon hopped into the passenger seat, setting a case loaded with recording equipment on the floor. In a few minutes, the car top was down and the agents were starting the forty-five-minute drive to the Makaha Valley. Soon, they were on a road between the rugged cliffs of the Waianae Range and Oahu’s western shore. As they drove, they saw a gorgeous, eighteen-hole golf course, with views of the Pacific and Makaha Valley, framed by huge volcanic cliffs. Behind the course, quaint, cottagelike structures came into view—the luxurious 185room Sheraton Makaha Resort and Country Club. This was the place, in an isolated and lush part of Hawaii, chosen by the price-fixing conspirators as the site of their next meeting, scheduled in two days. Weatherall and Herndon left their hotel rooms early the next morning dressed like any other tourists, in slacks and open-neck shirts. They walked to the lobby and headed straight to the front desk.

  “Excuse me,’’ Herndon said to the desk clerk. “We’re here for some meetings with Mark Whitacre of ADM. I understand he has some conference rooms reserved. Can we take a look at them?’’

  A hotel employee led them across the grounds to the cottages. They headed down an outdoor hallway to the conference room. The employee opened the door.

  The room was a disaster. It was huge, giving the conspirators plenty of space to walk around—a potential problem for the videotape. Worse, the neighboring room where the FBI was supposed to work Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 210 210

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  was separated by only a flimsy partition. Even if the agents were not heard, anyone could open the partition by pushing a button. Herndon glanced at Weatherall.

  “I know,’’ Weatherall said, “this is not good.’’

  Weatherall looked over at the hotel employee.

  “This room is simply not going to work,’’ he said. “We need to do something about it.’’

  The three men headed back to the hotel lobby. While Weatherall and Herndon were waiting, an agent from the Honolulu Field Office arrived, accompanied by members of the FBI’s surveillance team known as the Special Operations Group, or SOG. The SOG members would never have been mistaken for FBI agents. Several were dressed in shorts, with open, brightly colored shirts. With their deep tans, they were not likely to stand out among the hotel guests. The agents headed to the office of the hotel’s head of security and explained the problem with the conference room. This was an FBI operation, they explained. They needed a smaller room, preferably connected to another room where they could work.

  “This isn’t easy, guys,’’ the security chief said. “The hotel’s full. But let me work on it.’’

  The group headed out the door. Weatherall sighed.

  “I’ll tell you, Bob,’’ he said. “Nothing simple is simple.’’

  Later that afternoon, Herndon stood in one of the hotel suites. It was small and would probably be pretty uncomfortable as a meeting place for the lysine executives. But it was the best the hotel could do on short notice. Whitacre would stay in the suite’s bedroom; that would provide a plausible explanation for why the meeting was being held there.

  With less than twenty-four hours to go, new problems cropped up. The neighboring rooms were occupied, forcing the agents to set up far down the hall. For the camera to work, they would have to shoot microwaves through the walls of two rooms; it would be impossible to hide wires over such a huge distance.

  After bringing in the first load of equipment, the SOG team ran a test. The signal went in and out—they were sure to miss parts of the meeting. The team dashed out of the room, coming back with several boxes of new equipment to boost the signal. Everyone held their breath as the equipment was turned on. The picture came through; the microwaves would work.

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  But unfortunately, the camera would not. Unlike the device in Irvine, this camera could not rotate or zoom in. Because the new meeting place was so small, the camera could not be placed far back enough to get a wide view of the room. Half the people in the room would be outside the shot. The SOG team placed an emergency call to a technical support group in Quantico, Virginia, asking for another camera.

  As they waited for the delivery from Quantico, the agents did their best to arrange the room. They pushed the chairs into a circle, hoping to narrow the shot. They moved a table in front of the window, with plans to put the lamp there when it arrived. The room looked unnatural, but it would have to do. The next morning, a box with the new camera was delivered to the FBI office in Hawaii. A technical agent drove it to the Sheraton Makaha. Herndon and Weatherall watched as an agent opened the box, pulling out a green-tinted glass lamp. It looked familiar.

  “Yeah, we’ve seen this one,’’ Weatherall said. “It’s kind of been making the rounds in our case.’’

  The lamp appeared identical to the one that had been used at the meeting in Irvine, California. But it was too late for a change. The agents could only hope that, if the executives noticed the similarity, they would just assume that some lamp company was doing a good job marketing to the nation’s hotel chains.

  The next morning, Whitacre came back from breakfast and walked straight to the FBI’s command center, where he knew Herndon would be waiting.

  Herndon studied Whitacre as he slipped inside. He showed no tension, no fear. This was a big day, but Whitacre was calm. The agents traded greetings with him, talking a bit about the quality of the hotel.

  Bringing out a small bag, Herndon unzipped it and removed a razor and shaving cream.

  “It’s that time again, Mark,’’ he said, an apologetic tone in his voice.

  “Oh, sure, no problem,’’ Whitacre replied.

  As Herndon filled his hand with shaving cream, Whitacre pulled off his shirt. The agent smeared the cream across Whitacre’s chest and carefully shaved his body hair. It was an uncomfortable moment. Afterward, Herndon brought out the equipment. It was one of the earliest generations of a new device, known as F-Bird, after FBI Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 212 212

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  Research and Development. This was one of the first FBI investigations to use the new equipment. It was thin, about the size of a cigarette case. It did not need tapes; instead, the device recorded digitally using memory cards, allowing conversations to be uplo
aded later and played on a computer. There was no On/Off switch for Whitacre to worry about. Before a meeting, the agents would turn the device on, after programming it with a time limit for recording. The F-Bird would keep running until either the time ran out or the agents switched it off.

  Herndon strapped the device onto the small of Whitacre’s back, then attached the microphones and fed the wires to the front. He carefully taped them to the spots he had just shaved. Whitacre dressed. “Bob, I really think this will be a good meeting,’’

  he said, pulling on his shirt.

  “Think you’ll have any problem with the room?’’

  “No, the room will work out. It’ll be fine.’’

  Herndon ran through a few last points before remembering the instructions from the prosecutors.

  “Mark, one more thing,’’ he said. “When you guys start agreeing to volumes and prices, I want you to poll the group and see if they’re all in agreement. And I want you to use the word agreement.”

  Herndon expected Whitacre to object. People just didn’t talk like that. Even Herndon thought the move would potentially be a tip-off, but the prosecutors were demanding it. Surprisingly, Whitacre calmly said he would have no problem taking the poll.

  “Now, during the meeting I’ll probably give you a call,’’ Herndon said. “So just act like it’s room service or the hotel management, checking to see if everything’s all right. I’ll call even if there aren’t any problems, just to let you know we’re in place.’’

  “Okay.’’

  Weatherall arrived in the room, looking serious. He was ready to get started.

  Herndon turned back to Whitacre. “Everything will be fine, you’ll be great,’’ he said. “Remember to use the word agreement.”

  “Okay, Bob.’’

  “And remember, don’t talk too much. Let the action come to you.’’

  “I gotta talk, Bob,’’ Whitacre said, exasperated.

  “I know that but . . .’’

  “I mean, I’m there representing ADM. I’ve gotta make sure our interests are portrayed. Otherwise, everybody would be suspicious.’’