The Informant

by Kurt Eichenwald

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  “I understand, Mark. You can talk. Just don’t dominate. We want to see the others’ involvement.’’

  “I got you. I got you,” Whitacre said.

  Whitacre was ready to go. At that moment, Herndon felt some level of affection for him, felt lucky to have Whitacre on his team. He was the reason they were here. He was the one allowing the FBI to collect the evidence of this crime. Without Whitacre’s help, the case could never happen.

  Masaru Yamamoto of Kyowa Hakko pushed open the glass doors to the lobby of the Sheraton Makaha and walked outside. He had enjoyed breakfast at the hotel restaurant and was now headed to the meeting in Whitacre’s suite. Despite his casual dress of slacks and a sport shirt, Yamamoto looked almost formal compared with the many guests heading out for golf. As he walked, Yamamoto did not notice the casually dressed man following him. Yamamoto reached the path going downhill to Whitacre’s room, and the man stopped, touching the microphone on a concealed radio.

  “I’ve got an Asian male, about forty years old, dressed nicely, and walking your way,’’ the man said.

  Yamamoto rounded the corner at the bottom of the hill, a few dozen feet from Whitacre’s room. He walked near a window that appeared to be blocked by a blind. Behind the blind, another agent aimed an automatic, motorized camera through a tiny opening.

  The camera clicked repeatedly as Yamamoto passed.

  Herndon took a seat in front of the blank monitor and slid the earphones over his head. The SOG agents came in, telling him that Whitacre and some of the other lysine executives were in the room. Herndon glanced at the clock; in a few seconds, it would be 8:55. He pressed down the buttons on the recording equipment. Images and sounds instantly emerged from the monitor. Terry Wilson was talking.

  “We’ll give you five percent of the market,’’ he said. “That’s what we’ll give you.’’

  Yamamoto was amused. “Five percent, oh yes.’’

  “That should wake him up,’’ said Henri Vetter, Eurolysine’s representative to the meeting. The men laughed.

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  Herndon wasn’t positive what they were discussing. It didn’t matter. Manipulating the joystick, Herndon grew concerned. J. S. Kim, a Korean executive from Miwon, had placed a chair in front of the lamp. But almost as soon as it was there, it disappeared. Herndon watched Whitacre move the chair to another part of the room. Herndon smiled. Whitacre was paying attention.

  Whitacre looked around the cramped room. The seats were unnaturally close together. The lamp—wait, was that the same lamp from Irvine?—was set up in front of the window and looked out of place. Whitacre had stayed the night in the suite but hadn’t noticed how bad it was until he saw all the lysine executives crawling over each other. He checked his watch. It was time to get started.

  “I’d like to welcome everybody here to this meeting,’’ he said. “Glad everybody could make it, and sorry for the ones who can’t play golf tomorrow. We’re gonna have a good time.’’

  The nine other executives laughed as many sipped coffee or orange juice. Whitacre said that in the morning the executives would discuss production volumes and the results from the group’s last meeting in Japan. In the afternoon, they would deal with Cheil, the smaller of the two Korean companies involved in the scheme. Cheil was still refusing to agree to a reasonable volume allocation. The others had decided to keep its executives out of the morning meeting, figuring that might put pressure on them to accept a deal.

  “We can discuss some of the pricing situation this morning, too, obviously,’’ Whitacre said.

  Wilson, sitting on a light-colored couch, grabbed a cigarette. Smoke filled the small room.

  Whitacre turned the meeting over to Kanji Mimoto, who walked toward an easel in the corner of the room. For several minutes, he wrote a series of numbers on the board. These, he said, were the sales figures for February reported to him by each company. He compared them to the allocations that everyone had received.

  “We are doing this, you know, to keep the price,’’ he said. “And, uh, to keep the price, we have to understand each other.’’

  For thirty minutes, the conversation continued. Whitacre was getting antsy. Herndon hadn’t called. Maybe the phone was broken. Maybe the agents couldn’t get to him. He didn’t have the patience to wait. At 9:34, Whitacre picked up the telephone, and dialed a number.

  “I’m gonna order another orange juice,’’ he said.

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  Herndon picked up the phone on the first ring.

  “Is everything okay?’’ Whitacre asked. It was hard to believe that the man was placing this call right in the midst of the conspirators.

  “Everything’s fine,’’ Herndon said. “That chair was a problem at first, but everything’s fine now.’’

  “Yeah, okay,’’ Whitacre said. “Another orange juice. Thanks.’’

  Both men hung up. Whitacre rejoined the meeting. Herndon fixed his eyes on the monitor once again.

  None of the agents in the command center bothered to prepare any juice. If any of the executives ever noticed that the juice had not arrived, it would probably be blamed on lousy room service. If they shared production numbers, how could the conspirators be sure they were true? Perhaps, one executive suggested, they should revive the idea of hiring auditors. That made Mimoto uncomfortable.

  “If we, uh, we don’t trust each other, then it must be audited,’’ he said in fractured English. “But we don’t want, clearly, because it, uh, is illegal thing we are talking and we don’t want to—’’

  Wilson broke in. “It’s not illegal.’’

  Mimoto stared at him, astonished. “It’s very illegal,’’ he said. Whitacre shook his head. “To audit, to have an auditor? Nah. You’re going to have an auditor going through your financial figures anyway.’’

  “You don’t think this is illegal thing, no?’’

  “No,’’ Wilson said. “Absolutely not.’’

  “This is completely illegal,’’ Mimoto said.

  “No,’’ Wilson repeated. “No, it’s not.’’

  This made no sense to the Japanese. Of course what they were doing was illegal. That was the reason for the clandestine meetings. They didn’t understand that Wilson was making a distinction between the legal act of submitting numbers to an association and the illegal act of using the data to fix prices. For the next few minutes, Wilson explained why associations were allowed to have sales numbers. Yamamoto argued. What about after the numbers were submitted to the association?

  “Submitting the numbers is legal,’’ Whitacre said. “What we do with it is illegal.’’

  Yamamoto pointed toward some data. “This number is illegal,’’ he said.

  Wilson raised his hand. “I won’t even discuss that, Massy.’’

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  The whole group laughed.

  Yamamoto remained insistent. “This is illegal,’’ he said, pointing to one number after another. “This is okay. This is illegal.’’

  Sitting back, Wilson joined in the laughter.

  The SOG agents in the command room stood behind Herndon, watching in disbelief.

  “Oh, man, did you hear that?’’ one of the agents asked. “This sounds like really good stuff.’’

  Herndon almost shrugged. “Yeah, it’s pretty good,’’ he said. “But this is like a lot of meetings we’ve heard.’’

  The SOG agents watched silently for a second.

  “This is a great case,’’ one said softly.

  The Korean executives from Miwon eyed
the rest of the group with suspicion. What auditors would check the sales figures? The group wanted each company to just turn over the job to their usual accountants. How could such an audit be trusted? Maybe, the Korean executives implied, the companies could pressure the accountants to lie. Perhaps a new accounting firm should be hired just for this project. Sitting in a corner, Jacques Chaudret from Eurolysine shook his head. The idea was lunacy. Bringing in new accountants would signal to everyone in their company that something strange was going on.

  “You’re in Korea, but in the U.S. and in Europe, the antitrust law is very strong,’’ Chaudret said to the Miwon executives. “I have a hard time to explain to the controller that we have to be audited by a different company than the normal auditing company. For what reason?’’

  Wilson nodded. “Yeah.’’

  “The guys would be very, very suspicious,’’ Chaudret said. The discussion went around the room. Wilson listened, sucking on another cigarette. It amazed him how many risks these guys were willing to take.

  “How the hell do you give it some cover?’’ Wilson interrupted. “We can’t. We don’t have any cover.’’

  The debate raged on as Wilson listened, occasionally sipping coffee from a Styrofoam cup.

  “Either we trust each other or we don’t trust each other,’’ Wilson said. “I have no problem with audits; we do it lots of places. But in the end it comes down to: Do you trust or don’t you trust?’’

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  provided by each company’s usual auditor. The check would be looser than the system that the Miwon executives wanted, but it would involve far less risk. The only major issue left to resolve was what to do with Cheil, the one company not at the morning meeting. J. M. Suh, one of the company’s executives, would be allowed in later that day. What position should they take with him?

  The amount in dispute was between two thousand and six thousand tons. Wilson said that Cheil should simply be given the percentage of the market it was demanding. Otherwise, the company could upend the conspiracy by offering lysine at a lower price.

  “You have a rogue elephant out there that could destroy the market,’’ he said. “Two thousand tons can take the market from a dollartwenty to sixty-five cents.’’

  Mimoto nodded. “That’s right.’’

  “I think we’ve got to remember that,’’ Wilson said. “We have an old saying in the United States and at ADM. ‘It’s better to have ’em inside the tent pissin’ out, than outside pissin’ in.’ ”

  Mimoto looked confused. “Outside piss?’’

  Everyone laughed.

  “It’s better that they be part of the group,’’ Wilson explained. “It’s better.’’

  Whitacre leaned in. “It’s better that they be one of our friends. Competitors are our friends, remember? Customer’s the enemy.’’

  The group agreed. They would offer Cheil more volume and try to bring them into the conspiracy. Mimoto pulled the sheet of paper filled with production numbers off the easel.

  “Next subject,’’ Mimoto said as he folded the paper. “How to use the Amino Acid Association.’’

  Yamamoto laughed.

  “We’re usin’ it,’’ Whitacre said. “We’re usin’ it.’’

  Mimoto turned the floor over to Jacques Chaudret, who handed out copies of an agenda for an association meeting. The agenda was a fake; it was simply paperwork to explain why the lysine competitors had gathered in the same hotel room.

  “Everything we are doing today is legal,’’ Chaudret said to laughter.

  “But just in case . . .’’

  “Did your lawyers tell you that?’’ Whitacre laughed. “Our lawyers didn’t.’’

  Whitacre scanned the paper. “This is an official agenda?’’

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  “That’s right,’’ Chaudret said as he sat down. “That’s an easy coverup, at least for us.’’

  “I agree,’’ Wilson said.

  For twenty minutes, the men reviewed each item on the bogus agenda, explaining everything that was supposed to have happened at the fictional meeting of the lysine association.

  The morning session broke just after eleven. Whitacre stood. He thought it had been fabulous. He was dying to talk to Herndon about it.

  “I wouldn’t mind making a phone call,’’ he said.

  Whitacre slipped into his bedroom and picked up the telephone. The F-Bird was still recording.

  Herndon was staring at the action on the monitor when the phone rang.

  “Hey, Bob,’’ Whitacre said. “It’s Mark.’’

  What the hell? Herndon glanced at the monitor. Whitacre wasn’t on the phone in the room. Whitacre wasn’t in the room at all. Quickly, Herndon shut off the video recorder. It was 11:13.

  “Mark, where are you?’’

  “I’m in my room now, in my room.’’

  Herndon groaned inwardly. The camera had been lined up so that he could see the front door. He felt sure he would know when Whitacre left. He’d never thought Whitacre would walk out the side into the bedroom. This was just going to create problems down the line. Nothing simple is simple.

  “Mark,’’ Herndon said, trying to contain his frustration, “the tape was still running when you walked out of there.’’

  “Can you turn everything off?’’

  “I already did. But, Mark, I didn’t hear you say that you were leaving.’’

  “I did say I was going to my room.’’

  “Well, Mark, next time announce it.’’

  “I did say it to those guys,’’ Whitacre said defensively. “Said I’m gonna make some phone calls and see everybody at eleven-thirty.’’

  In truth, Whitacre’s statement had been far more ambiguous. Herndon tried speaking in a monotone, to hide his anger.

  “Okay, Mark.’’

  “That didn’t affect anything, did it?’’

  “I don’t think so. Everything’s fine. Just next time when you leave, announce it real loud.’’

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  “Yeah, well I told ’em we were going to make phone calls and were meeting up at eleven-thirty.’’

  “It’s okay, Mark. I just missed it.’’

  Whitacre paused. “Goin’ pretty well, isn’t it? You guys getting what you need?’’

  Herndon knew this was the reason for the phone call. Whitacre was excited about the progress at the meeting. He couldn’t wait to chew over every detail.

  “Yeah, we’re getting everything. You’re doing a good job, Mark.’’

  “The chairs being moved around didn’t affect anything?’’

  “No, that was fine.’’

  “First he put his right in front of it, did you see that?’’ Whitacre asked. “And I moved him over. ’Cause he first had his back right to it, J. S. Kim.”

  Whitacre barely took a breath. “Agreement is used a lot, isn’t it?”

  “Yeah, Mark.’’

  “Yeah, a lot. Lot. Yeah.’’

  Whitacre talked about the plans for lunch and told Herndon not to worry about what he was missing in the room. Everyone, he said, was just socializing.

  “Okay, Mark,’’ Herndon said. “Now remember, later today if you leave, just announce it.’’

  “I did,’’ Whitacre said. “I told ’em I was going to use the phone and see ’em in fifteen minutes in the restaurant. I made it very clear to those guys. And I said it to three or four of them.’’

  “I understand, Mark. I’m just reminding you.’’

  “Okay.’’

  Pause.

  “You guys getting everything you need?’’ Whitacre asked again.

  “Yeah, Mark, eve
rything’s fine.’’

  “And you understand why I called you that time, right? For the orange juice. I didn’t need orange juice. I really just wanted to say, ‘Is everything okay setup-wise?’ ”

  The two men discussed the dinner plans for that evening; Whitacre agreed that he would eat with the other lysine executives. Pause.

  “You’re getting everything you need?’’

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  “I think it’s going pretty well, don’t you?’’ Whitacre said.

  “Yeah,’’ Wilson agreed.

  All of Wilson’s pleadings for trust had done the trick. The others were letting down their guard. Wilson had really built something, Whitacre said.

  “Helped ’em get all the anger out,’’ said Wilson.

  Whitacre laughed.

  Wilson shrugged. “Everybody’s going to want to cheat anyway. Knowing Mick, we’ll want to cheat.’’

  Shortly after lunch, J. M. Suh of Cheil wandered into the meeting room with Whitacre.

  “Do you play golf tomorrow?’’ Suh asked.

  “We’re gonna be playin’ tomorrow,’’ Whitacre said. “I think we’re gonna play this afternoon also.’’

  Several of the other executives strolled in.

  “I came here just to play golf,’’ Suh laughed.

  Suh sank into the couch as the others found their chairs. The room was even more cramped than during the morning session. Not everyone had a seat.

  Wilson looked around the room. “Surprised this wasn’t bigger than it is.’’

  “It’s a whole lot smaller than expected,’’ Whitacre said. He stood, announcing that he was headed to the other room to fetch a chair. He said it as loudly as seemed natural. Herndon turned off the recorder for a few seconds. At least his instruction had gotten through. Suh scanned the room, resting his head on his arm. He was angry that his company had not been able to attend the morning meeting.

  “I want to hear background why we were excluded,’’ Suh said. Mimoto seethed. “I told you already over the phone many times, no?’’ he snapped. “I explain many times, so I think it’s useless to repeat this.’’