Taking a breath, Whitacre glanced at the office door. It was closed.
“I wouldn’t leave if I was you,’’ he said. “Things are going to be changing.’’
“Why?’’ Buffett asked. “What do you mean?’’
Whitacre leaned forward.
“You never know what will happen, Howard,’’ he said softly. “Not too long from now, you and I might be running this place.’’
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CHAPTER 11
Mark, are you an idiot?’’
Ginger Whitacre sat on a couch in the family room, cradling a cool drink and staring at her husband in disbelief. For days, he had been endlessly upbeat, almost unreasonably so. But now he was going over the edge. For the past few minutes, as logs crackled in the fireplace, Ginger had listened to Mark describe the glorious future he saw for himself—at ADM.
“No, really,’’ Mark replied earnestly. “When all this goes down, I’m going to be the only one left. Dwayne will be gone, Mick will be gone, Terry will be gone. I’m going to be the only one who can run ADM.’’
Ginger threw up her hands. “That’s totally illogical,’’ she said.
“How can you possibly stay there when you’ve just taken down the company? You think they’re going to pat you on the back?’’
Mark shook his head. His pep talk with Howard Buffett had emboldened his own expectations. If someone like Buffett—an ADM
director—was dissatisfied, other directors almost certainly would feel the same way. Buffett had postponed his resignation plans, so now Whitacre felt he was guaranteed at least one ally on the board. Once ADM’s crimes were exposed, Whitacre was convinced, everything would change. He was sure his name would be high on the list of candidates for the permanent chief executive of the company—perhaps even the only one there.
“Ginger, they need me,’’ Mark said. “They need me to run this company. I’m valuable to them. And I did the right thing. The board is going to understand that. They’re going to respect that.’’
Ginger kept arguing, trying to persuade Mark of how irrational his beliefs were. But he wouldn’t budge. He was convinced that he would soon be running ADM as a reward for his work with the FBI. He had Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 262 262
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expressed these thoughts in the first days of the investigation, but had dropped the foolish ideas. Now, somehow, the same unreasonable expectations had crept back into his mind. The more Ginger saw that glint of excitement in Mark’s eyes, the angrier she became. This sudden pipe dream could not have come from nowhere; something had to have triggered it. He was acting as if he had been brainwashed. As Mark argued about his bright destiny, she became certain of who was to blame.
Brian Shepard.
Ginger seethed at the FBI. They were lying to her husband just to keep him in line. They didn’t care about him at all. Of that she was convinced.
“We’re worried about our guy,’’ Herndon said. “We want to make sure we look out for him.’’
On the other end of the phone, Jack Cordes from the FBI’s contract review unit asked a few questions. What Herndon wanted was not unprecedented but would take time. There were lots of bureaucratic hurdles to clear before the FBI could pay someone who lost his job after working as a cooperating witness.
It was January 10, 1995. With planning under way for the raids on ADM, Shepard and Herndon were beginning to worry about Whitacre. He had become unrealistic, talking all the time about becoming a hero and running ADM. The agents did their best to brace him for the probability that he would be fired, but didn’t press. At this point, Whitacre’s feelings were bound to be complex. If he needed to believe in a bright future to get through the day, the agents couldn’t rip that away. But they could make sure Whitacre wasn’t abandoned if he ended up unemployed.
Shepard and Herndon had expressed their concerns to the prosecutors, who were split on the issue. Some wanted the matter resolved by the FBI; others vehemently opposed paying anything. Whitacre wasn’t some drug dealer, they argued; he would find another job. But a jury would always look askance at a witness who had been given money by the government.
In the end, the matter was left to the FBI’s discretion. By the end of the call with the contract unit, the agents felt more at ease. At least they had gotten the ball rolling.
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Marriott. When they arrived, the sixteen-story hotel was exceptionally busy. The Cobb Room, where the lysine executives were planning to meet, was booked until 11:00 the next night, leaving Shepard and Herndon cooling their heels for hours. When the agents finally gained access to the room, they saw it had problems, as always. It was spacious enough, with a wood veneer conference table, plenty of padded chairs, and a small buffet cart against a wall. But there was no end table for the lamp; the only furnishing that could hold the camera was a large dresser in the wrong part of the room. Shepard and Herndon moved heavy furniture late into the night.
The room reserved for the command center also made the agents uneasy. It was connected by an inside door to the Cobb Room, meaning that the agents might be heard. Herndon grabbed a towel and stuffed it under the connecting door. It was hardly a high-tech solution. But it would work, so long as the agents whispered. Early the next morning, Whitacre appeared at Shepard’s hotel room, ready for the day. Herndon handled the briefing, again reminding Whitacre to announce if he was leaving the room and to let other executives do as much of the talking as possible.
As Herndon spoke, Shepard walked across the room to check the briefcase recorder one more time. He placed it on the bed and turned it on.
Nothing.
He tried again. Still nothing.
“We might have a problem here,’’ he said evenly.
Herndon came over to look, and the two agents struggled with the case for several minutes. Shepard couldn’t understand it. He had tested the device in Decatur, just before they had flown to Atlanta. Whitacre stood by watching helplessly. Finally, he checked his watch.
“Hey, guys,’’ Whitacre said with an uncomfortable urgency to his voice. “I should probably be in the room when everybody else arrives.’’
The agents agreed and Whitacre headed down to the meeting room. A few minutes later, the frustrated agents swept up the briefcase and hurried to the command center. Shepard dropped into the seat in front of the monitor, while Herndon called the Atlanta FBI in search of the agents assigned to provide backup.
The Atlanta agents arrived a few minutes later, and Herndon showed them the briefcase unit. After studying it, the group agreed Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 264 264
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that somehow, the new batteries had died. One of the Atlanta agents, Jay Spadafore, said he had a spare set in his car and rushed to get them. He needed to hurry—the meeting next door was starting. Shepard turned on the camera.
A Korean executive, J. E. Kim from Cheil, was laughing. He had just taken a cab to the Marriott from his hotel, the Renaissance. Kim hadn’t realized until he arrived that the hotels were adjacent to each other. Whitacre walked with Kim to the window. The day was sunny and bright, affording a clear view.
“That’s right next door,’’ Whitacre said.
“Yes, I didn’t know,’’ said Kim. “So I only paid two dollars from Renaissance to here.’’
Yamamoto from Kyowa Hakko arrived minutes later, just before nine o’clock. Whitacre greeted him and then picked up the telephone, ordering breakfast and scheduling lunch. He hung up the phone as Yamamoto dropped his coat and other belongings near the camera.
“Here, Massy, I’ll move this stuff out of the way for you,’’ he said, picking u
p Yamamoto’s belongings. “There has to be a space to hang that.’’
Kim folded himself into a chair. He mentioned hearing about an earthquake the previous day hitting Kobe, a city in western Japan. Yamamoto nodded, saying he had heard that as many as 2,500 people were dead.
“Yeah,’’ Whitacre said. “They blew up a lysine plant there, too.’’
Yamamoto nodded, smiling. “Yeah.’’
Kim was confused. “Lysine plant?’’ he said, looking at Yamamoto.
“Your plant?’’
“Yes,’’ Yamamoto said. “And we have to increase the price. A dollarfifty?’’
Yamamoto laughed.
Kim still did not understand. Was the plant partly destroyed? Smiling, Yamamoto and Whitacre shook their heads.
“No,’’ Whitacre said. “It’s a—’’
“It’s a joke,’’ Yamamoto interrupted.
Everyone laughed heartily.
In the adjoining room, the agents snapped the new batteries into the briefcase. Herndon touched the buttons and the tape started to spin. He hurried over to the phone and dialed the number for the Cobb Room.
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Whitacre answered.
“Hey, it’s Bob, I’ve got your briefcase,’’ Herndon whispered.
“I’m sorry?’’
“I’ve got your briefcase. It’s working. I’m going to bring it to you.’’
“Yeah, that’d be great,’’ Whitacre said.
“Now, I’ve got a story for what’s going on.’’
“Yeah,’’ Whitacre said. “I already ordered from the menu the other day.’’
“Good, okay,’’ Herndon whispered. “I’m going to come to the door and say I’m with the hotel staff. I’m going to say I found the briefcase downstairs.’’
“Okay.’’
“Okay? So I’ll see you in a couple of minutes.’’
“Thank you,’’ Whitacre said. “Bye-bye.’’
Whitacre hung up and returned to the table.
By 9:05, the price-fixing meeting was ready to start. Mimoto had arrived and taken a spot at the head of the table. Beside him was a new executive from Ajinomoto, Hisao Shinohara. Jacques Chaudret had scurried in and was at the banquet cart, fixing a cup of coffee. Yamamoto and Kim were on either side. Only Sewon, the Korean company, was not represented.
“We have a couple of other people joinin’ us, I think, don’t we?’’
Whitacre asked.
“At, uh, ten-thirty,’’ said Mimoto.
“Two more at that point?’’ Whitacre asked.
“Two more,’’ Mimoto said.
“Well,’’ Whitacre replied, “we’ve got plenty of space.’’
Kim spoke up. Two more were coming from Sewon?
Chaudret, still at the banquet cart, turned to face the others. “No, no,’’ he said. “Two more from Sewon. One from Tyson. One from ConAgra.’’
The group laughed, amused at the idea of two big lysine customers attending a price-fixing meeting.
Mimoto smiled, staring straight at Whitacre.
“And one from FBI,’’ he said.
Whitacre felt his heart drop, until he heard everyone laughing. It was a joke.
“And seven from the FTC,” Whitacre laughed. The Federal Trade Commission, which also enforced antitrust laws, would be as interested as the FBI in what was happening in the Cobb Room. Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 266 266
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“Yeah,’’ Mimoto said, looking at his notes, “FTC.’’
“FBI,’’ Whitacre laughed again, still anxious.
He checked his watch. Let’s get going.
“Welcome to Atlanta,’’ Whitacre said. “We’ve been so often to Asia, so often to Europe, it’s good that everyone could come here at some point. I think Kanji is going to lead the meeting. And I think the topic here at the beginning would be more volume related.’’
A knock came at the door. The group paused.
“Yes?’’ Mimoto said in response. “FTC?’’
Whitacre walked to the door and opened it. It wasn’t the FTC. It was the FBI.
Herndon stood in the doorway, briefcase in hand.
“I wonder if I have the right room,’’ he said.
“Yes,’’ Whitacre said.
“This was left down in the cafeteria,’’ Herndon said, holding out the briefcase.
“Okay.”
“The bellman thought it might belong to you.’’
Whitacre took the briefcase. The tape was already running. He shut the door and hurried to the table.
“Uh, the banquet people,’’ Whitacre said as he scooted past Yamamoto. “I left my briefcase in the lobby. When I signed up for food and everything.’’
“You forgot your briefcase there?’’ Chaudret asked.
“Yeah.’’
“Wow!’’ Chaudret said.
“When I signed up for all the food and everything.’’
“Very honest, huh?’’ Chaudret said. “In Paris, it would have already been sold.’’
“Yeah,’’ said Whitacre. “Luckily, I had all my passports and everything still in my room.’’
Yamamoto, his hand on his chin, looked at Whitacre. “You’re keeping all document . . . in case?’’
Whitacre shook his head. “No, no.”
The group laughed again.
The Atlanta recording was another rousing success. For more than an hour, the executives reviewed their 1994 lysine production, praising one another for sticking to the agreed levels. Later, with the arrival of J. S. Kim from Sewon, more evidence of the illegal agreement piled Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 267
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up. Kim argued that Sewon needed a huge increase in its allotted volume. The others objected, saying the proposal would cause a price collapse. By the end, all but Sewon settled on new production levels for 1995—and every company agreed to hike the price to $1.30 a pound. Days later, Jim Mutchnik, the new antitrust lawyer on the case, walked into a small conference room with a copy of the Atlanta tape. He was amused at how the meeting had just come and gone. This conspiracy no longer fazed the others; with so much evidence already collected, Atlanta was being treated as almost a bother. But to Mutchnik, Atlanta was a hoot. The first minutes—with everyone joking about the FBI and the FTC—cracked him up. He couldn’t believe these executives were sitting there, committing a crime, thinking it was the funniest thing in the world. Mutchnik watched as, late in the meeting, the executives agreed to set the American price at $1.30. On screen, Mimoto looked at the assembled executives.
“Finished,’’ he announced. “Canada is the same?’’
The others wondered, what’s the Canadian exchange rate? Jacques Chaudret fished out a newspaper, scouring the financial tables.
“Canada,’’ he said. “What does it say?’’
He found the number. The group recalculated $1.30 as $1.83 in Canadian dollars. Mimoto announced the new prices would go into effect the following week. Mutchnik watched, blown away. In a little more than two minutes, the group had used a newspaper to fix the Canadian market—worth about $100 million.
I can’t believe they’re doing that, Mutchnik thought. It can’t be that simple.
The J. Edgar Hoover Building sprawls along a full city block on Pennsylvania Avenue, standing out as one of the most hulking and unattractive parts of official Washington. There, in offices along an inner corridor on the seventh floor, the workings of the FBI are overseen by a group of deputies and assistants who report to the man at the end of the hall, the Bureau Director, Louis Freeh.
In early 1995, one of the newest officials on that corridor was William Esposito, the acting Assistant Director of Division Six, the Bureau’s Criminal Investiga
tive Division. He had been promoted the previous fall from Special Agent in Charge in the San Diego Field Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 268 268
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Office to Deputy Assistant Director, but quickly moved up. Now, Esposito was responsible for knowing what was happening with every major criminal investigation being conducted by the FBI. Not long after starting his new job, Esposito was working in his office when his secretary told him that Don Stukey, the SAC from Springfield, was on the line. He snatched up the receiver.
“So, Don, what can I do for you?’’ Esposito said.
“We’ve got a case going here that’s pretty important,’’ Stukey replied. “But I think we’re going to need your help with DOJ.’’
What was the problem with the Department of Justice? Esposito asked.
The case was dragging, Stukey said. It was an antitrust investigation, and the agents had developed evidence that included excellent tapes. Indictments could have been brought months before, but the Antitrust Division still wouldn’t commit to a timetable. Also, Stukey added, there were tensions between the Antitrust Division and the U.S. Attorney’s office. The U.S. Attorney seemed prepared to go forward with the case quickly, but Antitrust was pushing to slow down. Stukey was considering going to the Justice Department to appeal for help.
“But before we ratchet this up, I want to make sure we have the backing of headquarters,’’ Stukey said. “This is a very significant case involving influential people, so there’s going to be a lot of pressure here. I think it’s something that you and others in the division, maybe even the Director’s office, need to hear about, so you know what we’re getting into. Nobody outside Springfield seems aware of it. There really hasn’t been anyone behind it.’’
Esposito was not surprised. Springfield was hardly a place known for turning out big cases. The name of that office on a case file would have led many at headquarters to pay scant attention. Plus, the Bureau’s historical expertise was with violent crime; while white-collar investigations had expanded, headquarters had not yet been affected in any meaningful way. Often, investigations of corporate crimes still failed to attract much interest.
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