Rats in the Grain: The Dirty Tricks of the Supermarket to the World, Archer Daniels Midland

Rats in the Grain: The Dirty Tricks of the Supermarket to the World, Archer Daniels Midland

by James B. Lieber

ISBN: 9781568581422

Publisher Basic Books

Published in Nonfiction/Crime & Criminals, Nonfiction/Social Sciences, Literature & Fiction/General, Literature & Fiction/Contemporary, Business & Investing/Biography & History, Business & Investing/Economics, Business & Investing/Industries & Professions

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Sample Chapter

Chapter One


"The FBI never forced me to do anything."
—Mark Whitacre

On June 21, 1995, FBI Special Agent Brian Shepard appeared before a federal magistrate in Urbana, Illinois. Shepard had come from Decatur, about forty miles west, where he ran a one-man FBI office, a satellite of the regional headquarters in Springfield. As usual, when Shepard asked for a search warrant, the proceedings were closed to the public. If word of a warrant leaked out before it was served, the evidence could be gone before the agents arrived. Most warrants targeted cash, crack, drug paraphernalia, stolen goods, or weapons. But this time Shepard wasn't trolling for ordinary contraband.

    Of average height, the middle-aged agent wore a suit off-the-rack that hung loosely on his lean frame. He had a weathered face, high cheek bones, and soft, straight, graying brown hair that spilled over his forehead. He handed his affidavit to the magistrate. In a clear, measured, high-toned drawl, he made out the case for the search. The magistrate looked up from the paperwork. Obviously, this wasn't routine.

    Shepard's affidavit also differed from most. It was not based on a tip from an anonymous informant. Though highly detailed and spanning over two-and-a-half years of clandestine surveillance of organized criminal activity, it did not rely on the work of a FBI agent who had gone undercover. Moreover, the organization under scrutiny was not a drug gang, child pornography ring, consumer fraud racket, or the mafia. Rather, it was ADM, the region's dominant corporation and one of the largest and most powerful in the country, producing a raft of food, feed, and fuel additives.

    Shepard's "cooperating witness," Mark Whitacre, also was not a disgruntled employee in a stalled career. Referred to as "CW" in the warrant, he was president of ADM's BioProducts division, a new and already profitable unit on which ADM was staking much of its future. Though only thirty-eight, Whitacre had reached ADM's inner circle and had become a corporate vice president. Recently, he had been named by a stock analyst as the leading candidate to succeed ADM's president James Randall, seventy-one, who was thought to be nearing retirement. ADM had distributed the analyst's report to its shareholders.

    Whitacre had no perceptible economic needs. He lived in high style in the baronial former residence of the company's legendary chairman and chief executive officer Dwayne O. Andreas, seventy-seven, who had ruled ADM for almost three decades. Conventional wisdom held that once Andreas passed from the scene his son Michael Andreas, forty-six, would take the reins. Known as Mick, the younger Andreas already held the position of vice chairman and oversaw day-to-day operations. He and Whitacre were friends. It was expected that the two would follow smoothly in the footsteps of Dwayne Andreas and James Randall to form an effective tandem at the top of the organization.

    According to Shepard, Whitacre long had been spying on and informing against the chairman's son. The executive also had given evidence against other top rung managers including Terrence Wilson, president of ADM's corn processing division. Besides mail and wire fraud, the alleged crimes involved setting up international price-fixing cartels to rig world markets in three commodities. One was lysine, an amino acid used to promote growth in pigs, poultry, and cattle. The others were citric acid, the all-purpose flavoring and preservative used in foods and detergents, and high fructose corn syrup (HFCS), the major sweetener of soft drinks.

    Shepard's affidavit spelled out how ADM had set up phony trade associations with its competitors. Then the company arranged conferences of the groups often in far-flung venues.

    Shepard called the organizations "facades." Each conference had an "official" meeting where innocuous matters were discussed and an "unofficial" behind-the-scenes session for price fixing. Shepard's affidavit was brutally honest about the credibility of his cooperating witness:

To the extent that this Affidavit contains information provided by the CW which is not corroborated by tape recordings and surveillance by the FBI, I believe the information is reliable. Before the CW received a letter granting use immunity, he made admissions against his own penal interest by disclosing the existence of the conspiracies to fix prices and allocate sales volumes or customers. The CW is willing to testify under oath to the information supplied.

Nevertheless, the CW has not always been truthful in his statements to the FBI. He initially provided some false and misleading information to the FBI. The CW has since provided information about price-fixing and volume-allocation schemes that I believe is reliable. As noted, much of that information is corroborated by tape recordings of conspiratorial meetings and conversations and surveillance by the FBI.

Whitacre had no criminal record or apparent motive to lie. Plus, the conspirators' conduct was preserved on hundreds of hours of tapes that Whitacre had recorded with concealed equipment provided by the FBI. The magistrate signed the warrant. The raid of ADM's headquarters focused international media attention on the price-fixing scandal in Decatur.

* * *

Previously the central Illinois town had been known for its association with Lincoln. In May 1860, it hosted the Illinois Republican Convention that nominated him for president. A month later, the Republican National Convention in Chicago named Lincoln as its candidate on the third ballot after his cousin John Hanks and close friend Richard Oglesby—a Decaturite who would become a Civil War general, Illinois governor and senator—returned from an abandoned homestead outside of Decatur with fence rails that were piled on the speaker's platform. The delegates were told that the wood had been split by Lincoln thirty years before. The candidate rode the "rail splitter" legend into the White House.

    Earlier, Decatur had not been so lucky for Lincoln. In March 1830, three generations of the Thomas Lincoln family including Abe, 22, arrived from Indiana. The first night they camped in a corner of the town square. Then they cleared a ten-acre site on the Sangaman River eight miles away. The river's name comes from sangama an Indian word meaning plenty of food, an allusion to the bounty of the rich well-watered local prairie. The young Lincoln helped his family break ground, plant corn, and build a barn, cabin, and smokehouse.

    The Decatur experience soured when the family came down with "ague," probably malaria. They moved again the following March and started over in Springfield. Seven years later, Lincoln began returning to Decatur, the Macon County seat, to handle cases as a circuit riding attorney.

    Decatur still trades on the Lincoln legend. The old circuit court, renamed the Lincoln Courthouse, is a spare clapboard box on a snippet of park. The Sangaman River homestead has been vandalized practically beyond recognition.

    Tourism in any event seems unlikely in this tough town of about 90,000, with its round-the-clock clangor of trains and trucks, many emblazoned with the molecule in a diamond-shaped leaf insignia of ADM. Mountainous dun-colored mills with nests of pipes, winking aircraft warning lights, and steaming plumes dominate the urban landscape. The sticky sweet and sour stench of enzymes brewing corn starch is overpowering.

    The town, which locals sometimes call "da crater," seems to have more than its share of convenience stores, used car lots, and scruffy bars. Because Illinois is the number one soybean state and Decatur is the soy processing capital, there are numerous businesses with such names as the Soy City Motel, Soy City Electric, and Soy City Tire. There is a small, spiffy financial district, but little else seems new here.

    At the edge of the mills sits ADM's six-story administration building. The second floor "war room" contains the terminals, screens, and clatter of over a hundred in-house buyers and sellers of commodities in world markets. On the top floor is the upper level management suite, an island of relative calm, soft lighting, and plush carpets that resembles an art museum. During the 1980s, Dwayne Andreas became taken with the quality of laser-enhanced topographically correct reproductions of classic paintings that could be picked for about $1,500. Executives and visitors walking these corridors saw the spitting images of Van Gogh's Starry Night over the Rhône, Monet's The Artist's Garden at Giverney, Pisarro's Boulevard Montmartre, and, one particularly relevant fake, Grant Wood's Dinner for Threshers, which portrays fatigued farm hands in their overalls at a table heaped with food. Other walls bore mementos and pictures of the senior Andreas with famous friends, including Presidents Truman, Kennedy, Bush, and Reagan; Chief Justice Warren Burger; Ex-Canadian Prime Minister Brian Mulroney; Mother Theresa; General Secretary Gorbachev; and President Yeltsin.

* * *

At midnight on June 27, 1995, approximately seventy FBI agents conducted the raid. They hit the administration building and seized carloads of documents from management files. They fanned into the suburbs and invaded the homes of ADM executives, whom they interrogated.

    The event, which quickly became known locally as "Gestapo Night," also included visiting Mark Whitacre's residence in Moweaqua, Illinois, about fifteen miles south of Decatur. He lived in a sprawling colonial mansion with thick columns, manicured grounds, a pool, a stable with horses, corral, and bridle paths. Dwayne Andreas, the prior owner, had retained a pricey grove of black walnut trees at the edge of the property. The FBI's purpose in "tossing" Whitacre's office was to provide him with a measure of protective coloring. It did not want its mole outed yet. It hoped that he would hear evidence or comments by his colleagues in reaction to the raid.

    No stranger to crisis, the company rarely made a move without deploying either or both of its Washington law firms. One was Williams & Connolly, the capital's premier purveyor of hardball litigation tactics. The firm was famous for gaining outstanding results for notorious clients in desperate jams, including Teamsters Jimmy Hoffa, Iran-Contra figure Oliver North, former Texas Governor John Connally, and would-be Reagan assassin John Hinckley, Jr. More recently, it took on the representation of President Clinton during the Lewinsky scandal and impeachment trial and with typical aggressiveness turned defense to offense by accusing the special prosecutor of ethical and grand jury lapses.

    At Williams & Connolly, Dwayne Andreas had had a personal relationship with Edward Bennett Williams, the brilliant trial lawyer who had won him an acquittal in a Watergate criminal case twenty-one years earlier. After Williams died, the lead partner at the firm on ADM business became Aubrey Daniel, III, a steely, slash-and-burn tactician who earlier in his career successfully prosecuted Lt. William Calley for his role in the My Lai massacre of civilians during the Vietnam War.

    The other Washington law firm was Akin Gump Hauer & Feld, which in its way was as prominent as Williams & Connolly. Its way was lobbying, writing legislation, cultivating politicians and officials and performing high-level errands. Its leaders were Robert Strauss, seventy-seven, the former Democratic National Chairman and Ambassador to the Soviet Union, and his protegé Vernon Jordan, the former head of the Urban League and a confidante of President Clinton.

    Squads of lawyers from the two firms descended on Decatur on the morning of June 28, 1995. Each attorney was assigned to an ADM employee thought to be a possible target of the government. Because the company still had no idea of Whitacre's role, it provided him with John Dowd of Akin Gump.

    A lawyer's approach in a situation where both a corporate client and an employee potentially are in trouble is delicate. Does the lawyer's allegiance run first to the company or to the individual? The meaning of Dowd's role may not have been clarified to Whitacre. At any rate, the executive whose cover was precarious decided that he had become Dowd's client and had entered into a solid confidential relationship with the attorney. During their discussion the day following the raid, Whitacre decided to come clean about his government activities.

    Dowd apparently saw their relationship differently. Immediately, he exposed Whitacre to ADM. Later when Whitacre accused Dowd of violating the attorney-client privilege, the Washington lawyer insisted that Whitacre had authorized him to tell the company

    The results of a raid based on Whitacre's reside information were dramatic. ADM stock, one of Wall Street's enduring stars, began to tumble, based on market worries that the company's worth had been falsely inflated by price fixing. In the same vein, some ADM shareholders believed that they had been misled as to the values of their holdings and filed numerous class-action suits against management.

ADM took another solid punch a week after the raid when Howard Buffett, a vice president and company spokesman, resigned. Buffett was the son of Warren Buffett, America's most successful post-war investor and second richest man after Bill Gates. At ADM, Howard Buffett became a reliable public voice for ADM's policies, including federal subsidies for gasohol (made with corn-based ethanol), heavy funding and lobbying of politicians, and opening up Cuba and Vietnam for trade. Now Buffett refused to spin or justify ADM's conduct.

    Buffett's resignation took ADM completely by surprise. It responded by angrily banning him from the premises on July 10, 1999. The company had no backup ready to replace him as an officer or board member. Now Buffett shied from the press. Though in time ADM's criminal complicity would be proven, no other manager besides Buffett would resign in protest.

    Unlike Buffett, Whitacre at first willingly cooperated with the media that swarmed him. Tall and blond, he favored expensively tailored double-breasted suits and bold silk ties. His fair complexion, soft features, and large eyes behind horn-rimmed glasses gave him a studious bearing and more than a slight resemblance to another celebrated whistleblower/turncoat—John Dean, Nixon's renegade White House lawyer. Whitacre's speech was sincere, staccato, and slightly compulsive. He seemed to need to get the ADM matter off his chest, but it apparently pained him to give information harmful to his colleagues and the company. To the press, he mentioned fearing for his family, which had been receiving threatening late-night calls. His children had endured schoolyard taunts about their father being an FBI snitch and questions about whether the family would go into the federal witness protection program. He wondered aloud in interviews if it would have been better simply to leave the company three and a half years before instead of spying for the government.

The son of a GM dealer, Whitacre grew up in an upper-middle-class family in Morrow, Ohio, about thirty miles north of Cincinnati. In high school, he began dating his pert, vivacious, future wife Ginger Gilbert and was president of his senior class.

    He went to Ohio State in 1975 with the notion of becoming a veterinarian but decided to aim for a lucrative career blending science and business. He finished an honors program in animal science and received a bachelors and masters degree in just four years. Only two years later, he emerged with a doctorate from Cornell in nutritional biochemistry. At graduate school, he distinguished himself with hard work and such high energy that his fellow students half jokingly tried to keep him away from the office coffeepot.

    His first job involved research at Ralston Purina in St. Louis. He stayed less than a year before receiving an offer in 1984 from Degussa, a German chemicals firm. Degussa intensively trained him in German for which he had keen aptitude, both oral and written. The company made him a technical sales representative and moved him to Germany in 1985. His assignments caused him to travel widely in Europe and Asia.

    At Degussa, Whitacre rose to the directorship of applied technology and moved in 1988 to the company's US headquarters at Teterboro, New Jersey. In America, he was promoted again to vice president. His large house in Warwick, New York, often served as the lodgings for the company's visiting German brass. It was rumored that Whitacre could become the first non-German to head the company's American branch.

    In 1989, ADM decided to enter the lysine business. As was its practice, Decatur sought a joint venture to avoid the delay in hitting the market that would be caused by building its own facility.

    Because of Degussa's extensive amino acid experience, ADM approached the company. ADM brought a lot to the proposed marriage: capital, clout, and above all its vaunted "river of dextrose." A byproduct of corn processing, dextrose is the basic raw material from which lysine is extracted.

    Whitacre had been restless in Teterboro. Usually he arrived early, finished his work in a few hours, and spent the rest of the day bouncing around the office and the plant searching for ideas. At thirty-two, he found himself across the bargaining table from ADM, as Degussa's lead negotiator. He saw a company dissimilar from his own. ADM was lean, unbureaucratic, dynamic, and quick to seize a new direction.

    Ultimately, Degussa rejected the joint venture opportunity, but Whitacre accepted an offer from ADM in October 1989. He would be president of a new division then called Biochem Products.

    Whitacre was happy to move back to the Midwest and for three years ecstatic about ADM. The company soon changed the name of the division to BioProducts and rapidly pumped $150 million into it. Whitacre supervised the building of the world's largest lysine plant and recruited the best sales and technical talent worldwide. In the process, he hired some of his old Degussa friends whose lives or at least lifestyles he changed with hefty bonuses and salary increases. They would become his devoted inner circle.

    ADM had big plans for BioProducts, which in addition to lysine would produce other amino acids, bacitracin, ascorbic acid (vitamin C), lactic acid, monosodium glutamate (MSG), and vitamin E. The company hoped to generate a third of its earnings from the division by 1997. Because of his experience travelling abroad for Degussa, ADM also put him in charge of expansion into Southeast Asia.

    Not only was Whitacre busy but he appreciated the nimble, decisive can-do atmosphere at ADM. He reported directly to Mick Andreas. The huge lysine plant, with an annual output capacity of 250 million pounds, went from blue prints to production within less than a year and a half, an astonishing feat. The facility, which looked like an indoor stadium, opened in February 1991.

    At the time, lysine was selling for about $1.30 per pound. ADM started a price war in order to win market share. When the price hit 60 cents, the operation was not even paying off the building costs. According to Whitacre, "we were losing money, a few million dollars a month. Production costs were high because we were just getting started."

    This sorry state was not regarded by ADM as permanent but only as stage one. As Whitacre put it, stage two started when Mick Andreas and James Randall, the ADM president, put him in touch with Terry Wilson the president of the corn processing division. Not especially popular among employees, Wilson, a gruff, bearish man with forearms like hams, silver hair, and metallic glasses, was the subject of office rumors about price-fixing. He put Whitacre at ease about losing money and said it was time to meet with the major competitors, which were two Japanese firms, Kyowa Hakko Kogyo and Ajinomoto.

    Whitacre told his FBI handlers that Wilson previously had set up a conspiracy to fix prices in citric acid. According to Whitacre, Wilson and Mick Andreas convinced the Japanese that it was time for everyone to climb out of the red in lysine. The way to do it was by raising prices collectively and carefully dividing up the market.

    Whitacre reported that ADM even had a price-fixing motto: "The competitor is our friend and the customer is our enemy." The phrase stood modern capitalism on its head. Whitacre promised that it "turned up lots of times on the tapes" he secretly made of the meetings. "Terry used to say it, and Mick would say it. It was our philosophy.... There are tapes of Mick Andreas quoting his father as always saying this."

    From the first, the government declined all requests to release the tapes under the Freedom of Information Act, because they were evidence in an ongoing criminal investigation. ADM also early developed a militant strategy to prevent any disclosures of the tapes, but portions leaked out.

    After his exposure, Whitacre publicly recounted how he became an informant wearing a wire and at times carrying a tiny recording device implanted in his briefcase. He claimed that in 1992, when price-fixing was being discussed with the Japanese but before it actually began, lysine batches in the ADM plant came out spoiled. There was a suspicion of sabotage by engineers from the Japanese competitors, who had visited the Decatur facility. Eventually sabotage was ruled out. Before it was, Dwayne Andreas became concerned, and ADM called a contact at the CIA who referred the case to the FBI. This resulted in the invitation of Brian Shepard to the plant. Among others, Shepard approached Whitacre who allowed the FBI to tap his home phone and agreed to spy. One of the ironies of the case is that the FBI initially contacted Whitacre about matters unrelated to price-fixing.

    In 1995, Whitacre insisted that he was not threatened by the government. "The FBI never forced me to do anything." He wanted to do the right thing because "from the beginning, I wasn't comfortable with the idea of price-fixing, not only because it's illegal but because I also believe it's the wrong way to do business."

    Brian Shepard also was a significant part of the equation for Whitacre. "I don't know. I just really trusted the guy. If it were another kind of guy, I might not have told him. He was really trustworthy and I found it a real relief to talk to him.... We really hit it off well."

    For the most part, Whitacre charmed the press, which did not probe the inconsistencies in his stories. For example, Whitacre always maintained that Dwayne Andreas was in on the price-fixing scheme. If so, why did he alert the CIA about alleged sabotage and later invite the FBI on site? If the competitor truly was the friend, why would such a friend even be suspected of sabotage? Above all, why really did Whitacre cooperate with the government? No similar tugs of conscience had disturbed him during school or in prior jobs. He was not known for making ethical stands or for doing anything to put his meteoric career at risk.

    Whitacre fast was becoming a folk hero of American business. A pariah at ADM, he found himself at the center of the largest antitrust probe in American history and in the pages of the New York Times, Wall Street Journal, Time, Newsweek, and Barrons. Fortune devoted a cover piece and extensive space to Whitacre's first-person account: "My Life as a Corporate Mole for the FBI." Residents of Moweaqua, from the barber to the police chief, told television that Whitacre and his wife Ginger were model citizens, parents, and philanthropists. The couple was especially concerned with the plight of poor children. They organized toy drives and invited local kids to play on their grounds. Time described Whitacre as practically a "second son" to Dwayne Andreas. Reporters, editors, and readers warmed to the story of a man who had everything and seemingly put it all at risk as a covert operative for the FBI in order to protect free enterprise.

    Some media pundits wondered if ADM could survive. There were bound to be more shareholder cases, plus endless class-action antitrust suits with crippling "treble" damages, as well as the bloodletting of the company's leadership in criminal court. As for ADM, it had not been sitting on its hands. On July 21, 1995, to buttress its stock price which had plunged 15 percent since the raid, it announced it would repurchase 20 million shares.

    The company's enormous and in some ways ominous influence began to be felt. Some long-distance callers to WAND-TV in Decatur, which had recently run a lengthy Whitacre interview, were patched through without their permission to ADM security. Neither the station nor the company offered any public explanation beyond suggesting that the phone lines in central Illinois had gotten crossed. Some of the callers later complained of continuing irregularities with their own lines or being watched.

    After an ABC television investigative reporter parked briefly on a public street in Dwayne Andreas' neighborhood, he was questioned by police. The journalist did not return to Decatur. ADM's reaction to Whitacre was predictable. At first, the company shunned him and gave him nothing to do. Having a known whistleblower on site makes managers uncomfortable. By the second week in July, ADM had barred Whitacre from the premises, although it kept him on the payroll. Whitacre's lawyer James Epstein of Chicago told the media he expected ADM "to invent some pretext to fire Mark."

    ADM put Whitacre's past under a microscope. The first matter the company came up with was relatively minor "résumé fraud." ADM said Whitacre had mischaracterized himself as a PhD in biochemistry. Although Whitacre had won a PhD from Cornell, it was in the field of nutritional biochemistry, a somewhat less rigorous science. Then ADM announced that Whitacre had faked having an MBA from Northwestern University's elite Kellogg School of Management when he successfully submitted his name for nomination to the board of trustees at Decatur's Milliken University. In fact, Whitacre held an MBA from Kensington University, a correspondence school in California.

    Whitacre seemed shaken by the MBA revelation. After being banned from ADM, he took his family on a vacation. Now, from the road in Kentucky, he began calling the Decatur media. He rambled on air to WAND-TV that he had no idea "where the item on Northwestern came from." He suggested ADM itself. "I do know that there's a lot of press releases and different things that go out and different analysts we talk with and sometimes our degrees go and get overinflated."

    He added that the close personal scrutiny "almost feels like you are running for politics." He continued to assert his integrity telling a Chicago paper, "when this is over, I believe there will be a place for me in American business. Someone will still want to hire an honest person."

    After a week it became clear that the credentials flap had failed to damage Whitacre. It simply paled in comparison with the worldwide corporate scam he had alleged.

    ADM, however, continued to dig. Soon it accused him of conventional graft. In July, the company discovered that Whitacre had authorized payments based on dummy invoices from nonexistent European companies. The checks then found their way into Swiss and Cayman Islands bank accounts controlled by Whitacre and three of his ADM cohorts, two of whom had come from Degussa.

    On August 8, 1995, ADM announced that the scheme had defrauded it of at least $2.5 million. The company fired Whitacre and his fellow alleged embezzlers and sought their indictments. A federal grand jury had been investigating price-fixing at ADM and its competitors. Now one was formed in central Illinois to target fraud by executives, including the famous informer.

    Later ADM calculated that the wire transfers totalled more than $9 million. It refused to explain why standard audit techniques had failed to detect the scheme before Whitacre blew the whistle on the company.

    For a time, Whitacre continued to fight brashly. He publicly insisted that he merely had partaken of an insidious off-the-books bonus plan for upper management. The extra cash came with significant strings: if an executive displeased ADM, it could expose him for tax evasion. He argued that this is what had happened to him but strenuously denied that he had stolen anything. ADM ridiculed the notion of under the table bonuses and painted him as a thief.

    The government now had a problem on its hands. Overnight, Whitacre had gone from an altruistic whistleblowing witness to something like a soiled mafia snitch, neck deep in crime. In fact, the FBI had a bigger headache with Whitacre than with the organized crime turncoat because the latter usually had been granted full immunity from prosecution in exchange for his testimony. At the beginning of his tour of duty as a spy, Whitacre had signed a narrow agreement with the government. It barred charges against him for any acts of price-fixing he committed before and during his cooperation with the FBI, so long as they were revealed to Brian Shepard or other agents. It forbade him to commit additional crimes. Most of the offshore transfers had occurred after Whitacre had started wearing a wire.

    Caught off-guard, the FBI and Justice Department prosecutors knew that they would be accused of giving Whitacre a license to steal if they broadened his immunity. Their case could go off the rails. But failing to protect him meant that he could cease to cooperate and refuse to testify against ADM at an eventual antitrust trial.

    Whitacre desperately pressed for a deal. On August 2, 1995, he met with federal agents, confessed his role in the overseas payments ring, and explored a guilty plea to tax evasion and mail fraud, which leaked to the press. It was rejected.

    The following day, he and his lawyer tried to rekindle an earlier conversation about the economic consequences of his informing. During his two-and-a-half years undercover, he had received no payments, but there had been talk about what would happen if ADM discovered and fired him. Under such circumstances, Whitacre wanted the government to buy his home and pay his salary until he could become re-established. During his service to the FBI, no agreement had been nailed down. Now that his fears had come true, the government was not willing to continue the discussion.

    On August 6, 1995, Whitacre began writing suicide notes. One was to the Wall Street Journal. It stressed the wire transfers: "regarding overseas accounts and kickbacks, and overseas payments to some employees, dig deep. It's there! They give it; then use it against you when you are the enemy."

    The government began weighing whether it could make the case without Whitacre. Prosecutors who listened to the audio tapes and watched the video tapes found them compelling. There was a possibility that they alone could induce a guilty plea from ADM. But, ADM was a tough company that could not be expected to plead guilty.

    A jury also could be expected to be impressed by the tapes. However, in some high profile trials, taped evidence had not been enough to carry the prosecution. Although seemingly caught dead-to-rights on video, John Z. DeLorean, the high-level automotive executive, had been acquitted of cocaine dealing, and Marion Barry, the former mayor of Washington, had been convicted only of a minor charge.

    The antitrust prosecutor and FBI resolved to try to "flip" additional witnesses against ADM. By now the Justice Department through grand jury subpoenas had seized records from a host of companies involved in manufacturing lysine, citric acid, and high fructose. They included, in addition to ADM, Kyowa Hakko Kogyo and Ajinomoto of Japan, Sewon of Korea, CPC International, Inc., England's Tate & Lyle PLC (owner of ADM's crosstown rival A.E. Staley), and Haarmann & Reimer, a division of Germany's Bayer A.G. White-collar prosecution experience dictated that not all of these companies would stonewall the government, and that at least some of their executives would testify in exchange for immunity.

    On August 8, 1995, Whitacre called the caretaker of his pool and grounds and told him not to come in early the following day. The next morning, Whitacre went into his garage and closed the door. After getting into his daughter's BMW convertible, he used the car phone to bid a final goodbye to his wife. The message was recorded by their answering machine while she slept. Then Whitacre turned on the motor. When the gardener arrived, he braved the exhaust fumes to reach Whitacre, drove him out of the garage, and shook him awake.

    Whitacre, who credited the man with saving his life, was spirited to a hospital in Chicago. He stayed for a week and emerged with a diagnosis of manic depression. The suicide attempt was seen by some as an admission of guilt to theft. Questions also arose about whether Whitacre had faked the gassing in order to arouse sympathy, to obtain better treatment from the government, or even to get ADM off his back.

    The facts of the event were strange enough to stimulate a series of articles in the Echo, an obscure journal for forensic psychiatrists, which were passed among prosecutors and agents on the case. The articles pointed out several oddities. In the first place, Whitacre had been found unconscious in the backseat of the BMW. In most known attempts of this type, the person sits in the front. But more important, Whitacre did not seem to have carbon monoxide poisoning. Otherwise, he could not have been roused to consciousness by mere shaking. Several factors explain this. Carbon monoxide emissions have been reduced substantially in late model cars. Also, the car was not parked in a confined space but in Whitacre's six-car garage. In addition, before getting in the backseat, he reportedly had lowered the BMW's rag top. It seems likely that Whitacre, as a large-animal scientist, was versed in physiology and could have calculated his odds and shut his eyes all the while waiting to be discovered.

    The psychiatrist analyzing the case also doubted the diagnosis of bipolar disease. While Whitacre had demonstrated remarkable peaks of high energy in his work, there were no similarly reported valleys of depression or documented lapses of judgment (before the alleged embezzlement scheme) during his schooling, work, or relationships that typify the mental illness.

    On the other hand, the suicide attempt seemed credible given the strain of his situation. For almost three years, Whitacre had led a double life. The hours at his corporate post, which included working out the kinks in a costly start-up venture plus constant travel, were formidable. His FBI activities amounted to a virtual second job in terms of planning, taping, and travelling, as well as debriefing sessions usually at night with his government handlers.

    His home life deteriorated. His wife and three children—sons aged 8 and 15, and a daughter 16—were aware of his snitching. Communication with his wife became strained for the first time in their marriage. He spent less time with his children and worried what they thought when they saw the wire when he took off his coat at night. Above all, the stress of informing on people who were his friends at ADM soon started tearing him apart as evidenced by his efforts to back away from the FBI.

    Internal government files uncovered years later revealed that Whitacre had begun threatening suicide to the FBI not long after he started spying on ADM. An FBI log entry from November 18, 1992 noted:

Source advised that source had been very distraught and had been working under intense pressure during the last couple of weeks. Source advised that everyone of source's superiors at Archer Daniels Midland (ADM), Decatur, Illinois, were turning against source.... Source said source felt that everything was against source.

Source advised that source had brought biochemical books home and was researching the lethal doses of various chemicals as source was considering committing suicide. Source said that source had been an upbeat person all of source's life but that the last couple of weeks source has been very depressed.

Though his handlers perceived the mole's depressed and erratic behavior, they forbade him from seeing a psychiatrist or psychologist for fear that his secret activities would stop or be leaked. The abrupt termination of Whitacre's career, his alleged betrayal by a lawyer, his outing as a spy and money launderer, and fear of jail caused mounting anguish without an end in sight. Those who knew him do not doubt that he wanted to die.

    The stock analysts now questioned Whitacre's credibility, his sanity, and whether he could do any lasting damage to his former employer. By mid-August, ADM shares were trading at over seventeen dollars and had been restored to the value before his revelations.

    Whitacre seemed to bounce back quickly. By fall, he had rented a suite in a suburban Chicago office park as the president of a biotech start-up firm that was attempting to bring new Chinese blood testing kits into the US medical market. Whitacre said that lithium made him feel better and boasted that soon his new company would have a private placement of its stock.

    Whitacre also attempted to better his legal situation by continuing to inform to the government. He alleged other illegal activities at ADM. His efforts did not catch ADM off-guard.

    The company was famous for its influence in Washington over Congress, federal agencies, and even the White House. It had no special clout with law enforcement in Chicago. Now it prevailed upon the Department of Justice to base all investigations involving ADM, except for the antitrust cases, in Washington, DC. The new attorneys in charge of the embezzlement probe would be attached to the fraud section, a part of the Justice Department's criminal division.

    The shift in headquarters was ironic because all of the alleged fraud, money laundering, and related crimes were initiated in Decatur. Nothing was alleged to have occurred in Washington. The justification for the move was the accusation made by ADM's lawyers from Williams & Connolly that the Illinois FBI agents had aided or condoned Whitacre's bogus invoice scheme.

The advantages of the move for ADM were undeniable. Soon a "Chinese Wall" was built between the Justice personnel working on the antitrust case in Chicago and the fraud officials in Washington. Key Illinois operatives, such as Brian Shepard and Chicago federal prosecutor Scott Lassar, who knew ADM well, were removed from the fraud loop. Through its prestigious beltway law firms, ADM also exercised far more influence over the Department of Justice in Washington than it did in Chicago, where in fact some prosecutors in the US Attorney's Office regarded the lobbyist lawyers with contempt.

    Deputy Attorney General Mary Spearing, chief of the fraud section, and her deputies Don Mackay and James Nixon came to Chicago for a meeting with Whitacre on September 5, 1995. They were joined by FBI agents Anthony D'Angelo, Michael Bassett, and Edward Herbst. The so-called proffer session took place at the offices of Whitacre's lawyers James Epstein and Robert Zaideman, who both were present. Chicago federal prosecutors Scott Lassar and James Griffin, who headed the antitrust case, made the introductions and departed within five minutes.

    For hours Whitacre revealed the minutiae of the fraud scheme, transaction by transaction, check by check. He identified each participant and account, foreign and domestic, and insisted that all of the bonuses had been approved by James Randall or Mick Andreas. He believed himself guilty of failing to pay taxes but not of theft or embezzlement.

    Whitacre also outlined a widespread pattern of corporate misconduct. It included the misappropriation of technologies necessary to produce such products as antibiotics, amino acids, and vitamins. The general ploy was to bribe another company's worker to steal secret material from his plant and bring it to ADM. In addition, Whitacre accused Randall and ADM director of security Mark Cheviron of hiring prostitutes to pry information out of employees at a competitor's lysine plant in Eddyville, Iowa.

    He accused ADM officials of self-dealing by inducing the company to lease their real estate and pay top rates, personal use of corporate air craft, environmental offenses, pervasive campaign finance violations, electronic bugging of competitors, and cocaine trafficking.

    With his attorneys by his side, Whitacre made charges involving the company that could have taken federal investigators and grand juries months if not years to unravel, much as the antitrust conspiracy had. But ADM's attorneys from Williams & Connolly were even more active. They pushed the Justice Department hard to drop the antitrust case due to the alleged misconduct by Whitacre's FBI handlers. In this they were unsuccessful. But they were highly effective in lobbying the fraud section of the Justice Department to limit its probe to bogus invoicing involving Whitacre and his subordinates and to wrap up the investigation quickly.

    The fruits of ADM's inside-the-beltway strategy became apparent. In October 1995, not one but two Justice Department spokespersons, John Russell and Carl Stern, informed the New York Times, Wall Street Journal, Chicago Tribune and other media that ADM was not "the target or subject" of any investigation by the criminal division. Stern told Fortune that in order to win the favorable ruling, ADM's attorneys from Williams & Connolly successfully had lobbied senior Justice officials just below the level of the attorney general.

    At the same time that Stern's bosses gave him the green light to release the information, the ADM publicity department began advising journalists to call Justice for a comment. The result was very good copy for ADM. The off-the-books bonus scheme was portrayed as an aberrational scandal with Whitacre as its ringleader rather than as part of a wider corporate pattern. Fortune aptly called its piece "ADM takes the Justice Department for a Spin."

    The resulting flap about ADM's manipulation of Justice soon led its spokespeople to issue a caveat. While ADM was off the hook for fraud and related offenses, individual corporate employees still could be the subjects of investigations. By late 1995, Whitacre correctly perceived that only he and his underlings were being scrutinized, which led him to grow increasingly despondent.

    In March 1996, he made a claim on WAND-TV of abduction. Unknown men in suits had thrown him into the back of a brown sedan. It had no license plate or operable door locks. The men drove him around for half an hour telling him to shut up about ADM. Then they pushed him out on the street. The story was not verifiable. Shortly after the interview, he moved with his family to Chapel Hill, North Carolina. (Continues...)

Excerpted from "Rats in the Grain: The Dirty Tricks of the Supermarket to the World, Archer Daniels Midland" by James B. Lieber. Copyright © 2000 by James B. Lieber. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.
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