The Informant

by Kurt Eichenwald

  With introductions complete, Whitacre escorted the executives down the hallway toward ADM’s huge trading room, the corporate nerve center where it purchased tons of corn, wheat, soybeans, and other farm products for processing each day. On the front wall of the vast room, a screen flashed up-to-the-minute commodity prices. At row after row of desks, an army of traders barked buy and sell orders into telephones.

  Around the edges of the room were various executive offices, most with the doors open. Whitacre stopped at one office and tapped on the door frame.

  “Terry?’’ he said. “They’re here.’’

  Terry Wilson, head of the company’s corn-processing division, looked up from his desk and smiled. The expression was more a reflection of strategy than delight; he was hoping to finish with the Ajinomoto executives quickly, in time for an early afternoon round of golf. Like many American businessmen, Wilson often felt frustrated with the Japanese. In negotiations, they seemed loath to horse-trade; they would listen but often retreated into ambiguity, making no specific commitments. Such tactics were considered a sign of virtue in Japan, the vague responses praised as tamamushi-iro no hy¯ogen o tsukau, or “using iridescent expressions.’’ Whatever its elegant description in Japanese, for Westerners like Wilson, a hard-drinking ex-marine, the approach was tiresome. He was not looking forward to it today. Wilson stepped from behind his desk, past a television that was broadcasting the day’s news.

  “Mr. Ikeda, Mr. Mimoto, it’s been a long time,’’ he said. “You’ve come on a day with such nice weather, it’s a shame you’re not here to play golf.’’

  The men chatted about their golf games as Whitacre led them to the executive meeting room, where they found their places around a conference table. A kitchen staffer appeared, serving iced tea, water, and orange juice. As everyone settled in, Whitacre walked to a wall phone and dialed 5505—the extension for Jim Randall, the president of ADM.

  “Jim, our guests are here,’’ Whitacre said simply. He hung up and returned to his seat.

  Everyone knew this could be a tense moment. Randall had been at the company since 1968. His skills as an engineer were indisputable; Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 14 14

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  his hands-on role kept the huge processing plants running. Still, the sixty-eight-year-old Randall was no Dwayne Andreas. As much as Dwayne’s smooth and polished style made him the perfect Mr. Outside for ADM, Randall’s gruff, plainspoken approach ensured that he would remain Mr. Inside. He often rubbed people the wrong way, whether he was boasting about his sports cars or ADM’s market dominance. The visitors today expected to hear about the company’s might; they knew that ADM’s invitation to visit was partly for the purpose of scaring them.

  Randall walked into the room a few minutes later, introduced himself, and took his place alongside Wilson and Whitacre. Instantly he took control of the meeting and the conversation, describing how ADM was transforming itself into a new company.

  Over slightly less than a century, ADM had grown into a global giant, processing grains and other farm staples into oils, flours, and fibers. Its products were found in everything from Nabisco saltines to Hellmann’s mayonnaise, from Jell-O pudding to StarKist tuna. Soft drinks were loaded with ADM sweeteners and detergents with ADM

  additives. Americans were raised on ADM: Babies drinking soy formulas were downing the company’s wares; as toddlers, they got their daily dose of ADM from Gerber cereals. The health-minded consumed its products in yogurt and canola oil; others devoured them in Popsicles and pepperoni. While most people had never heard of ADM, almost every American home was stuffed with its goods. ADM called itself

  “the Supermarket to the World,’’ but in truth it was the place that the giant food companies came to do their grocery shopping. Now, Randall said, ADM was entering a new era. Beginning three years before, in 1989, ADM had taken a new direction, creating the Bioproducts Division. No longer would the company just grind and crush food products. Instead, it was veering into biotechnology, feeding dextrose from corn to tiny microbes. Over time, those microbes, or

  “bugs” as they were known, convert the sugar into an amino acid called lysine. As people in the business liked to say, the bugs ate dextrose and crapped lysine. In animal feed, lysine bulked up chickens and pigs—

  just the product needed by giant food companies like Tyson and Conagra.

  Until ADM came along, the Japanese largely controlled the market, with Ajinomoto the undisputed giant. Start-up costs alone kept out potential competitors—tens of millions of dollars were required just to develop the proprietary, patented microbes needed to ferment Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 15

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  lysine. But ADM abounded in cash; it had already invested more than

  $150 million in the new business. Now, the world’s largest lysine plant was in Decatur, ready to produce as much as 113,000 metric tons a year. And running it all was Whitacre, a whiz-kid scientist who was almost certainly the first Ph.D. ever employed at ADM as the manager of a division.

  “We’re going to be the largest biochem company in the world,’’

  Randall said. “It just makes so much sense for us. We have the raw materials available, we have cheap utilities. It’s just a natural.’’

  The Japanese executives listened skeptically but said little. If ADM could produce that much lysine, it would have to gobble up much of the existing market. Building such a huge business struck them as irrational, foolhardy. ADM would have to keep large portions of the plant idle while waiting either for the market to grow or competitors to leave the business. Still, the executives didn’t mind hearing the boasts. They knew that listening as ADM rattled its saber would give them the chance to learn other, truthful information about the company.

  As Randall spoke, Whitacre and Wilson did their best not to cringe. For all of Randall’s swagger, they knew the most important fact about ADM’s new effort was being left untold: The company couldn’t get the damn plant to work. The bugs went in the vats, the dextrose went in the bugs and out came—very little. In recent months, a virus had turned up repeatedly in the giant fermenters where the lysine was produced, killing the bugs before they produced much of anything. While ADM was producing enough to have a presence in the market, the virus contamination had cost as much as $16 million so far in lost production time alone. And the pressure was really on: Dwayne Andreas had recently suggested shutting down the plant and trying again with a test model. Meanwhile, Dwayne’s son, Mick, who ran much of ADM’s daily business, had been pounding Whitacre for weeks to fix the problem. But after each attempted solution, the virus returned. It was not something to mention to ADM’s chief competitor. Ten minutes into his monologue, Randall pushed himself back from the table.

  “That tells you about our plant, in a nutshell,’’ he said. “Now, Mark’s going to give you a tour, and we’ll see you back here later for lunch.’’

  The Ajinomoto executives thanked Randall and followed Whitacre out the door. He escorted them to his Lincoln Town Car for the short Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 16 16

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  drive to the plant. There, everyone donned hard hats and safety glasses.

  They started the tour in the upstairs lab, where a handful of tiny flasks were being automatically shaken. Inside each of them was a mixture of dextrose and soy flour feeding a small number of microbes. Even as the group walked past, the microbes were multiplying rapidly. The irony was that those tiny cells of bacteria were the multimilliondollar heart of this giant operation. They were ADM’s proprietary biological secret that had allowed the company to break Japan’s control of the business.

  Fujiwara and Brehant asked questions and jotted down notes. The group left the lab, walking past the control room and into the main area of the plant.

  The Ajinomoto executives hesitated, awed. In front of them
was a plant unlike any they had ever seen, a vast acreage of fermenters. Dozens of them were spread across the plant, stainless-steel giants rising ninety feet toward the ceiling. The group headed out onto the plant floor, then down a metal staircase. Fujiwara and Brehant walked near the plant manager as he described the operations. Whitacre and Ikeda were a few steps back. Mimoto, already behind the rest of the group, slowed his pace. He waited until he felt sure that no one was looking. Quickly, he reached into his pocket and pulled out a plastic bag, removing the moist handkerchief inside. He placed the handkerchief on the staircase banister, rubbing it as he walked down the steps. Before anyone noticed, he slipped the handkerchief back into the bag, sealed it, and casually placed it back in his pocket.

  Mimoto knew that the multimillion-dollar bacteria used by ADM

  to produce its lysine was growing everywhere in this plant, even places where it could not be seen. He could only hope that, with the handkerchief, he had successfully stolen a sample of it for Ajinomoto. Weeks later, Whitacre was at his desk when the intercom buzzed. It was Liz Taylor, his secretary who sat just a few feet outside his office.

  “Yeah, Liz, what’s up?’’

  “Somebody’s on the phone for you, but I can’t pronounce his name. But he sounds Asian.’’

  Whitacre picked up the telephone.

  “Mark Whitacre.’’

  “Hello, Mr. Whitacre?’’ Liz was right. The caller’s Asian accent was thick.

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  “Yes?’’

  “I do not know if you remember me,’’ the caller began. At about six-thirty in the morning, Whitacre stepped off the staircase that brought him up from ADM’s basement garage. He walked past the trading floor, straight for Mick Andreas’s office. Mick was at his desk when Whitacre walked in, looking flustered.

  “Mick, you’re not going to believe what the hell’s happened,’’ he said. “I think I know the reason why we’ve been having all these problems in the plant.’’

  Andreas leaned back in his chair. “Well, I’ve only been asking you to come up with one for eight weeks,’’ he said. “I’m all ears.’’

  Whitacre was jumpy and breathless. He clearly thought he had latched onto something explosive, and told the story to his boss in a rush of words. The recent contaminations in the plant, he said, were not the result of mistakes. Instead, he had just learned that they had been caused by a competitor. Ajinomoto in Tokyo had engineered an incredible plot of corporate espionage. The Japanese were behind the viruses plaguing the ADM plant.

  Andreas listened silently. He wanted to hear everything before asking questions. Pacing as he spoke, Whitacre explained that he had received a call at his office the previous day from an Ajinomoto executive named Fujiwara, one of the group who had toured the plant a few weeks before. During the call, Fujiwara had asked for Whitacre’s home number. The request had seemed innocuous, he said; because of the time difference from Tokyo to Decatur, it made sense that Fujiwara might need the number.

  “So last night, the guy called me at home just after eight o’clock,”

  Whitacre said. “And Mick, he knew everything. Almost first thing, he said to me, ‘Do you remember the total nightmare during May, June, July, and August that you had in your plant?’ And when I asked him what he meant, he said, ‘Those months when ADM was losing about seven million dollars a month in the lysine business.’ ”

  The statement had taken him by surprise, Whitacre said, and faster than he could respond, Fujiwara began listing ADM’s lysine production for the past three months. Both Andreas and Whitacre knew that was serious. Those numbers were proprietary, and no one outside the company was supposed to have heard about the problems in the plant. How could this Fujiwara person have found out?

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  Before he had been able to raise that question, Whitacre said, Fujiwara began toying with him, asking coyly why he thought the ADM plant was having so many start-up problems.

  “I couldn’t believe what he said,’’ Whitacre fumed, his voice unnaturally high. “He told me that one of our highest-paid employees is an employee of Ajinomoto, and is sabotaging the plant.’’

  Andreas sat expressionless as Whitacre spelled out the ugly details: The mole was acting on instructions from Tokyo and had been ordered to inject a virus into containers of dextrose for the purpose of wreaking havoc on the plant.

  As he spoke, Whitacre seemed to vacillate between anger and dismay. This Fujiwara call reinforced every bad thing he had heard about Japanese corporations.

  “I’ll tell you Mick, it’s like Rising Sun,’’ Whitacre said, referring to the Michael Crichton best-seller about intrigue at the American headquarters of a Japanese corporation. “Just like Rising Sun.’’

  The idea of using the mole, he said, had come from Ikeda, the top man who attended the plant visit. Fujiwara seemed frightened of the senior Ajinomoto executive, Whitacre continued, and had openly expressed fears that Ikeda might have him killed or deported if he learned of the phone call.

  “I couldn’t understand why he would talk to me, so I finally asked him why he was calling.’’

  Andreas anticipated the answer before Whitacre even said it: money.

  Fujiwara wanted $10 million, Whitacre explained. For that, he would identify the saboteur, give ADM some new microorganisms immunized against the virus, and describe where and when the sabotage had occurred.

  “He said that, with his help, in three days we could solve the infection problems we’ve been wrestling with for four months,” Whitacre said.

  Whitacre finished, and Andreas paused before asking his first question.

  “How well do you know this guy?”

  Whitacre stumbled with the answer, again mentioning Fujiwara’s visit to ADM a few weeks before. Andreas pressed the question, and Whitacre conceded that he didn’t know Fujiwara well at all. Andreas thought for a moment. What Whitacre was describing sounded crazy. Still, it fit the reports that Andreas had heard about the Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 19

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  plant’s problems—the sudden appearance of the virus, the futile effort to stop it. Fujiwara couldn’t simply be ignored.

  “I gotta get this clear in my mind,’’ Andreas said. “Go through it again.’’

  Whitacre repeated the story. Andreas asked a few more questions.

  “Okay, if you hear from this guy again, I want you to talk him down on the price,’’ Andreas said. “I want you to find out the least amount of money he’d settle for.’’ Maybe, he reasoned, they could just strike a deal for the bugs that were resistant to the virus.

  Also, Andreas said, keep this quiet. If there was a mole inside the plant, the last thing they wanted was to give any sign that ADM was onto him.

  A pause. “Keep me informed,’’ Andreas said.

  “Okay, Mick,’’ Whitacre replied, nodding.

  Whitacre headed out the door, while Andreas sat at his desk in thought. Had the news come from anyone but Whitacre, he might have dismissed Fujiwara’s bizarre call as a clumsy extortion plot. But Whitacre understood the plant better than anyone else did. Without him, ADM’s “Mr. Lysine,’’ the company could never have moved so quickly into the business. If he was taking this Fujiwara call seriously, then Mick figured he had better be worried, too. Andreas reached for the phone to call his father, Dwayne, who was staying at his apartment in Florida. This was just the kind of threat the ADM chairman needed to know about. With everything Dwayne had done to build his company and his influence, he would not sit back and let his new business be wrecked by a competitor. No one who knew the history of ADM or its iron-fisted chairman could expect that. The modern era of ADM was set in motion on October 21, 1947, when Shreve M. Archer sat down for a meal of cooked chicken. The fi
fty-nine-year-old ADM chairman and descendant of its cofounder was enjoying his meal in the company’s hometown of Minneapolis when he abruptly stood, gasping for air. A bone had caught in his throat. Archer turned blue, then grimaced in pain as he swallowed the bone. He was rushed to nearby Miller Hospital, but it was too late. Twenty days later, he died of complications from the incident. The sudden, disturbing death of Archer left a void at the company he had directed since 1924. In his years at the helm, Shreve Archer had Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 20 20

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  in many ways become ADM. He had pushed the company to acquire competitors, providing a diversified product line that helped it weather the darkest days of the Great Depression. Most important, he had made an open-ended commitment to the promise of the soybean, a farm staple that had gained prominence only since World War I. Archer pushed ADM into the budding industry, building a giant soybean-processing plant in Decatur. That decision, and countless others like it, had helped transform ADM from a single Midwestern plant at the dawn of the twentieth century into one of the nation’s big grain processors. Succeeding Archer would have been hard for anyone; with no one groomed as a successor at the time of his death, the task seemed all but impossible.

  The man chosen for the job was Thomas Daniels, a descendant of the company’s other cofounder. Daniels had an unlikely background for the position; he had planned on a career in the foreign service and was probably the first head of a grain-processing company who had taken his own polo ponies to college at Yale. But as Daniels took over, ADM was on the verge of a descent into disarray, one that would end almost two decades later in a desperate search for a savior. In the same year as Archer’s death, across town at rival Cargill Inc., a twenty-nine-year-old vice president named Dwayne Andreas was rising to power. He had joined Cargill two years before, when it had purchased his family’s business, Honey Mead Products Company of Cedar Rapids, Iowa. Now Andreas, the fourth son of a Mennonite farm family, was a millionaire and Cargill’s youngest senior executive. At first glance, he seemed unimposing, standing five feet four inches and weighing just 137 pounds. But his bosses marveled at his intelligence and tenacity. He seemed destined for great things at Cargill. No one at that time could have imagined the unlikely pairing of this young, hard-charging executive with a midsized competitor on the verge of decline. For that to occur, Andreas and Cargill would have to part ways, an idea that surely seemed far-fetched. With Cargill’s high hopes for him, it seemed only Andreas himself could derail his career there.