Hulse didn’t know what to say.
“I’m in turmoil over this,’’ Whitacre said. “I didn’t know what to do, so I thought I’d call you to talk it over. I knew you wouldn’t say anything.’’
The two men hashed through Whitacre’s options. Nothing sounded good.
“This just isn’t fair, being placed in the middle of all this,’’ Whitacre said. “I mean, I don’t want to fix prices. But I don’t want to lose my job, either.’’
As he spoke, Whitacre’s distress grew. “I don’t know, Sid,’’ he said.
“Where do I turn?’’
Hulse listened to his friend’s concerns but said little. He had no idea how to clean up this mess.
•
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The blue waters of Camelback Lake were still and calm in the afternoon air. Usually, the forty-four-acre lake in Scottsdale, Arizona, was alive with motion, as windsurfers skimmed past brightly colored sailboats. But the approaching winter brought a chill this day, November 18, 1992. With the water too cold for swimming, the adventurous played golf instead on one of the championship courses of the lakeside resort, the Regal McCormick Ranch.
Whitacre glanced across the lake from a table at the Piñon Grill, an award-winning restaurant at the resort. He had just arrived in Scottsdale for an industry meeting and was eating lunch with executives from a food company. The talk was casual, the atmosphere relaxing. Whitacre felt calm and happy. Lunch came to an end. Whitacre said his good-byes to his luncheon companions and wandered out of the restaurant to the hotel lobby. Ahead, he saw a bank of pay phones; he hadn’t checked his voice mail for more than an hour. He called in and found that several messages were waiting. He had just finished deleting one message, and pushed zero to hear the next.
Beep. Beep.
Whitacre quickly deleted Shepard’s pager tone and slammed down the receiver. He couldn’t take the tension anymore. Something had to make this come to an end. He picked up the receiver again and called the Decatur Resident Agency. It rang just a few times.
“FBI.’’ Shepard, as always, answered the phone.
“It’s Mark,’’ Whitacre said sharply.
Whitacre said incorrectly that he was calling from Phoenix—the city where his plane had landed that morning. Shepard asked about meeting again.
“Look, I’m here on business; I’ve got a lot of work to do,’’ Whitacre said. “I’m really having trouble with all this. I’ve really been very distraught and working under a lot of pressure for the last couple of weeks.’’
“Why? What’s going on?’’
“Everybody’s turning against me.’’
“Who?’’
“Everybody. My superiors at ADM. They’re all denying any knowledge of wrongdoing. Everything’s against me.’’
Shepard asked a few more questions, trying to soothe his witness. But Whitacre wouldn’t listen.
“You know, I’m a biochemist,’’ Whitacre said. “I have access to lots Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 92 92
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of biochemical books. And I’ve taken a bunch of them home so I can research the lethal doses for a bunch of different chemicals.’’
Shepard paused. “Why would you do that, Mark?’’
“Because I’m considering committing suicide,’’ he said, his voice choking. “I’ve been an upbeat person my whole life, but not now. Not now. For the last couple of weeks, I’ve been very depressed.’’
The words flowed out as Whitacre grabbed at everything. Something, he thought, would make Shepard back off. But Shepard didn’t believe a word.
“Mark, you know you’re not serious,’’ he said evenly. “You’re not going to commit suicide. You’re just upset, and you’re trying to get away from this.’’
“Brian, I can’t keep living two lives. I mean, when does it end?’’
“It ends after you help us. Look, right now we need your help, and you’re the only one who can do it. It’s the right thing to work with us. But we’re going to keep investigating, whether you help or not. That’s the way it is. And if you’re not helping us, if you’re not with us, then you could end up a defendant.’’
Shepard paused to allow his statement to sink in.
“Now, you’re telling me people are denying knowledge of wrongdoing,’’ he said. “I gave you a tape recorder. Where’s the tape of that conversation?’’
Whitacre glanced around the lobby.
“I didn’t make it.’’
“Why not?’’
“If I record any conversations with my bosses, all it would do is implicate me. I mean, they could make me the fall guy. It’s me against the Andreas family, and I don’t see any way I can win that.’’
“Mark, you’re not alone in this. We—’’
“It would never work,’’ Whitacre interrupted.
“Mark—’’
“I talked to a friend of mine. He’s twenty years older than me, but he’s a high-level guy, president of a company outside Illinois. He knows the Andreases, and doesn’t like them. I told him about this situation.’’
Was Whitacre telling outsiders about the FBI? “What’s this friend’s name, Mark?’’ Shepard asked.
“I’m not going to tell you. But he said there’s no way the Japanese would ever trust me in this because I’ve only been with the company three years.’’
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Shepard wrote down Whitacre’s comments.
“And besides, you can’t do anything to me,’’ Whitacre said. “My friend gave me the name of an attorney, a former attorney with the Federal Trade Commission, as somebody to contact who knows all about price-fixing laws. I called the guy.’’
Shepard paused. “You’ve hired an attorney?’’
“I’m not paying for him. My friend is paying for him. And I’m going to pay him back, with interest. In one year. I’ll pay him back. My friend said I should never meet with the FBI without an attorney present.’’
“Okay,’’ Shepard said. Things could be difficult now. Few lawyers would allow Whitacre to continue as a cooperating witness, and Shepard could not ethically press Whitacre to disclose his lawyer’s advice.
“I spent five and a half hours with the attorney, and he says everything I’ve been doing is legal,’’ Whitacre said. “It’s all legal. He said it might be leading to illegal stuff. But for now, it’s legal.’’
Shepard doubted what he was hearing. Any lawyer who said such a thing had not been told the truth, at least based on the tape that the FBI already had in hand. Maybe this lawyer didn’t even exist. Shepard challenged Whitacre’s statements.
“No, that’s what he said,’’ Whitacre insisted. “He told me I can legally contact competitors and talk about prices and volumes that we quote to customers.’’
Shepard reminded Whitacre of everything he had told him in the past. Whitacre knew what was going on, Shepard said. The FBI was only involved in this because Whitacre had been so troubled by it all. He had wanted to help clean everything up. What happened to that? Why was ADM so upset about the FBI being around if nothing illegal had been going on?
Hesitating, Whitacre shifted gears, saying that Mick Andreas was upset by the FBI’s poking around in the Fujiwara case because he had told Whitacre about meetings in Florida and Europe.
“Were those price-fixing meetings?’’
“I think so. And Mick was upset because Dwayne didn’t know he had told me about the meetings.’’
Even though the lysine talks were probably legal, he continued, Mick was worried that if the FBI overheard Whitacre’s calls to competitors, the agents might get suspicious and start investigating.
“So it’s not that they’re afraid of lysine,’�
�� Whitacre said. “They’re afraid that the FBI might uncover stuff about meetings in the other divisions.’’
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Shepard listened carefully. Talking with Whitacre was like trying to grab smoke. He always had another reason, another explanation.
“Well, Mark, there’s only one way to convince us of this,’’ Shepard said. “You’ve got to cooperate fully. You have the recording device. You’re going to have to start taping these conversations.’’
Whitacre paused.
“Fine, Brian,’’ he said finally. “I’ll tape it.’’
The following Tuesday, November 24, Whitacre sat in room 545 at Decatur’s Holiday Inn, across from Shepard and Weatherall. The meeting started badly. No, Whitacre said, he hadn’t been able to tape anyone at ADM yet. And no, he had no tapes of Fujiwara, either. He had been on the road too much. After Arizona, he had traveled to Lake Charles, Louisiana, to meet with Chris Jones and Tim Hall, two former colleagues from Degussa whom Whitacre was consulting about a new project at ADM. Without any tapes, Shepard asked Whitacre for details of meetings he had already described between ADM and the other lysine competitors.
The talks had indeed taken place, Whitacre said—in Tokyo, Maui, Mexico City, and Paris. But they were legal. They had discussed pricing and production simply in an effort to form an industry association. The companies wanted to work together to expand the lysine market, he said, and an association seemed the way to go. Maybe the meetings might lead to price-fixing, he added. But at this point, everyone was trying to follow the law. They had even discussed the idea of bringing lawyers to the association meeting to make sure everything was on the up and up.
Sitting on the bed, Weatherall watched Whitacre. He didn’t believe a word. It was all too neat, too contradictory with his other statements. Suddenly, now that Whitacre was consulting an attorney, everything he said exonerated him from wrongdoing.
Weatherall had little doubt what was going on.
This guy, he thought, has been coached.
At home, Whitacre was up late, pondering his problems with the FBI. His family had noticed something was wrong; he had been more distracted and inattentive than usual. But he couldn’t talk to Ginger about this. She had already made it clear that she wanted him to leave ADM or work with the FBI. Neither option seemed acceptable. But now, finally, Whitacre had come up with a plan, a way out. Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 95
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Whitacre smiled to himself. Outsmarting Shepard wouldn’t be so tough. In a short time, he wouldn’t have to worry about the FBI anymore. Best of all, he felt sure that no one would ever figure out his role in the events about to occur.
The next day, Whitacre was at his desk when he reached for the phone to call Sid Hulse.
“We’ve got volume building up in the plant,’’ he said. “So we’re going to stop worrying about getting prices up. In fact, I want you to drop ’em.’’
Hulse sounded uncertain. Not long ago, Whitacre was telling him about the illegal efforts to drive prices up, now he wanted to push them down. But Whitacre implied that the change of strategy was being ordered by ADM’s top management. Hulse asked a few specifics about where the prices should be.
“Do whatever you have to do,’’ Whitacre said. “Just sell as much volume as you can.’’
Hulse cautioned Whitacre that the new strategy could lead to a collapse in prices.
“I know that,’’ Whitacre said. “But our warehouses are filling up, and our production costs will be lower if we sell more.’’
“Okay,’’ Hulse replied.
Whitacre replaced the receiver and smiled. The FBI thought that they were in control, that they could decide what Whitacre would do. They were wrong.
I’ve got control of this whole thing.
In Decatur, no one but Whitacre understood the marketing of lysine. If anyone wanted a price, they asked Whitacre. If anyone wanted to know what the Japanese were doing, they asked Whitacre. He could decide what others knew, and what they didn’t. And he wouldn’t tell them anything about what was happening now: He was seizing control of the world lysine market; he was ordering prices into a free fall. To flood the market with volume, ADM
would have to drop its price every time the Japanese or Koreans tried to match it. The competitors would respond in kind, and a race to the bottom would ensue. Since the Asian competitors always called Whitacre, he could blame the move on his bosses. When his bosses asked, he could blame the Asians. This would take the wind out of the recent trend of price increases. After that, it might take a few weeks, but Whitacre felt confident he could push everyone toward a price war. Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 96 96
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It was the first stage of his plan, and it was perfect. With a price war, there couldn’t be price-fixing. And without price-fixing, the FBI wouldn’t need a witness.
Whitacre felt gleeful. Now, all he had to do was keep up appearances for a few weeks. He was almost free.
About a week later, the Whitacres were in the family room when the phone rang. Ginger answered; it was for Mark. He walked to the living room, sat on the couch, and picked up a cordless phone.
“Mark Whitacre.’’
“Ah, yes, Mr. Whitacre? This is Mr. Mimoto.’’
Whitacre shifted in his seat. He hadn’t been expecting his counterpart from Ajinomoto to call.
Mimoto continued before Whitacre could respond. “I wanted to speak to you about lysine sales in Japan,’’ he said.
“Excuse me, Mr. Mimoto, I’m sorry,’’ Whitacre said. “We have a bunch of people over at the house tonight, we’re having a party here. I was wondering if maybe we could talk about this another time?’’
“Oh, yes,’’ Mimoto said. “Sorry. We can speak another time.’’
Whitacre said he would call on a more convenient day and hung up. He headed back to the family room. Ginger was on the couch, reading a book. The kids were watching television.
There were no guests. There was no party.
But if the FBI was listening in on his calls, he had just made sure that they would have nothing to hear.
Byron Cudmore parked his light-blue Chevy Silverado pickup truck a short distance from the lobby of the Holiday Inn in Decatur. It was about six o’clock on the evening of November 30. Picking up his briefcase from the passenger seat, the prosecutor hustled across the lot to the hotel’s entrance. Inside, Cudmore saw Shepard waiting in a lobby chair. The two men greeted each other, and Shepard said that everything was set. Cudmore nodded.
Without another word, Shepard led the way past the glass-paneled Greenhouse Restaurant, toward the elevators. After almost a month of talking about Shepard’s cooperating witness, Cudmore would finally be meeting him.
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meeting. Things with Whitacre were falling apart; the agent didn’t know what to believe. Whitacre kept talking about some lawyer he was consulting, and at first, the agents had feared he was being coached on his answers. But now Shepard wondered whether the lawyer even existed. What lawyer would allow his client to keep meeting, alone, with the FBI?
To help get Whitacre under control, Shepard wanted him to sign a cooperation agreement with the U.S. Attorney’s office. Most cooperating witnesses work without such agreements. But often—particularly when a witness is being difficult—the terms of cooperation are put in writing. That way, one document describes the witness’s obligations to the government and the legal consequences if those terms are not met. In the call to Cudmore, Shepard said that he had mentioned the idea to Whitacre, who had agreed to meet with the prosecutor to discuss signing an agreement. Cudmore followed Shepard to a guest room, wh
ere Weatherall was already waiting.
“When is Whitacre supposed to get here?’’ Cudmore asked, setting his briefcase on the hotel room table.
“He should be on his way,’’ Shepard said.
The knock came a few minutes later. Shepard let Whitacre in and introduced him to the prosecutor. Whitacre struck Cudmore as awfully young; he looked more like a scientist than a top-level executive. Cudmore asked Whitacre to take a chair at the table.
“What we’re trying to do today is get a chance to eyeball one another, and see what makes each other tick,’’ Cudmore said. “That will give us a chance to develop some level of trust, and for you to ask me any questions to flesh out a cooperation agreement.’’
Cudmore asked if Whitacre had any worries.
“Well, I’m concerned about myself and my family and my new home,’’ Whitacre said. “I mean, we just bought our house not too long ago, and it’s the house that Dwayne Andreas used to live in. And I’m worried about the expenses because I have to pay for it.’’
Just days before, Whitacre said, he had been granted a onehundred-thousand dollar raise and forty thousand additional shares of stock options. His job was lucrative, and he didn’t want to risk it. Cudmore listened, incredulous. Clearly, Whitacre did not fully understand his situation. Regardless of the risks, he didn’t have many options.
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basically put yourself in a situation where cooperation is the logical way for you to proceed. You can’t take yourself out of this situation; you can’t make it go away.’’
Whitacre sat erect and didn’t speak.
“If you’re not cooperating, you could end up being a defendant,’’
Cudmore cautioned.
“No, that’s not right,’’ Whitacre argued. “I’ve told Brian, there hasn’t been any price-fixing yet.’’
“That’s not the only issue that could lead to a criminal prosecution,’’ Cudmore said gently. “You’ve told us a lot of things. In fact, you’ve told us so many things that there have to be some lies somewhere. Lying to a federal agent can be the basis for a prosecution. That’s a felony, and I think the penalty is five years in prison and a big chunk of money.’’
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