The Informant

by Kurt Eichenwald

  Again, the French executives said that the Koreans would not cooperate. They would cheat. Whitacre suggested that sales numbers could be audited by an accounting firm hired by the lysine producers.

  “We do that in citric,’’ Wilson added.

  Rollier and Crouy encouraged Wilson and Whitacre to attend more meetings. Even without agreements to limit volume, the meetings helped. Wilson’s face was hard. “Well, I don’t know.’’

  Crouy leaned in. “Let’s not forget that if prices went up in Europe, it’s because we talked in Mexico first.’’

  “That’s right,’’ Wilson agreed.

  “Then because we talked in Europe a lot after.’’

  “You made it happen,’’ Wilson said.

  “I mean, it didn’t just go up like that.’’

  “You made it happen,’’ Wilson repeated.

  Whitacre tried not to breathe. Crouy and Wilson had just confessed: Lysine prices went up because competitors met in Mexico. They made it happen.

  The executives drank coffee after dinner. Past eight-thirty, Whitacre checked his watch. He and Wilson needed to leave, or they would miss their plane. Whitacre picked up the $267 dinner bill, and the men parted ways. Wilson and Whitacre hurried to a cab. As the cab made its way to Meigs Field, Whitacre decided to make one more point for the tape. He mentioned that he had paid the bill for dinner.

  “On my expense report, should I put dinner with Philippe Rollier and Alain Crouy of Eurolysine?’’

  “Nah,’’ Wilson said. “Probably not.’’

  “I did that one time and Randall kicked my ass.’’

  “Yeah, yeah. Well, better not.’’

  Whitacre relaxed in his seat. It was the perfect close for the evening. Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 157

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  Later, shortly before eleven-twenty, Whitacre was back at the Best Western, barely able to contain his excitement.

  “Brian, you’re not going to believe it,’’ Whitacre breathed. “They talked about everything. They talked about Mexico. Terry told them all about citric, how they do it. And it’s just like I told you.’’

  Shepard held up a hand. Whitacre was a little too excited. He needed to slow him down.

  “That’s great, Mark,’’ he said. “Let’s take this one step at a time. Did you get everything on tape?’’

  “I used the recorder, just like Tom said. I think it was fine, I think everything worked fine.’’

  “That’s super. Why don’t we get the recorder off first, and then we can talk.’’

  “Okay, Brian.”

  Whitacre shucked off his suit jacket.

  “Man, Brian,’’ Whitacre said, grinning. “You’re gonna love it. You’re just gonna love it.’’

  That night, Ginger Whitacre was awakened by the sound of her husband coming up the stairs. She glanced at the bedside clock and saw it was past one. She could scarcely believe his days; she knew he would be getting up in just over four hours. Between ADM and the FBI, he was barely sleeping anymore.

  Ginger leaned up on her elbows as Mark quietly pushed the door open. His tie was already loosened and the top few buttons of his shirt were unfastened.

  “I’m awake,’’ she announced.

  “Hey,’’ he said softly. “How you doing?’’

  “I’m fine,’’ she said.

  “Chicago went well,’’ said Mark, as he unbuttoned the rest of his shirt. “Just finished up with Brian.’’

  Ginger took a deep breath, saying nothing. In recent weeks, her attitude had soured toward the FBI. They were demanding a lot of her husband.

  “Hey,’’ Mark said as he took off his shirt, “look at this.’’

  He walked over to a small brass lamp on the bedside table and turned it on.

  Ginger stared at him, aghast. Somebody had shaved his chest hair. The hair they always joked about, because it had taken most of Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 158 158

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  their marriage to grow. Now, there were strips of bare skin across his chest.

  “Oh, my God,’’ she gasped.

  “Now I’ve got a chest like a woman,’’ Mark laughed.

  “Why did they do that?”

  Mark explained as he took off his pants.

  “Hey, that’s not all,’’ he said, turning his pocket inside out. “They cut a hole right here, too. Can’t carry change in that pocket anymore.’’

  “Are you joking? Not your good pants!’’

  Ginger seethed. The FBI was taking over her husband’s life. It was one thing to cooperate. It was something else when the government was shaving her husband’s body and cutting up his clothes.

  “This is ludicrous,’’ Ginger said. “Why does this have to be you? These FBI agents are trained to put their lives on the line. You’re not. If somebody needs to do all this, let it be them.’’

  Mark laughed, telling her not to worry. But Ginger knew he was just as bothered as she was.

  “Mark, you’ve got to get out of this,’’ she said. “Why don’t we say you got a job offer? They can’t make you stay just to tape, can they? Can’t you leave?’’

  Whitacre sat down on the bed.

  “I don’t know,’’ he said softly. “I don’t know.’’

  The next morning, Shepard and Weatherall drove to Springfield to turn in the latest tapes. They arrived at the ELSUR office by 10:40 and obtained duplicates. Soon, they were listening to the tapes, noting the best phrases.

  Pat ’em down for wires.

  That could spell trouble. They needed to make sure everything was being done to protect Whitacre.

  We do that in citric.

  Perfect. Now the larger case involving citric acid was making progress.

  If prices went up in Europe, it’s because we talked in Mexico first. Mann would want to hear about that portion. It was as close to an admission as anyone could hope.

  By about three, Shepard and Weatherall were hustling down the hallway to find John Hoyt or Dean Paisley. This was a huge breakthrough. Hoyt was in his office. For several minutes, the two agents briefed Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 159

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  him on the new tape. The ASAC offered congratulations and handshakes. After they left, Hoyt pulled out his daily planner, where he kept a record of important meetings. He flipped to the page for April 29.

  “Brian and Joe re: ADM,’’ he scribbled.

  Hoyt smiled. He could summarize the briefing in one word. He brought his pen back down on the page.

  “Homerun!!” he wrote.

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  CHAPTER 7

  The receptionist on duty peered through the bulletproof glass in front of her desk, into the lobby of the FBI’s Springfield office. A young stranger dressed in a conservative suit had just come through the public entrance and was walking toward her. He was a handsome man, standing more than six feet tall, with reddish brown hair and a confident manner. The receptionist watched as he took a small leather case out of his suit jacket and flipped it open. A badge and credentials—his “creds.” The man was an agent.

  “Good morning,’’ he said. “I’m Bob Herndon. It’s my first day.’’

  To Herndon, the moment felt good. The thirty-year-old agent was back in an FBI office, showing his creds, identifying himself by name. It had been a long time.

  For three years before this day in June 1993, Herndon had worked undercover, posing with a false name and identity in a long-running counterintelligence project. All that time, he and his wife had been separated from their friends and family. He couldn’t carry real identification, couldn’t walk into the office where he was assigned. It had been challenging work, but he had been ready to come in, to be Bob Herndon again. He wanted to go home to
the Midwest; Springfield needed more agents. The match was perfect.

  Herndon and his wife, Raelene, had just purchased a house nearby, and he was already boasting to friends about his three-mile commute. His phone calls with Bob Anderson, the supervisor who ran his new squad, left him feeling as though a good relationship was already developing. Anderson appeared in a few minutes and escorted Herndon back to his office. The supervisor broke into a grin as he sat down.

  “Well, I’ve got some news for you,’’ Anderson said. “You’ve been traded.’’

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  A last-minute transfer had been ordered, Anderson explained. Herndon was being moved to the squad supervised by Dean Paisley, assigned to a complex financial investigation that had been under way for months.

  “It definitely needs another person,’’ he said. “And you’ll be working with a couple of great guys.’’

  Anderson said that the case involved ADM. Herndon stared across the desk blankly. He had no idea what Anderson was talking about. For forty-five minutes, the supervisor provided a crash course in ADM, lysine, and price-fixing. He briefly mentioned other allegations from the cooperating witness, including the corporate espionage, the bugging of the Decatur Club, and the bogus extortion claim.

  “Now, the case is being handled in Decatur,’’ Anderson said.

  “That’s about forty miles away, but it’s an easy forty miles, with hardly any traffic.’’

  He explained that Herndon could work in Springfield. But much of his time would be spent in Decatur, where he would also have a desk. Anderson finished up and paused for questions.

  “Sounds great,’’ Herndon said.

  The supervisor stood and showed Herndon to his new desk. He gave his new agent the number for the Decatur Resident Agency, telling him to call Shepard and Weatherall. Probably he should head out there today, maybe catch lunch with them, Anderson suggested. Sitting at his new desk, Herndon picked up the phone. He was excited about the case and eager to meet his new partners. Still, he couldn’t shake the feeling that his bubble had been burst. That three-mile commute was history.

  Later that day, the three FBI agents were walking down a dusty Decatur road. Despite the hot sun, Shepard and Herndon wore their suit jackets to cover the guns holstered on their hips. Weatherall was in shirtsleeves; he had left his weapon inside his briefcase. The agents were heading to lunch at the Lock Stock & Barrel, about a mile away. As they walked, Shepard and Weatherall questioned Herndon. The investigation had begun progressing smoothly; the last thing they needed was some young hotshot spooking Whitacre. Would he take shortcuts? Was he a know-it-all?

  Answering the questions, Herndon poured out his story. He had grown up a strapping, middle-class kid in Overland Park, Kansas, the only child of a state auditor and a schoolteacher. In school he trained to be an accountant and worked with a Kansas City firm. But Herndon Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 162 162

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  had always wanted to be with the FBI and applied in 1986. It was good timing; the savings-and-loan crisis was blossoming and the Bureau needed accountants. So, at the age of twenty-three, Herndon had been shipped off to the FBI academy in Quantico, Virginia. After his training, Herndon had first been assigned to New Orleans, where he investigated possible fraud at a thrift. The case had been a success, with Herndon “flipping” a crooked bank officer, persuading him to plead guilty and cooperate. That was followed by a case involving a federal judge who took bribes. An FBI team that included Herndon had wired up a witness and planted listening devices in the judge’s chambers, gathering the evidence to send him to jail. Coming off that case, Herndon had been chosen for the counterintelligence project.

  Herndon began to worry that he was talking too much; he didn’t want his new partners thinking he was out of line. He changed the subject.

  “Well, Bob Anderson told me about your case,’’ he said. “It sounds great.’’

  “Let’s not get into it here,’’ Shepard said.

  They arrived at the restaurant; it seemed nice and agent-priced. Weatherall and Herndon took advantage of the all-you-can-eat salad bar, while Shepard just sipped on black decaffeinated coffee. At the table, Shepard described his background. He mentioned that he had originally trained to be a meteorologist, setting off a slew of jokes about TV weathermen. Weatherall talked about growing up in Texas, his military background, and the types of cases he had handled since being stationed in Champaign. The mood relaxed as the three men began to get a better sense of one another. This partnership seemed as though it might work. During his first few days on the case, Herndon reviewed the files, now three volumes thick. He knew he had to hurry; the investigation was not going to wait for him. Already, another price-fixing meeting was scheduled in a few days for Vancouver, British Columbia. As he flipped through, Herndon wrote down each name. Dwayne and Michael Andreas, as chairman and vice-chairman, were clearly the people in charge of running ADM, along with Jim Randall, the president. Mark Whitacre and Terry Wilson were most directly involved in the lysine price-fixing. The names of the foreign competitors were the hardest to keep Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 163

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  straight. Ajinomoto seemed to have the most contact with ADM, through Kanji Mimoto and Hirokazu Ikeda. They were the Japanese company’s version of Whitacre and Wilson. The managing director at Ajinomoto, Kazutoshi Yamada, was the equivalent of Mick Andreas. About a month before, Yamada had flown to Decatur for a meeting with Mick Andreas. Whitacre had taped the conversation, but it wasn’t of much use.

  Yamada was easy to mix up with Yamamoto of Kyowa Hakko. But of the two, Yamada was far more important—both his company and his authority were bigger. One simple trick to remember who was who: The one with the shorter name was the bigger player. Besides the Japanese, there were other foreigners involved—

  executives with European subsidiaries of Ajinomoto, as well as officers of two Korean companies, Miwon and Cheil Jedang Ltd. Over time, Herndon figured, he would get comfortable with the names. He reviewed tapes from the investigation, which now numbered almost fifty. There had been a lot of meetings already; in just the past few weeks, ADM had met with the Japanese in both Decatur and Tokyo. As he listened to the recordings, Herndon thought he could help by writing summaries of them. He had used such a system in the case against the federal judge, and it had been helpful. Shepard liked the idea when Herndon proposed it, and gave him the go-ahead. Throughout June 23, planes carrying executives from the world’s lysine producers landed at Vancouver International Airport. A gathering on the American continent seemed only fair; ADM had traveled to Tokyo the month before. Plus, in Vancouver, they remained out of the reach of law enforcement from the United States, where antitrust laws were particularly tough.

  The executives from each company arrived at different times. ADM from America. Ajinomoto and Kyowa Hakko from Japan. Miwon and Cheil Foods from Korea. Even the executives from Ajinomoto’s European affiliates, Eurolysine and Orsan, flew in, heading to the meeting at the Hyatt Regency Vancouver.

  As the men traveled through the terminals that day, no one noticed that they were being photographed and videotaped by the Royal Canadian Mounted Police. For while American law-enforcement officials had no authority in Canada, they did have an assistance treaty with their northern neighbors. And the RCMP was recording every public move made by the conspirators.

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  The next morning, June 24, Joe Weatherall was in his hotel room at the Hyatt in Vancouver. Weatherall had drawn the assignment for this trip, to serve as Whitacre’s contact and to provide help to the RCMP. At about eight-fifty, the phone in his room rang.


  “Joe?’’ a voice said. “Hey, it’s Mark.’’

  Whitacre described the morning’s plans. He and Wilson would meet with Ajinomoto to discuss monosodium glutamate, or MSG, the additive best known for its use in Chinese food. Whitacre was not responsible for MSG; that product was handled at ADM by Barrie Cox, who also ran citric. The meeting would give Whitacre a chance to hear what kind of discussions took place with products other than lysine. Throughout the morning, Whitacre called Weatherall with updates on the MSG talks. Ajinomoto wanted their executive in charge of MSG to meet with Cox. At one point, Whitacre said, an Ajinomoto executive had asked, “Can we do MSG like we do lysine?’’

  Whitacre said that the lysine meeting was scheduled for about one o’clock, and promised to call at the first break. Weatherall thanked him and hung up.

  For a moment, the agent reviewed his notes.

  Now it’s MSG.

  These companies wanted to rig the market for every product they sold.

  Later that afternoon, Dean Paisley came out of his office and signaled to Herndon. “Hey, Bobby,’’ he said, “Joe’s on the line.’’

  Herndon got up from his desk and hurried over. Paisley was already back at his desk.

  “Okay, Joe, I’ve got Bobby here,’’ Paisley said to the speakerphone.

  “So what’s going on up there?’’

  “Well, our friend tells me it’s been a good meeting,’’ Weatherall replied slowly.

  Weatherall provided a quick rundown of the developments. The meetings had taken place throughout the day; all five lysine producers attended. According to Whitacre, a pricing agreement had been struck, but volume was still a problem. ADM was pretty mad. The agents discussed Vancouver excitedly. Even though the Canadians had refused permission for Whitacre to record, the FBI now had its first solid evidence that all lysine competitors—not just one or two companies—were gathering for secret meetings. The agents ended their call feeling confident. It was good to hear Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 165

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