The Informant

by Kurt Eichenwald

  Suh stared back at him, saying nothing. If Mimoto was trying to intimidate him, the effort wasn’t working. Even though Cheil was the smallest lysine company, Suh wasn’t going to let himself be bullied.

  “Anyway, forget about the past,’’ Mimoto said. “We are ready to accept you also, of course, depending on the quantity.’’

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  The others asked what 1994 allocation would satisfy Cheil. Suh insisted on eighteen thousand tons.

  “That is our position,’’ Suh said.

  Mimoto sounded exasperated. “What is the reason?’’ he asked. In the next room, Herndon cracked a smile. Even though Suh was there to negotiate Cheil’s role in a crime, Herndon couldn’t help but admire him a bit. Suh was standing up to the biggest lysine players in the world; he seemed to know that his little company still had the power to wreck everyone else’s scheme. Suh was playing on those fears to the hilt.

  The guy, Herndon thought, was pretty ballsy.

  For several minutes, Wilson explained his proposal. Cheil would be allocated the percentage of the market it was requesting. If the numbers were truthful, the company would be able to sell eighteen thousand tons—maybe more. If the market dropped in size, everyone would cut back. All the companies would stick with their percentages and adjust sales depending on the total market.

  Suh listened impassively as the others explained the proposal for sharing production numbers. Suh asked about using auditors to check the figures.

  “Our preference is to trust each other,’’ Wilson said. “If we find somebody lyin’—death or something like that. Something very bad would happen. We would hire some Mafia figure or something, and rub you out.’’

  The group laughed.

  “If we can’t trust each other in the end, it ain’t gonna work,’’ Wilson continued. “That’s how I feel.’’

  Whitacre nodded. “If we can’t trust each other, it’s not worth meetin’.’’

  Wilson lit a cigarette. They had reached an end point. It was make or break.

  Mimoto looked at Suh. “You are okay for that?’’

  Suh nodded. “Yeah, I’m all right.’’

  “Okay, then, very good,’’ Mimoto said.

  He smiled and looked around the room.

  “Fantastic,’’ Mimoto said with a laugh. “So five companies agree on quantity for the first time.’’

  •

  •

  •

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  Five companies agree.

  “That’s it!’’ Herndon said. “That’s the one.’’

  After more than a year, they finally had a conspirator pronouncing an agreement on tape. Robin Mann was going to love this one. So would a jury.

  Herndon glanced around. Weatherall was standing behind him. Their eyes locked.

  Weatherall smiled and nodded. He’d heard it.

  From that moment, a tone of friendliness permeated the meeting. The group spent hours discussing regional prices and how to handle customers who falsely claimed that they had been offered a better price. If everyone held firm, the customers would have to pay the fixed price to somebody.

  Wilson leaned forward on the couch. “You just say, ‘The price is not gonna be less than x, ’ period. It’s tough to do, but it can be done if you just trust each other that you’re not cheating.’’

  Mimoto agreed. “If we trust each other, we can enjoy the gain,’’ he said. “Offer the simple price.’’

  Wilson walked across the room for a can of soda, then trudged back to the couch. Some of the executives were still talking about their fears of being cheated.

  “We are gonna get manipulated by these goddamn buyers,’’ Wilson said, waving his hands. “They can be smarter than us if we let them be smarter.’’

  Everyone listened in silence.

  “They are not your friend,’’ Wilson continued. “They are not my friend. Thank God we have ’em, but they are not my friends.’’

  He looked around the room.

  “You’re my friend. I wanna be closer to you than I am to any customer, ’cause you can make it that I can make money or I can’t make money. At least in this kind of market. And all I want is to tell you again, let’s put prices on the board. Let’s agree that’s what we’re gonna do and walk out of here and do it.’’

  The pep talk had its effect. The executives were willing to give trust a chance. The men continued their talks, laughing and joking for an hour and a half. With warm feeling spreading, Mimoto invited everyone to join him for dinner at the hotel restaurant.

  “We appreciate it,’’ Whitacre said, following Herndon’s instructions. “Take you up on it.’’

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  The group started chattering. Business was done; who was ready for some golf?

  “I have to make a few phone calls first,’’ Whitacre said. “I’ll meet you on tee in about fifteen minutes.’’

  The executives stood and headed to the door.

  “I have to play golf,’’ Suh said.

  The phone beside Herndon rang just seconds after he shut off the monitor.

  “Hey, is this Bob?’’

  “Yeah, Mark. It’s me.’’

  “What do you think?’’

  Herndon took a breath. “It’s a good tape, Mark. It’s a very good tape.’’

  “Yeah, it’s good, isn’t it?’’ Whitacre said excitedly. “Kinda ties everything together, doesn’t it? Kinda ties everything we’ve been talking about.’’

  Herndon couldn’t argue.

  “You did a great job, Mark. Really great.’’

  Herndon lifted his arms, pushing his shoulders back as far as he could. He breathed out as he held the position, stretching his muscles. He sometimes cheated himself on his warm-ups before he exercised, but today Herndon was going through all his paces. After hours of sitting, staring at a black-and-white screen, he badly needed to loosen up. Once he was limber, he picked up a bucket of one hundred golf balls and headed to a tee on the hotel driving range. The place was relatively empty. He set up his first ball and took a swing. He whacked the balls for ten minutes, moving through the bucket quickly. Herndon heard someone arrive behind him, but stayed focused on his swing. Thwack.

  A golf ball whizzed past him, about three feet from his left ankle. Herndon jumped back and turned around to get a look at who was golfing so carelessly.

  It was Jacques Chaudret.

  Chaudret, wearing a pastel sweater around his shoulders, walked over to Herndon, looking surprised.

  “Oh, I am so sorry,’’ Chaudret said. “It’s a terrible mistake. Unfortunately, that’s how my golf game is a lot.’’

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  Herndon smiled. “You kind of scared me.’’

  “I know. I thought I was going to hit you.’’

  “Well, okay,’’ Herndon said. “Have a nice day.’’

  “Yeah, you, too.’’

  Chaudret turned. But there was something Herndon enjoyed about the moment; he couldn’t let it go.

  “Great weather, isn’t it?’’ Herndon said.

  Chaudret stopped.

  “Yeah, it is,’’ he replied, almost by rote.

  Turning away, Chaudret walked back to his tee. Herndon watched, smirking to himself.

  Boy, if only you knew who I am and what I just did, he thought.

  “Okay,’’ Mimoto said as he walked with a club in hand up to the first tee. “If I win, we get Tyson.’’

  The other executives, gathered around the tee box, all laughed. It was in jest; no one was about to let their golf games decide who received the lysine contract for Tyson Foods or ot
her customers. But the joke set the tone for all eighteen holes. The winner of the next hole gets Hudson Foods. The loser has to give up five thousand tons. We already know Whitacre’s score—sixty-seven plus alpha. As they laughed and played, no one noticed the man on a nearby hill, carrying what appeared to be a gym bag. The man, a member of the SOG team, looked through his sunglasses at the executives standing near the tee box. He turned his gym bag slightly. Without looking down, he gripped the button near his hand. The camera hidden inside the bag clicked.

  Another executive stepped up to the tee. The agent readied his next shot.

  Early that evening, Whitacre arrived at Wilson’s bungalow, dressed casually in a sports coat with the microcassette recorder hidden in the breast pocket. Herndon had removed the F-Bird that afternoon. With so much evidence on lysine, the agents had pushed Whitacre to use his time with Wilson to talk about price-fixing in citric acid. This would be Whitacre’s only chance, when he and Wilson were alone. Wilson headed out of the room and joined Whitacre. The sidewalk between the bungalows was almost like a tunnel, cutting down the natural light from the Hawaiian sunset. Wilson seemed happy; the golf game had relaxed him.

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  The two men stepped off the sidewalk, onto a blacktop parking lot leading to the hotel restaurant. This was the moment, Whitacre thought.

  “So, is citric about where lysine is today?’’

  “Yeah,’’ Wilson said.

  “I thought citric was all perfected by now.’’

  “No. It always goes back to trust.’’

  “Same kind of trust factor there?’’

  “Trust is a little bit different.’’

  The two men stepped over a curb.

  “Do you submit the numbers?’’ Whitacre asked. “Has that helped out?’’

  “Yeah, yeah.’’

  “Is it done by region or by country?’’

  “We do it by country.’’

  “Boy, I don’t know if we can do that.’’

  “Nah,’’ Wilson said, shaking his head. “Not right now ’cause you’re not big enough.’’

  Well, Whitacre asked, are the citric numbers called in to somebody similar to Mimoto? Wilson looked thoughtful. “The numbers, let’s see, the numbers go to Hoffman-LaRoche.’’

  The two men walked under an awning and into a hotel lobby. Whitacre held back a smile. Wilson had just implicated one of the world’s largest drug companies in the citric-acid price-fixing. Whitacre breathed deep. It had been a good day.

  Weatherall and Herndon were already seated at a table on the patio terrace of the hotel restaurant. A breeze came in as the skies darkened, rustling the surrounding palm trees. The evening was gorgeous. Herndon was positioned near a glass wall, with a perfect view into the restaurant. He watched as Whitacre and Wilson walked inside and were joined quickly by the other lysine executives. A hostess steered them toward a large table.

  “Looks like they’re sitting inside, Joe,’’ Herndon said. From the corner of his eye, Herndon saw Whitacre standing. He was pointing outside, saying something. The others stood and began trooping toward the patio.

  “Uh, here they come,’’ Herndon said. “They’re going to sit out here.’’

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  emerged from the restaurant. None of the patio tables was large enough for them, so the executives moved several together. Herndon looked up, catching Whitacre’s eye for a second. Herndon broke the stare, glancing back down to the table. Knowing Whitacre, Herndon thought, he might start trying hand signals or something if they maintained eye contact. Plus now he had the added danger that Chaudret might walk over to talk about the mishap at the driving range.

  The waitress set the agents’ meals on the table and they dug in. They weren’t there for surveillance; there was no reason to pay particular attention to the nearby table. At one point, Herndon noticed that Whitacre had stood, glancing toward him before heading inside. Did he want something?

  “Well, he’s getting up to go to the rest room,’’ Herndon told Weatherall. “I think I’ll follow him and see if there’s something he needs.’’

  Herndon wiped his mouth with his napkin and pushed back his chair. He headed to the rest-room door, and glanced over his shoulder. No one was coming. He walked in. Whitacre was washing his hands.

  “Hey,’’ Whitacre said. “Got something for you.’’

  Herndon could tell that Whitacre was going to keep talking. He quickly looked under the stalls. They were alone. Herndon stood beside the door.

  “Terry and I were talking about citric on the way over here,’’

  Whitacre said. “I got the tape. They’re doing the same thing with citric. Just like I said. Same thing. We talked about numbers they exchanged. They’re exchangin’ numbers, country by country.’’

  Whitacre was pouring everything out, right there in a public rest room. Herndon suggested holding off.

  “It’s fine, Bob,’’ Whitacre said. “And it’s a great tape. Just what you guys have wanted.’’

  Herndon held up his hands. “Okay, that’s good, Mark,’’ he said.

  “Well, just go back to dinner and—’’

  “What time are you guys checking out tomorrow?’’ Whitacre interrupted. Herndon started to answer, then caught himself. He didn’t want to stay in the bathroom chatting.

  “Look,’’ he said, “let’s get together later tonight. Give us a call and—’’

  “I don’t know how late we’ll be out with these guys,’’ Whitacre said, interrupting again.

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  “That’s fine. We’ll be up. Just give me or Joe a call, okay?’’

  “Okay,’’ Whitacre said, nodding eagerly.

  Whitacre headed back into the restaurant, while Herndon walked to the sink, exasperated. Whitacre’s excitement was leading him to take unnecessary risks again.

  Why does he do this? Herndon thought

  The next morning was cleanup for the FBI. The lamp had to be returned, the other recording equipment packed away. Before the morning was out, Weatherall and Herndon were in the lobby, packed and ready to go.

  As the agents waited for the desk clerk, Yamamoto and some of the other Asian executives arrived. They were all checking out around the same time. Herndon and Weatherall noticed them in line, but said nothing.

  It made sense that they were all leaving together. The executives had finished their illegal meeting. And the agents had finished recording it. The lysine investigation was a wrap. With volume and pricing agreements in place, the conspiracy was finally on course; every meeting between the lysine producers from now on would just be an update. Now, the case had to take another turn. The agents had gathered evidence indicating that price-fixing was a way of life at ADM. Many of the other possible products—citric and lactic acid, MSG, even highfructose corn syrup—involved huge industries that dwarfed lysine. Whitacre still had no direct contact with those businesses, but could pick up secondhand information such as his conversation with Wilson in Hawaii. Even Dwayne Andreas’s seventy-sixth birthday party at the company had offered Whitacre the chance to overhear discussions about the citric conspiracy. But he would never be able to develop enough information on his own to bring a solid case. On April 14, the agents and prosecutors met to discuss their options for developing other cases. Herndon and Shepard arrived with a list of ideas. Perhaps the FBI could set up an agent as a supplier in the citric-acid business. Maybe the agents could approach the accountants who were auditing numbers from the citric conspiracy and persuade them to cooperate. The ideas seemed unlikely to succeed. The meeting ended with a decision to pursue two tracks. The agents would push Whita
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  the case for the Springfield U.S. Attorney, on an application for wiretaps at ADM. There was a lot of information they needed for the application, and it would take a long time to develop. But if a judge approved it, the government would hear exactly what ADM executives said in their phone conversations with competitors.

  Something bothered Herndon. The agent stared at Whitacre, who was sitting at a table in a Forsyth hotel as he spoke. His suit jacket was on; in fact, it seemed like Whitacre’s jacket was always on. Herndon glanced at Shepard. Shirtsleeves. His own jacket was hung up over by the door. It was a hot day; the room’s air-conditioning unit was working hard, but still the room was toasty. And Whitacre was wearing his suit jacket.

  What’s up with that?

  “Hey, Mark,’’ Herndon said. “It’s kind of warm. Can I take your jacket?’’

  Whitacre smiled. “Oh, no, Bob, that’s okay. I’ll keep it on.’’

  The conversation resumed, and Herndon sat back. Warning signals were going off in his head. When Whitacre left, Herndon approached Shepard.

  “Hey, Brian,’’ he said. “You know, Mark hasn’t been taking his coat off recently.’’

  “Yeah?’’

  “You don’t suppose there’s a reason for that, like he’s been taping us?’’

  Shepard considered that for a moment. Even if Whitacre was taping, confronting him could be a disaster for their relationship.

  “I don’t think he is, Bob,’’ he replied. “He may be. But I don’t think he is.’’

  Herndon nodded.

  “Yeah,’’ he said. “I don’t think he is, either.’’

  Work was piling up for Whitacre. Not only was he still responsible for lysine, but now his duties had expanded to include setting up legitimate business deals with other corporations. Topping that off, some of his European salesmen were participating in regional price-fixing meetings. It kept him busy.

  On May 3, Whitacre was scrambling to get a few things done. In just eight days, he would be leaving for Europe to meet with the top executives in his division’s European staff, Marty Allison and Alfred Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 229