The Informant

by Kurt Eichenwald

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  it seemed odd that he would bring the project up. Maybe that was a sign there was nothing to these Degussa allegations. Maybe Jones and Hall had simply shared their expertise in methionine, without divulging Degussa’s secret process. But as they talked it through, the agents began to wonder. Maybe that’s just what Whitacre wanted them to think. Maybe he offered his side of the methionine story because, somehow, he had figured out that the government was on his tail.

  Joe Hartzler sat in the grand jury room of the Springfield federal courthouse, eating his lunch. The prosecutor was filling in for Heaton at a meeting scheduled for shortly after one o’clock. For the first time, prosecutors in both the methionine and lysine cases would be in the same room, laying out their positions. Because Whitacre was a cooperating witness in one investigation and a potential defendant in the other, the two cases were hopelessly intertwined. The expectation was that by the end of this meeting, the two sets of prosecutors would be cooperating.

  Shepard, Herndon, and John Hoyt were the next to arrive, accompanied by Robin Mann and two other antitrust lawyers, Marvin Price and Susan Booker. The six had just returned from lunch. The group greeted Hartzler, joining him around the conference table. The agents had been pleased to learn a few weeks before that Hartzler was taking a role in the lysine case. Hoyt had worked with Hartzler fleetingly in the 1980s, when the prosecutor was bringing criminal cases in Chicago against Puerto Rican terrorists. Hoyt had been impressed with Hartzler’s aggressive style.

  As the group waited, they discussed strategies. They had plenty of time; Peter Clark and Jim Baker, prosecutors from the Justice Department’s Fraud Section who were involved in the methionine case, had been delayed in their flight from Washington.

  Hoyt was appointed to make the opening presentation. The group would have to be savvy; they had heard that Clark had a strong, aggressive personality and was not likely to bend if confronted. The fraud prosecutors finally arrived and quickly took their seats. Hoyt smiled, asking about their flight and trying to set an amiable mood.

  “Now, we’ve all kind of got an embarrassment of riches,’’ Hoyt said as he segued into the main topic. “We’ve got two cases that both seem pretty important. But each one could cause the other trouble.’’

  Hoyt began summarizing portions of Harvest King, stressing that it Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 238 238

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  involved important allegations against a Fortune 500 company. Clark broke in.

  “I’ve heard about your case,’’ Clark said in a booming voice. “But our case is important, too. It involves the same Fortune 500 company. And the agent is finding the witnesses to be very credible.’’

  With that, Clark seized control of the conversation. Shepard and Herndon were surprised; they had never seen anyone from the Justice Department so forcefully shove aside an FBI supervisor. Over time, the two sides thrashed out their positions. They agreed that Shepard and Herndon needed to meet the cooperating witness in the Mobile case so that they could examine his story in light of other information they knew. They also resolved to include the Mobile allegations in Springfield’s wiretap application. Springfield would also issue grand jury subpoenas in the Mobile case for bank records of individuals in their district—including Whitacre. Robin Mann spoke up. Mobile had no looming statute-oflimitations problem that required filing charges anytime soon, she said.

  “So can you give us assurances that you won’t take any action in your matter until the completion of our investigation?’’ she said. Clark stiffened. He had the look of someone who had been hit in the face with sand.

  “I’m not giving you guarantees about anything,’’ he snapped. Mann and Clark stared at each other for a second, the air between them frigid. Finally, Mann pressed Clark again on the timing of a potential prosecution.

  “If it comes down to it, the decision will be made by Assistant Attorney General Jo Ann Harris,’’ Clark responded, his tone cold. The room was silent. Invoking the name of Harris, the head of the Justice Department’s Criminal Division, struck the antitrust team as excessive. All that these cases needed was coordination; there was no need to run to senior officials in Washington. Whatever else was going on, Clark was making it clear that he had no intention of being railroaded by Springfield. Hartzler cleared his throat. “Well, Peter,’’ he said, “couldn’t you agree not to take action until the Springfield agents have an opportunity to meet with the Mobile agent? That way, we can coordinate, and that might influence how we do things.’’

  Clark nodded. “Yeah, I’ll do that. But I want you to understand. Any postponement of further action on this case is only temporary.’’

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  He looked at the assembled group. “We are not stopping this investigation,’’ he said. Just off Interstate 10 in the Louisiana town of Lake Charles, the Players Riverboat Casino floated dockside. The vessel appeared to be of the Victorian era, belying its true age of less than one year. A huge paddle wheel was visible behind it—a nicety required on all casino riverboats by Louisiana gambling laws, even though this one was powered by diesel engines and underwater propellers. In its first few months, the riverboat had brought an economic boom to Lake Charles, an oil town still struggling from the collapse of crude prices in the 1980s. Some folks in town had once considered the boat a sign of moral decay. But now, with money coming in, the casinos were mostly viewed as a blessing, the town’s salvation.

  On August 24, Shepard and Herndon drove past the riverboat and eyed its inviting polished chrome and flashing lights. Perhaps, the agents agreed, they would visit the casino later. But first, they had to stop by a hotel up the street, where Craig Dahle was waiting to introduce them to his cooperating witness. Dahle met the two agents in the hotel’s downstairs restaurant for dinner. Everyone was friendly, but the atmosphere was strained. The agents knew that one of the cases was probably going to be derailed before too long. The only question was whose.

  After his meal, Dahle checked his watch.

  “I better get upstairs in case my guy shows up,’’ he said. Shepard and Herndon agreed to come up soon.

  When they arrived, Dahle was still alone. The witness, Kyle Rountree, knocked on the door about ten minutes later. After the introductions, Dahle walked his witness through his story. Rountree said that the former Degussa employees, Jones and Hall, now worked at a Lake Charles company called Kronos. Rountree worked with them and made no secret that he disliked Jones. A woman close to Jones had raised Rountree’s suspicions about espionage. She showed him documents from a computer disk she claimed to have found on Hall’s desk. The documents appeared to contain proprietary data on Degussa’s methionine process. Rountree mentioned that he had letters between Jones and Mark Whitacre, as well as check stubs documenting ten-thousand-dollar payments from ADM to the two former Degussa executives. A date on one check matched the date on a letter from Whitacre to Jones. Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 240 240

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  “You told me something last time about Whitacre and the sign-in sheet at Kronos,’’ Dahle said.

  “Yeah, I remember seeing his name on the Kronos visitor’s log sometime around November of 1992.’’

  Herndon blinked. “How do you remember a visitor’s log from two years ago?’’ he asked.

  “I just routinely check the visitors’ log so I can know who’s coming and going,’’ Rountree said.

  The answer didn’t make a lot of sense to Herndon, but he dropped it. The interview lasted another hour, but Rountree offered no more details about Whitacre.

  After it broke up, Shepard and Herndon walked down the street to the riverboat casino. They were feeling pretty good; there seemed to be no evidence that Whitacre had been involved in wrongdoing. Probably Mobile was nothing
to worry about.

  The effort to obtain authorization for wiretaps at ADM was moving ahead. As the lawyers explained it, they probably had enough P.C.—

  “probable cause”—to persuade a judge. But, for approval, they also needed to demonstrate that the FBI had the technical ability to tap specific company phones. It was a tall order, since the agents couldn’t exactly walk into ADM and start asking about how the company’s phone system worked.

  But then again, maybe they could. At one of the meetings in Forsyth, Shepard told Whitacre that they wanted him to ask Mick Andreas a few questions. All it would take was a little playacting. On the morning of September 12, Whitacre turned on the tape recorder in his coat pocket as he walked toward Mick Andreas’s office.

  “Mick, how you doin’?’’ he said at the doorway.

  Andreas looked up from his desk. “Hey, how you doin’?’’

  For a few minutes, Whitacre discussed some proposed investments for his division. Eventually, he mentioned that one lysine competitor was worried about the security of ADM’s phones.

  “I said security shouldn’t be a—for me to call on these phones—I don’t see that as a problem,’’ Whitacre said. “Do you?’’

  Andreas didn’t understand. “What?’’

  “Like for them to call me on a lysine problem on our phones here at the office,’’ Whitacre said. “I couldn’t imagine these phones could be a problem.’’

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  “To tap these phones or get into these phones, you gotta get inside the building,’’ Andreas said.

  He pointed to the wire attached to his desk phone. “This phone line doesn’t go anywhere. It goes down into a computer, and then comes out on one of a hundred or five hundred lines.’’

  “That’s what I thought.’’

  “It just does it at random,’’ Andreas said.

  Essentially, the computer guaranteed that a single phone line could not be tapped. Plus, anyone trying to place a tap would have to get past the company’s on-site telecommunications crew, who were on duty twenty-four hours a day. The phones were safe.

  “But that doesn’t mean we go around . . . ,’’ Andreas said, waving his hand in the air. “Gotta be careful what we talk about.’’

  The latest Andreas tape was a letdown for the government. ADM

  seemed to have a security system in place that was virtually impenetrable. The investigators wouldn’t be able to show a judge that they could tap the specific lines they wanted.

  The application for wiretaps was at death’s door. The agents could still gather information about lysine—in October, meetings were scheduled in Chicago between Ajinomoto and ADM, and the larger group meeting was set for Zurich. But they might have to accept that they would be unable to prove ADM’s involvement in other pricefixing conspiracies. Howard Buffett bid good-bye to Congressman Dick Durbin and hung up the telephone. Buffett was feeling pretty good about himself. Maybe he had just saved ADM from being caught up in a scandal. A few years back, Buffett had been recruited to ADM from his hometown of Omaha—the city where his famous father, Warren, presided over an investing empire. By the fall of 1994, Howard Buffett was serving as a director, as well as an assistant to Dwayne Andreas. Buffett was the company’s chief spokesman and its prime contact for the nation’s political elite. But Buffett also saw part of his job as helping to keep the company out of trouble. The call with Durbin was part of that effort. Buffett had heard days before that the congressman was interested in going to a Chicago Bears football game. Buffett had mentioned that to Dwayne Andreas, who told him to make the necessary arrangements.

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  That summer, a scandal had enveloped Mike Espy, the Secretary of Agriculture for the Clinton administration, because of gifts he had taken from companies—including a basketball ticket from the Quaker Oats Company. Setting up Durbin with seats at a Bears game, the secretary said, sounded awfully similar. Buffett thanked the secretary and telephoned a lawyer to ask about the situation. The lawyer came back with a strong answer—the tickets couldn’t be provided unless Durbin paid part of the cost.

  When Buffett informed Durbin, the response could not have been more gracious. The congressman thanked Buffett for his efforts and promised to pick up part of the tab himself. Buffet felt confident that he had just helped ADM dodge a bullet.

  Not everyone saw it that way. Days later, Dwayne Andreas confronted Buffett. He had heard everything about the tickets. And he was livid.

  “If a congressman asks you to do something, you do it!’’ Andreas snapped. “If there’s something wrong with it, that’s his problem!’’

  Buffett started to explain what the lawyers had said, but Dwayne waved him off.

  “Howard,’’ Andreas said sharply, “you’re useless to ADM if you have to ask for an attorney’s opinion every time you get a request.’’

  The October 11 meeting in Forsyth was a reunion of sorts. Herndon’s first child, a girl, had been born in September, and his participation in meetings with Whitacre had dropped off. So when Whitacre saw Herndon with Shepard in the hotel room, he beamed. For several minutes, they talked about the new baby. When they finally got down to business, Whitacre seemed to have little new information. He shared some office gossip about how Dwayne Andreas was angry with executives traveling on company business without authorization. It seemed insignificant. Suddenly, Whitacre smiled. “You’re not going to believe what Howard Buffett told me,’’ he said.

  Howard Buffett? The name had been mentioned in the case before, but hardly with any frequency. The agents looked at Whitacre quizzically.

  “You know, Howard Buffett,’’ Whitacre said. “He’s a corporate vice president in public relations. And you know who his dad is?’’

  The agents nodded. Who hadn’t heard of Warren Buffett?

  “Well, Howard doesn’t like Dwayne and Dwayne doesn’t like Howard,’’ Whitacre said. “Dwayne told Howard that he’s useless.’’

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  Whitacre looked at the agents expectantly.

  “Howard was talking to me about it, complaining about the Andreas management style. And Howard told me this quote. He said,

  ‘With what I know about the company, it’s amazing what I could do with these people.’ That’s what he told me.’’

  Shepard leaned in. Was there something here?

  “What more do you know about here?’’ he asked. “Let’s get more specifics. What does this involve?’’

  Whitacre shrugged. “I don’t know,’’ he said. “I didn’t ask him about it.’’

  The agents could almost feel the air draining out of the room. All this build-up for nothing? Herndon wrote it down anyway. Maybe sometime later they would interview Buffett and find out what he knew.

  The meeting droned on, with little accomplished. The agents figured they would be breaking soon.

  “Oh, by the way,’’ Whitacre mentioned casually, “this friend of mine, Kuno Sommer. He’s a Ph.D. He just replaced Mr. Hauri at Hoffman-LaRoche. He’s in charge of their citric-acid business now.’’

  The agents snapped to attention. From earlier tapes, they knew that Hoffman-LaRoche collected the production numbers in the citric-acid price-fixing conspiracy. And now the new head of that operation, this Kuno Sommer, was a friend of Whitacre’s ? With the chances for the wiretap application fading, suddenly Whitacre had presented a new avenue for investigation.

  “Tell us about Kuno Sommer, Mark,’’ Shepard said.

  Whitacre brought out Sommer’s business card, showing that his friend was head of global marketing for Hoffman-LaRoche’s Vitamins and Fine Chemicals Division. Herndon and Shep
ard stared at the card, awed.

  The timing was perfect. The next day, Whitacre was scheduled to accompany Wilson and Mick Andreas to Chicago for a meeting with Ajinomoto at the Four Seasons Hotel. Now Whitacre had another assignment. Herndon told him to ask Wilson about Kuno Sommer. If Whitacre’s friend was collecting numbers on citric, Wilson would have to know about it.

  Whitacre’s face fell.

  “Kuno hasn’t been in the job very long,’’ Whitacre said. “He won’t know anything yet.’’

  The agents pushed him, but Whitacre kept arguing. His message was clear: while he might be willing to record Wilson, Andreas, and Eich_0767903277_5p_01_r1.qxd 10/11/01 3:56 PM Page 244 244

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  the lysine competitors in their conspiracy, he wasn’t comfortable laying a trap for his friend.

  “Mark, who knows how the answer will come back,’’ Herndon said.

  “Look, if Kuno Sommer is not involved, this might give him the chance to avoid getting caught up in citric. Just ask the question. Let’s find out.’’

  Eventually, Whitacre agreed to ask Wilson about Sommer. The meeting ended, and Whitacre headed out the door. A minute later, Shepard glanced at Herndon.

  “Wow,’’ he said, “this could be our break.’’

  Whitacre opened the driver’s side door on his new 1994 Lincoln Town Car. He liked the green color of this car better than the blue on his old model. When the doors unlocked, Mick Andreas climbed into the front passenger’s seat, while Wilson struggled into the back. Wilson’s bad back was troubling him; his doctor was advising surgery, but Wilson kept putting it off. Whitacre sat in the driver’s seat, easing against the cushion gently. The F-Bird digital recorder was strapped on, and he didn’t want to crush it.

  Putting the car into reverse, Whitacre backed out of his parking place. Soon, he was headed toward the Decatur airport where a corporate plane was waiting.

  “This is your company car?’’ Andreas asked.

  “Yeah,’’ said Whitacre. “Always get the used ones. Last one I had was Buffett’s.’’