The Informant

by Kurt Eichenwald

  “Liz,’’ Roberts said, “you’re an employee of ADM. You have to answer our questions. We need to know that code.’’

  Taylor shook her head. “I’m uncomfortable telling you. It has nothing to do with ADM. It’s private.’’

  “Liz, you don’t have a choice. You have to tell us.’’

  The conversation went in circles. Taylor didn’t know what she was supposed to do, so she stuck with what she thought was right and refused. Frustrated, the lawyers asked her to think through her decision during lunch. She left the building, agonizing over her dilemma. She telephoned Jim Epstein and described the situation. Epstein contacted Whitacre, who immediately called Taylor. The voice mail was a private number, he said, urging her to keep the code a secret. Finally, Taylor headed back. Her decision stood, she told the lawyers. She was not revealing the code.

  About two hours later, Taylor was at her desk when the telephone rang. It was Brian Peterson, Whitacre’s successor as head of the Bioproducts Division.

  “Liz,’’ Peterson said, “I’m afraid we’re going to have to transfer you out of the division. We’re moving you over to a secretarial job in the plant.’’

  Taylor was shocked. “Why?’’ she asked. “Why can’t I stay at my regular job?’’

  There was little choice, Peterson replied.

  “In the main office, sensitive information would cross your desk,’’

  he said. “And ADM doesn’t trust you anymore.’’

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  In an unassuming office building in downtown Chicago, a swarm of law-enforcement officials stood outside the unmarked door to room 1603. They pushed the buzzer and waited, keenly aware that someone was most likely watching them with the camera embedded in the ceiling. The wait dragged on, and the prosecutors were getting ready to buzz again when someone answered. The officials walked inside the room, one of the office sites for the Chicago FBI.

  It was the morning of September 5. The officials—Spearing, Mackay, and Nixon from the Fraud Section, along with Ed Herbst from the FBI—were shown to a conference room. They were joined by D’Angelo and Bassett, as well as their supervisor on the Whitacre case, Dave Grossman.

  After almost a month of delay, Whitacre was finally going to sit down that day for another interview. The air in the room was electric. Grossman was particularly annoyed. There were seven people here, all to interview one guy. D’Angelo and Bassett were top agents, he thought—they didn’t need prosecutors holding their hands. Grossman felt sure it would prevent them from gaining Whitacre’s trust—the first step toward getting a confession. Grossman had voiced his concerns to Washington earlier, yet now everyone was here, as if he had never said a word.

  Grossman looked around the conference room. “How many are going to this interview?’’ he asked.

  “All of us,’’ Spearing responded.

  “That’s ridiculous,’’ Grossman said. “These are two experienced agents. You don’t need to be here.’’

  “It’s important for us to be here,’’ Spearing said.

  “Who’s running this investigation?’’ Grossman said sharply. “Is it the FBI?’’

  Spearing spoke slowly. “This is a very sensitive case and has very large ramifications. DOJ is going to help run this investigation.’’

  The meeting quickly became heated. Grossman demanded that the agents be allowed to do their work unhindered, while Spearing insisted with equal vehemence that the prosecutors would be part of a Whitacre interview. D’Angelo and Bassett took it all in, saying nothing.

  “Look, this is our investigation!’’ Spearing finally lashed out. “If you don’t want to work on it with us, fine. We’ll get agents who will.”

  Grossman was on his feet. “Fine!’’ he snapped. “We’re out of it!’’

  With that, Grossman was gone.

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  Still at the conference table, D’Angelo and Bassett looked meekly at the prosecutors.

  D’Angelo shrugged. “Hey,’’ he said softly, “I still want to work on this, guys. It’s a great case.’’

  Herbst nodded and pushed back from the table, leaving the room to find the SAC. Soon, he was back with a ruling. The case was too important for diversions. D’Angelo and Bassett would remain the case agents.

  But Dave Grossman was out as case supervisor. He would be replaced by Supervisory Special Agent Rob Grant. It was a brilliant September afternoon with a perfect sky and a cool breeze. The agents and prosecutors strolled on a bridge crossing the Chicago River, heading toward Epstein’s office on South Riverside. As they walked, D’Angelo and Bassett discussed the impending Whitacre interview, inviting the prosecutors to jump in with questions at anytime.

  After everyone arrived at the law firm, it took a few minutes to assemble around a conference-room table.

  “All right,’’ Spearing said. “This is another interview with Mark Whitacre. You’ve met Agents D’Angelo and Bassett; they’re conducting the interview.’’

  She looked at Whitacre sternly, warning that if he planned to lie, he might as well not speak.

  Epstein spoke up. “My client is cooperating and plans on continuing his cooperation. If there’s anything you want to ask, he’s here to tell you about it.’’

  D’Angelo took over. He wanted to reiterate the importance of being truthful.

  “This is your chance to put everything out on the table,’’ he said.

  “This is the chance to redeem yourself, if you tell us every single thing that you’ve done—even things that might be in a gray area. We would rather it come from you than from ADM or another source, because you can still help yourself, if you’re truthful.’’

  Whitacre nodded. “I understand that,’’ he said. “And I want to tell you, I feel bad. I’m so sorry, and I feel the worst about letting down Brian Shepard and Bob Herndon. I want to try and make that right.’’

  He glanced around the room.

  “The last time we talked I was under a great deal of stress,’’ he said.

  “I said some things that weren’t true. I’d like to clear that up right now.’’

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  His opening words were promising. Some things he had described before, Whitacre said, had never happened. Plus, he had failed to disclose several frauds, as well as the names of other co-conspirators. He began, again, with his friend Sid Hulse and the 1992 deal involving Eurotechnologies. At the last interview, Whitacre had said that Hulse was a representative of Eurotechnologies and had paid a twohundred-thousand-dollar kickback on a contract with ADM. But that wasn’t completely true. Hulse, in fact, was the owner of Eurotechnologies and had kept $466,000 from the deal. Whitacre’s share, he said, had been wired to his bank in the Cayman Islands.

  “When did you set up that account?’’ asked D’Angelo.

  “In the fall of 1991,’’ Whitacre replied. “I went there ’cause lots of ADM employees have accounts there. That’s for sure. Mick and Dwayne Andreas, too.’’

  Whitacre said he opened his account during a vacation, in anticipation of receiving money from frauds.

  “Why did Hulse receive the bigger portion?’’

  “ADM was trying to hire him as an employee. They wanted to use the kickback as an incentive.’’

  Whitacre glanced around at the circle of faces.

  None of this was his idea, he protested. This was standard procedure at ADM, a way of giving executives under-the-table compensation.

  “Mick knew all about this kickback, the one with Eurotechnologies,’’ Whitacre said. “I talked to him about it several times in the seco
nd half of 1991. He didn’t have any problem with it. He told me, in fact, that there would be plenty of opportunities for me to take kickbacks on European and Asian contracts, for like ten or twenty-five percent of each contract.’’

  “Did Mick help you set up the Caymans account?”

  “No, I did that myself. But Mick told me what bank to use. In fact, I also set up an account later at the Union Bank of Switzerland. Mick told me about that, too. It was a place I could deposit money, so I wouldn’t have to pay taxes. Every top ADM executive does it, though.’’

  “All right,’’ D’Angelo said, glancing through his notes. “Anything else involving Sid Hulse?’’

  “Yeah, well, something I mentioned last time,’’ Whitacre replied. There was a fake loan agreement, where a one-hundred-thousand-dollar kickback was disguised to look like money Whitacre had borrowed from Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 418 418

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  Hulse. That way, he could deposit the money in a domestic bank account, but wouldn’t have to report it as income. It would be tax-free.

  “Anything else?’’

  Whitacre nodded. Another fraud he had left out before, he said, involved a company named something like Far East Specialties, also known as FES. The deal took place in March 1992 and involved bogus invoices submitted to ADM.

  “For how much?’’ D’Angelo asked.

  “Well, that one was for $1.2 million.’’

  “Did you get all that money yourself?’’

  “No. A guy named Ron Ferrari took three hundred thousand dollars.’’

  Ferrari was a friend who had played pro football with the San Francisco 49ers. It was Ferrari, Whitacre said, who had set up the FES

  account at a Hong Kong bank.

  “How do you know Ferrari?’’ D’Angelo asked.

  “He worked at ADM,’’ Whitacre said. But the FES deal took place after Ferrari had left the company, he said.

  Whitacre continued, saying that Ferrari was knowledgeable about kickback schemes and knew other ADM executives who had received money in such deals.

  D’Angelo circled back to FES. Whitacre explained that once the money arrived in Ferrari’s Hong Kong account, it had again been wired to the Caymans.

  “Did you tell Mick Andreas about this transaction?’’

  “Well, I told him about the kickback, but I told him I was only receiving five hundred thousand dollars,’’ Whitacre said.

  “Why did you lie?’’

  Whitacre shrugged. “I thought he would consider $1.2 million to be excessive.’’

  “Who else knew about this?’’

  “I’m not aware of anybody else knowing about this deal,’’ Whitacre said. “Just me, Ferrari, and Andreas.’’

  Whitacre looked around the room. “You know, it’s really obvious that they knew about these deals. How do you think they found them so fast?’’

  Days before allegations were first raised against him, Whitacre said, he had been warned what was coming.

  “I got a phone call from a guy at ADM named Lou Rochelli. He told me Randall was ordering everybody to pull invoices on the kickbacks. He knew exactly where to look. He said, ‘We’re going after Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 419

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  Whitacre for embezzlement.’ He said that before they even had the records pulled.’’

  The agents listened carefully. ADM’s rapid discovery of its evidence against Whitacre had left them suspicious. And here, Whitacre was naming a potential witness, someone who might be able to testify about what had happened inside the company. If Rochelli backed up this story about Randall, this case could go in a whole new direction—

  against ADM.

  “Did Randall know about these two kickbacks beforehand?’’

  “Not that I know of,’’ Whitacre said.

  D’Angelo changed the subject, asking about Whitacre’s relationship with the FBI. It had begun, Whitacre said, in the fall of 1992—a few months after the FES transaction.

  “Did you ever divulge these illegal activities to the FBI?’’ D’Angelo asked.

  “No. I never thought ADM would divulge them or challenge them. They had too much to lose. They approved the deals, and everybody else was doing it, too. I just never thought they would risk bringing it up.’’

  After starting his cooperation, Whitacre said, he did not commit any more frauds until May of 1994. That was when he arranged the

  $2.5 million ABP transaction involving Beat Schweizer, the Swiss national who helped move his money. In the last interview, Whitacre had said that Schweizer knew nothing of the illegal activities, although the prosecutors suspected that the man was a money launderer.

  “Schweizer set up the bank account for ABP at the Union Bank of Switzerland,’’ Whitacre said. “We always thought ABP would be a twodeal company.’’

  “Did Schweizer know that the money was illegal?”

  “I told him. He knew it was obtained illegally.’’

  Ed Herbst, who had conducted the last Whitacre interview, sat back. So much for protecting Beat Schweizer.

  “How did you meet Schweizer?’’ D’Angelo asked.

  “He was supposed to be a banking expert, and I became aware of him when I was working with Degussa in Germany.’’

  “Do other ADM executives use Schweizer?’’

  Whitacre looked back blankly. “I don’t know.’’

  “Did you use Schweizer while you were at Degussa?’’

  “Definitely not. I didn’t do anything like this at Degussa. I was never exposed to it until I came to ADM.’’

  The second ABP deal occurred earlier in 1995.

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  “Around February, Brian Shepard told me that my FBI work would be coming to an end soon,’’ Whitacre said. “So I decided to do one more transaction.’’

  That fraud was his biggest ever, Whitacre said—totaling $3.75 million. Again, he had used an ABP contract. After receiving the money, he hid it in his accounts in Hong Kong, Switzerland, and the Caymans. For the second time, he said, he had relied on Schweizer to move the money around.

  “How much was Schweizer paid?’’ D’Angelo asked.

  “I don’t know, something like $750,000. If I could review some records, I could give you better answers.’’

  D’Angelo flipped through his notes. “Anything else?’’

  “Well, those are the ones that I did.’’

  “All right, Mark,’’ D’Angelo asked, “how much are we talking about? How much money did you obtain illegally?’’

  Whitacre glanced to the ceiling, as if he was calculating the number in his head.

  “About $7.7 million,’’ he finally responded.

  D’Angelo wrote that down. “Why did you take it?’’

  Whitacre shrugged. “I was looking for security, and I didn’t think ADM would ever disclose it.’’

  “Why not?’’

  “Because this stuff was part of the culture. They disclose the money I got, you guys are going to find out about what they got. I didn’t think they’d risk that.’’

  “Was Mick Andreas aware of all these transactions?’’

  Whitacre paused thoughtfully. “Not after the first two,’’ he said.

  “Mick told me at the beginning that it wasn’t necessary to tell him about every time I did this.’’

  “But you still say Mick approved this?’’

  “For sure. Definitely. From my conversations with him, I know he wouldn’t have disapproved of what I was doing.’’

  D’Angelo watched Whitacre carefully. “But did he approve of the size of these transactions?’’

  “No, probably not,’’ Whitacre said. “He probably would have thought five hundred thousand dollars for each was more acceptable.’’

  Whitacre blinked through his glass
es and shrugged.

  “He probably would have thought some of these were excessive,’’

  he said. “He would have thought, with the bigger ones, I was being greedy.’’

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  There were other, smaller deals, Whitacre continued. Some involved Marty Allison, the ADM executive he had mentioned in his first interview. The total amount was more than the $40,000 he had identified then, he said. One deal was small, involving a ten-thousand-dollar cash kickback on a twenty-thousand-dollar computer contract.

  “There was no wire transfer for that,’’ Whitacre said. “Allison came to meet me at The Blue Mill. That’s a Decatur restaurant. And while we were there, he gave me an envelope filled with hundred-dollar bills.’’

  “Why would Allison share his money with you?’’

  “I was his boss,’’ Whitacre said. “He gave it to me as insurance, in case anybody ever started asking questions.’’

  “What else did you do with Allison?’’

  “There was another one where Allison set up an account in the name of Nordkron Chemie, to receive the money.’’

  “Where was that account set up?’’

  Probably in Hamburg, Germany, Whitacre said. But $220,000 was wired to that account, with $110,000 then sent to a Whitacre account at Swiss Bank Corporation.

  “Now, there was one other transaction you should know about, in 1991 or 1992,’’ Whitacre said. “That involved a guy named Reinhart Richter.’’

  Whitacre said that Jim Randall had wanted to hire Richter away from Degussa to head ADM’s division in Mexico.

  “So he came up with a way to pay Richter like $190,000 to

  $200,000 in bogus invoices,’’ Whitacre said. “They set up some Mexican company to do it. I don’t remember the name, but it had Amino in the title.’’

  “Why do it that way?’’ D’Angelo asked.

  “That’s how they do it,’’ Whitacre responded. “Like I told you before. They do it so they can pay extra money to the people they hire without alerting the shareholders.’’

  Lots of ADM people talked about the money schemes, Whitacre said. Howard Buffett was concerned about it. Mick Andreas had groused that the company was giving out too much in under-the-table money after one executive retired early. A friend of Mick’s, Tom Frankel, had taken money. Mick himself used a company called Amylun—or something like that—for his own kickbacks on bogus invoices. Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 422 422