The Informant

by Kurt Eichenwald

  “Delivered how?’’

  Allison swallowed. “Cash in a briefcase,’’ he said.

  The agents showed Allison a series of documents from the Covert

  & Associates transaction. He pointed out his own handwriting, as well as Whitacre’s.

  “All right,’’ Bassett said. “What led up to your next financial transaction with Whitacre?’’

  In the summer of 1993, Allison replied, he was transferred to London.

  “Now, I was hearing rumors around the office about executives receiving off-the-books bonuses,’’ he said.

  “Rumors from who?’’

  “I don’t remember. People besides Whitacre. But I always assumed the rumors were true, and that ADM was making the payments to keep leverage on executives because of the price-fixing at the company.’’

  Bassett wrote that down. He was not surprised; by that time, Whitacre had already told Hulse and Richter about such bonuses, and sent illegal payments to both men.

  “Anyway, before I left for London, Whitacre came to see me.’’

  Whitacre was smiling as he headed into Allison’s office and shut the door.

  “Hey, bud,’’ he said. “I’ve got some news for you.’’ Standing in front of his desk, Whitacre explained that Allison was about to receive an off-the-books payment. Allison felt flattered; he as- sumed it was increasing his status in ADM’s management.

  “Now, I’ll tell you what you need to do,’’ Whitacre said, handing him a slip of paper. “Call this 800 number. They’ll help you set up a corpora- tion in Delaware. I want you to call it Nordkron Chemie.’’ Whitacre wrote out the name. Allison looked at it.

  “Why Nordkron Chemie?’’

  “It’s close to the name of a real company in Hamburg.’’ Smiling, Whitacre explained that the money paid through Nordkron Chemie would include a bonus for him as well. Allison didn’t mind shar- ing with his boss. He was a team player.

  As instructed, Allison set up the corporation and opened an account at Dresdner Bank during a routine visit to Germany. He heard nothing more about the transaction until August, when Whitacre called him in London.

  “Well, Marty,’’ Whitacre said, “a $220,000 bonus is almost on its way to Nordkron Chemie.”

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  Allison was excited to hear the news.

  “Now, you understand, most of that is mine,’’ Whitacre said.

  “Yeah, I remember.’’

  “Okay, here’s how it breaks down. When the money arrives, $140,000 of it is mine. I’ll tell you how to get it to me. And the other eighty thou- sand is yours.’’

  “Okay,’’ Allison said. The money sounded great.

  “Now, this is all going to be tied to some bogus research trials in Europe,’’ Whitacre said. “But don’t worry about that. I’ll take care of it.’’ Whitacre instructed Allison to mail him an empty envelope from Germany the next time he was there. Then, he could attach the post- marked envelope to the bogus contract before submitting it for payment. Allison didn’t understand. If this was approved by management, why the subterfuge?

  “It’s just for the accounting people,’’ Whitacre said. “Even though se- nior management knows about these payments, the accounting depart- ment doesn’t.’’

  Allison relaxed. That sounded reasonable.

  The money arrived in three installments; as promised, it totaled

  $220,000. Whitacre first requested his share in April 1994, asking for a sixty-thousand-dollar check in the name of Union Bank of Switzerland. Allison did not know that this check was part of the money Whitacre was using to establish the ABP Trading account at Union Bank—the account where a $2.5 million ADM check would be deposited in a few months. In June of that year, Whitacre asked Allison for three more checks to- taling $140,000—in the names of Stiner, DMJ, and Sloan Implement. Despite all the money flowing out, the remaining $80,000 suited Allison fine. But he had some concerns. He called Whitacre, asking how to handle the taxes on these bonuses.

  “Well,’’ Whitacre said, “some people claim the payments, some people don’t.’’

  “What do you think, Mark?’’

  “Hey, Marty,’’ Whitacre said amiably. “Whether you pay taxes is up to you.’’

  By the end of Allison’s interview, the full truth seemed to have finally emerged.

  The key to the case was Nigeria. In his interview, Sid Hulse—the beneficiary of the first bogus invoice—seemed to have thought that the Nigerian investment had popped up as an idea after he received his illegal money. But Allison made it clear that Whitacre had been Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 518 518

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  scrounging up cash for Nigeria many months before. Whitacre had started the old-fashioned way, by borrowing money. But when that ran out, he appeared to have applied the Nigerian’s invoice fraud to ADM, all in the search of the money he needed for his big payoff. Once everything fell through, Whitacre knew that no one at ADM had noticed the outflow of cash. He returned to the corporate till, grabbing cash to compensate himself and his friends for their foolish losses. The 1991 transactions told the whole story. Of the $530,000 in illegal transfers that year to Hulse and Richter, almost 85 percent ended up in Lagos—not counting the twenty-thousand-dollar loan from Allison and whatever Whitacre invested. The agents and prosecutors were certain that the Nigerian fraud had been the driving force behind this entire enterprise.

  The approved bonus plan no longer made any sense. Records from ADM and its accountants proved to be a dry hole; even the corporation’s Caymans subsidiaries were nothing important. Plus, it was hard to believe that each payment coincided so closely with the financial demands of the Nigerians—and later of Whitacre’s friends who wanted their money back.

  Making Whitacre’s story less credible, none of the initial money ever went directly to him. Instead, for his fraud allegations to be true, ADM would have to be wiring illegal bonuses to its executives through third parties—including people who didn’t work for the company. Why would sophisticated executives create so many unnecessary witnesses to their crimes? Why not simply wire money directly to Whitacre’s offshore accounts, as was done later in the scheme?

  To the agents and prosecutors, there was only one explanation: The use of other executives helped to hide that most of the money was going to Whitacre. In the earliest days of the scheme, he had used his friends and associates to create a wall between himself and ADM. But it was telling that, once money started going to Whitacre personally, his compatriots—who had been paid so much under-the-table cash in their earliest days at the company—never received another dime. That day, the agents and prosecutors emerged from the Allison interview confident that they had finally figured out the whole truth behind the fraud schemes at ADM. They had no idea that at least one more piece of the puzzle was still missing.

  D’Angelo found it the next week, in the pages of a lawsuit. ADM had sued Mark Whitacre the previous Thursday, just as it Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 519

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  was wrapping up negotiations for the outlines of its plea agreement. The forty-page complaint accused Whitacre of defrauding ADM with a group of associates—including Allison, Ferrari, Hulse, and Richter. But it also named Whitacre’s family members who turned up in the banking records—his wife, his mother, and his in-laws. D’Angelo looked at the long list of defendants on the first page. All the names were familiar. Except one.

  David Page.

  Just as the agents had expected, ADM had been holding back. D’Angelo flipped through the suit, and found the name on page 19. The suit said that Whitacre had hired David Page in 1993 but that throughout his employment, Page had continued working for another company, Vanetta USA.

  “Page was something of an illusory employee at ADM,’’ the suit said. “M
ost employees in the Bioproducts Division did not know that David Page was an ADM employee. Page did not hold himself out to others as an ADM employee, and Page did not conduct business on behalf of ADM.’’

  What the hell?

  Lower down, another sentence jumped out.

  “Page also received at least $30,000 from Whitacre’s personal bank account at the Swiss Bank Corporation.’’

  D’Angelo reached for the phone to call Bassett. They needed to track down David Page, and find out what Whitacre had been doing with him.

  Page turned up in Pennsylvania, and a local FBI office sent an agent to interview him. But when the 302 of the interview came back to Chicago, D’Angelo was convinced the man was lying. The interviewing agent had not known enough about the case to catch the discrepancies. D’Angelo started making plans to visit Page in person. Page hired a lawyer and agreed to meet the FBI again. By then, Bassett’s transfer to Albany had come through; for the most part, he was off the case. D’Angelo and the case supervisor, Rob Grant, flew to Washington to meet with Page at the Fraud Section.

  Page told of being interviewed by Whitacre for a job that paid

  $120,000 a year, with a thirty-thousand-dollar signing bonus. The interview took place at a Decatur Mexican restaurant in 1993, just as Harvest King was picking up steam.

  “I asked Whitacre what my responsibilities would be at ADM,’’

  Page said. “And he responded, ‘Nothing.’ ”

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  It was a scam, Page said. Whitacre told him to kick back onethird of his salary each year; Page could keep one-third and use the other third to pay taxes. Whitacre even received one-third of the thirtythousand-dollar signing bonus.

  “Whitacre assured me that no one would ever know about our relationship or the kickbacks,’’ Page said. “He told me that he was president of the division and no one was looking over his shoulder.’’

  Eventually, Page said, he took on a new role. Whitacre was having trouble bringing his overseas cash back into the United States and wanted an untraceable method for obtaining the money—after all, those millions were doing him no good sitting in Switzerland or the Caymans.

  So Whitacre asked Page to open a Swiss account of his own. Then, beginning in the fall of 1994, Whitacre periodically wired $10,000 from one of his offshore banks to Page’s foreign account. Simultaneously, Page withdrew $10,000 in cash from his American bank account and passed the money to Whitacre. With that system, Page helped Whitacre launder $30,000 into the United States.

  “Usually we would meet at a hotel,’’ Page said. “And I would just pass him an envelope stuffed with cash.’’

  After almost three hours, the interview ended. The investigators and prosecutors gathered their papers, tossed them in their cases, and made their way to the exit. As soon as the door closed behind them, they began laughing.

  “I’ll tell you, Whitacre has no credibility,’’ D’Angelo said. “I can’t believe his greed! With all his millions, he’s setting up this guy for a few thousand!’’

  Mackay shook his head. “This tops them all.’’

  Something about the petty nature of the Page fraud—and the complexity of the laundering—eliminated any remaining doubts about the deceit in Whitacre’s story. The frauds had never been about a corporate scheme. They had been about greed. Pure and simple. The group spent the rest of the day marveling at Whitacre’s machinations. But the humor ended when Don Mackay voiced the concern slowly dawning on all of them.

  “When you get stuff like this popping up out of nowhere,’’ Mackay said, “you know we’ll probably never figure out everything Whitacre did.’’

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  CHAPTER 19

  So, where do we stand?’’John Daniels asked his fellow directors. It was shortly before noon on Tuesday, October 8, the day of the last gathering of the ADM special committee. Williams & Connolly had finally hammered out the final details of a plea agreement with the government. Now, the directors had returned to Simpson Thacher to vote the deal up or down. In the room, four ADM directors, three Simpson Thacher lawyers, and the company’s general counsel listened as Aubrey Daniel spelled out the terms of the settlement. Several directors, including Brian Mulroney and Ray Goldberg, listened in by speakerphone. On one side of the conference room, coffee and pastries loaded on a buffet table remained largely untouched.

  For more than twenty minutes, Daniel described the deal. The price tag stood at $100 million. Dwayne Andreas and Jim Randall would now be part of the immunity deal, he explained, although both were expected to testify before the price-fixing grand jury. When Daniel finished, the room was silent for a moment.

  “All right,’’ Mulroney said over the phone. “Let’s poll the vote.’’

  Glenn Webb, a director who headed an agricultural company, spoke up. “No. It’s too early in the process to make a decision of this magnitude.’’

  The size of the settlement left Webb troubled. “This is a terribly high price,’’ he said. “At this amount, I would think we could get a lot more concessions.’’

  Several directors nodded in agreement. Their friendship with Dwayne Andreas weighed on them. Some directors looked to Beattie for his opinion.

  “No, that’s not our place,’’ Beattie said. “This is one of those hard Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 522 522

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  decisions we’ve been telling you about that you’re going to have to make.’’

  Ross Johnson leaned up. “We have to stay focused on the shareholders. An indictment would really hit the value of the stock. We need to move on.’’

  At one point, Aubrey Daniel suggested that he could perhaps negotiate the price of the settlement down.

  “Aubrey!’’ John Daniels snapped, pounding the table. “I don’t want any more negotiation. We’ve got to come to grips with this. Let’s not prolong this process.’’

  Aubrey Daniel nodded, saying nothing.

  The discussions continued for hours. Finally, John Daniels had had enough. He shot a look at Beattie.

  “Let’s bite the bullet and accept this,’’ he said. “It’s in the best interest of the shareholders.’’

  “Let’s poll the vote,’’ Mulroney said.

  Ray Goldberg, who was calling from Harvard and had only a few minutes before he was scheduled to teach a class, was the first to respond.

  “We’ve got to put this behind us,’’ he said. “If this is what it takes, I vote yes.’’

  Daniels glanced toward Rod Bruce, a former ADM executive.

  “Roddy?’’

  “Yes,’’ Bruce said evenly.

  Brian Mulroney, who was calling from an airport where he was waiting for a flight, was next. Everyone knew that this moment—effectively turning against the Andreas family—would be difficult for him.

  “Brian?’’ Daniels said.

  A moment’s hesitation.

  “We need to do the right thing for the company and the stockholders,’’ Mulroney said. “We’ve done a terrific job as a special committee. It’s now the time for us to make the right decision for all those involved.’’

  A few directors nodded in agreement.

  “And I regret that the U.S. government treated people the way they treated the ADM people, that they would have a father testify against his own son,’’ Mulroney continued.

  The next words rushed out without even a breath.

  “I’m sorry, I have to run,’’ Mulroney said. “I’m giving my proxy to Glenn Webb.’’

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  Mulroney was gone. He never voted.

  The conference-room door opened. A waitress wheeled in a buffet lunch of salmon, boneless chicken, and pasta salad, distracting the directors. As the wai
tress laid out lunch, Daniels looked to Webb, the man with two votes.

  “Well, Glenn. How do you vote?’’

  Webb threw up his hands. “I vote in favor.’’

  Daniels turned to Ross Johnson, who had already made it clear where he stood.

  “Yes,’’ Johnson said.

  One more to go. Daniels faced John Vanier, a quiet man who was chief executive of his own agricultural company.

  “Jack?’’

  Vanier chuckled. “Of course I vote yes.’’

  Unanimous. The case was over.

  Their official duties out of the way, the remaining directors turned to lunch. Beattie addressed the group.

  “There’s one other important issue we have to discuss,’’ he said. A decision needed to be reached about the future of Mick Andreas and Terry Wilson.

  On October 17, two days after the record price-fixing settlement with ADM was announced, company shareholders gathered in Decatur for the annual meeting. Those who remembered the company’s combative approach the previous year were surprised to see a subdued Dwayne Andreas take to the stage this time around. No longer did he silence critics; instead, he complimented even vociferous detractors. Most surprising, he issued an apology for ADM’s crimes.

  “I consider this a serious matter, which I deeply regret, and I acknowledge to you that this occurred on my watch,’’ he said. “You have my apology and my commitment that this will never happen again.’’

  Whitacre was never mentioned directly, but neither were Mick Andreas and Terry Wilson. As the ceremonies ended, reporters surrounded Brian Mulroney near the stage. With ADM pleading guilty to price-fixing, one reporter asked, what was the future of Mick Andreas and Terry Wilson?

  “They no longer work here,’’ Mulroney said simply.

  Terry Wilson had retired, and Mick Andreas had gone on leave. Their once stellar careers at ADM were over.

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  Providing psychiatric treatment to Whitacre had been a whirlwind for Dr. Derek Miller.

  It had taken months to find a lithium level that controlled Whitacre’s manic periods. But, in early October, Whitacre showed signs of trouble, writing a letter to his lawyer that accused the government of being communist. It was the worst time for him to spin out of control. Not only was his case heading toward indictment, but he was leaving Chicago for Biomar’s offices in Chapel Hill, North Carolina—