A Korean executive, J. E. Kim from Cheil, was laughing. He had just taken a cab to the Marriott from his hotel, the Renaissance. Kim hadn’t realized until he arrived that the hotels were adjacent to each other. Whitacre walked with Kim to the window. The day was sunny and bright, affording a clear view.
“That’s right next door,’’ Whitacre said.
“Yes, I didn’t know,’’ said Kim. “So I only paid two dollars from Renaissance to here.’’
Yamamoto from Kyowa Hakko arrived minutes later, just before nine o’clock. Whitacre greeted him and then picked up the telephone, ordering breakfast and scheduling lunch. He hung up the phone as Yamamoto dropped his coat and other belongings near the camera.
“Here, Massy, I’ll move this stuff out of the way for you,’’ he said, picking up Yamamoto’s belongings. “There has to be a space to hang that.’’
Kim folded himself into a chair. He mentioned hearing about an earthquake the previous day hitting Kobe, a city in western Japan. Yamamoto nodded, saying he had heard that as many as 2,500 people were dead.
“Yeah,’’ Whitacre said. “They blew up a lysine plant there, too.’’
Yamamoto nodded, smiling. “Yeah.’’
Kim was confused. “Lysine plant?’’ he said, looking at Yamamoto. “Your plant?’’
“Yes,’’ Yamamoto said. “And we have to increase the price. A dollar-fifty?’’
Yamamoto laughed.
Kim still did not understand. Was the plant partly destroyed?
Smiling, Yamamoto and Whitacre shook their heads.
“No,’’ Whitacre said. “It’s a—”
“It’s a joke,’’ Yamamoto interrupted.
Everyone laughed heartily.
In the adjoining room, the agents snapped the new batteries into the briefcase. Herndon touched the buttons and the tape started to spin. He hurried over to the phone and dialed the number for the Cobb Room.
• • •
Whitacre answered.
“Hey, it’s Bob, I’ve got your briefcase,’’ Herndon whispered.
“I’m sorry?’’
“I’ve got your briefcase. It’s working. I’m going to bring it to you.’’
“Yeah, that’d be great,’’ Whitacre said.
“Now, I’ve got a story for what’s going on.’’
“Yeah,’’ Whitacre said. “I already ordered from the menu the other day.’’
“Good, okay,’’ Herndon whispered. “I’m going to come to the door and say I’m with the hotel staff. I’m going to say I found the briefcase downstairs.’’
“Okay.’’
“Okay? So I’ll see you in a couple of minutes.’’
“Thank you,’’ Whitacre said. “Bye-bye.’’
Whitacre hung up and returned to the table.
By 9:05, the price-fixing meeting was ready to start. Mimoto had arrived and taken a spot at the head of the table. Beside him was a new executive from Ajinomoto, Hisao Shinohara. Jacques Chaudret had scurried in and was at the banquet cart, fixing a cup of coffee. Yamamoto and Kim were on either side. Only Sewon, the Korean company, was not represented.
“We have a couple of other people joinin’ us, I think, don’t we?’’ Whitacre asked.
“At, uh, ten-thirty,’’ said Mimoto.
“Two more at that point?’’ Whitacre asked.
“Two more,’’ Mimoto said.
“Well,’’ Whitacre replied, “we’ve got plenty of space.’’
Kim spoke up. Two more were coming from Sewon?
Chaudret, still at the banquet cart, turned to face the others. “No, no,’’ he said. “Two more from Sewon. One from Tyson. One from ConAgra.’’
The group laughed, amused at the idea of two big lysine customers attending a price-fixing meeting.
Mimoto smiled, staring straight at Whitacre.
“And one from FBI,’’ he said.
Whitacre felt his heart drop, until he heard everyone laughing. It was a joke.
“And seven from the FTC,” Whitacre laughed. The Federal Trade Commission, which also enforced antitrust laws, would be as interested as the FBI in what was happening in the Cobb Room.
“Yeah,’’ Mimoto said, looking at his notes, “FTC.’’
“FBI,’’ Whitacre laughed again, still anxious.
He checked his watch. Let’s get going.
“Welcome to Atlanta,’’ Whitacre said. “We’ve been so often to Asia, so often to Europe, it’s good that everyone could come here at some point. I think Kanji is going to lead the meeting. And I think the topic here at the beginning would be more volume related.’’
A knock came at the door. The group paused.
“Yes?’’ Mimoto said in response. “FTC?’’
Whitacre walked to the door and opened it. It wasn’t the FTC.
It was the FBI.
Herndon stood in the doorway, briefcase in hand.
“I wonder if I have the right room,’’ he said.
“Yes,’’ Whitacre said.
“This was left down in the cafeteria,’’ Herndon said, holding out the briefcase.
“Okay.”
“The bellman thought it might belong to you.’’
Whitacre took the briefcase. The tape was already running. He shut the door and hurried to the table.
“Uh, the banquet people,’’ Whitacre said as he scooted past Yamamoto. “I left my briefcase in the lobby. When I signed up for food and everything.’’
“You forgot your briefcase there?’’ Chaudret asked.
“Yeah.’’
“Wow!’’ Chaudret said.
“When I signed up for all the food and everything.’’
“Very honest, huh?’’ Chaudret said. “In Paris, it would have already been sold.’’
“Yeah,’’ said Whitacre. “Luckily, I had all my passports and everything still in my room.’’
Yamamoto, his hand on his chin, looked at Whitacre. “You’re keeping all document . . . in case?’’
Whitacre shook his head. “No, no.”
The group laughed again.
The Atlanta recording was another rousing success. For more than an hour, the executives reviewed their 1994 lysine production, praising one another for sticking to the agreed levels. Later, with the arrival of J. S. Kim from Sewon, more evidence of the illegal agreement piled up. Kim argued that Sewon needed a huge increase in its allotted volume. The others objected, saying the proposal would cause a price collapse. By the end, all but Sewon settled on new production levels for 1995—and every company agreed to hike the price to $1.30 a pound.
Days later, Jim Mutchnik, the new antitrust lawyer on the case, walked into a small conference room with a copy of the Atlanta tape. He was amused at how the meeting had just come and gone. This conspiracy no longer fazed the others; with so much evidence already collected, Atlanta was being treated as almost a bother.
But to Mutchnik, Atlanta was a hoot. The first minutes—with everyone joking about the FBI and the FTC—cracked him up. He couldn’t believe these executives were sitting there, committing a crime, thinking it was the funniest thing in the world.
Mutchnik watched as, late in the meeting, the executives agreed to set the American price at $1.30. On screen, Mimoto looked at the assembled executives.
“Finished,’’ he announced. “Canada is the same?’’
The others wondered, what’s the Canadian exchange rate? Jacques Chaudret fished out a newspaper, scouring the financial tables.
“Canada,’’ he said. “What does it say?’’
He found the number. The group recalculated $1.30 as $1.83 in Canadian dollars. Mimoto announced the new prices would go into effect the following week.
Mutchnik watched, blown away. In a little more than two minutes, the group had used a newspaper to fix the Canadian market—worth about $100 million.
I can’t believe they’re doing that, Mutchnik thought. It can’t be that simple.
The J. Edgar Hoove
r Building sprawls along a full city block on Pennsylvania Avenue, standing out as one of the most hulking and unattractive parts of official Washington. There, in offices along an inner corridor on the seventh floor, the workings of the FBI are overseen by a group of deputies and assistants who report to the man at the end of the hall, the Bureau Director, Louis Freeh.
In early 1995, one of the newest officials on that corridor was William Esposito, the acting Assistant Director of Division Six, the Bureau’s Criminal Investigative Division. He had been promoted the previous fall from Special Agent in Charge in the San Diego Field Office to Deputy Assistant Director, but quickly moved up. Now, Esposito was responsible for knowing what was happening with every major criminal investigation being conducted by the FBI.
Not long after starting his new job, Esposito was working in his office when his secretary told him that Don Stukey, the SAC from Springfield, was on the line. He snatched up the receiver.
“So, Don, what can I do for you?’’ Esposito said.
“We’ve got a case going here that’s pretty important,’’ Stukey replied. “But I think we’re going to need your help with DOJ.’’
What was the problem with the Department of Justice? Esposito asked.
The case was dragging, Stukey said. It was an antitrust investigation, and the agents had developed evidence that included excellent tapes. Indictments could have been brought months before, but the Antitrust Division still wouldn’t commit to a timetable. Also, Stukey added, there were tensions between the Antitrust Division and the U.S. Attorney’s office. The U.S. Attorney seemed prepared to go forward with the case quickly, but Antitrust was pushing to slow down. Stukey was considering going to the Justice Department to appeal for help.
“But before we ratchet this up, I want to make sure we have the backing of headquarters,’’ Stukey said. “This is a very significant case involving influential people, so there’s going to be a lot of pressure here. I think it’s something that you and others in the division, maybe even the Director’s office, need to hear about, so you know what we’re getting into. Nobody outside Springfield seems aware of it. There really hasn’t been anyone behind it.’’
Esposito was not surprised. Springfield was hardly a place known for turning out big cases. The name of that office on a case file would have led many at headquarters to pay scant attention. Plus, the Bureau’s historical expertise was with violent crime; while white-collar investigations had expanded, headquarters had not yet been affected in any meaningful way. Often, investigations of corporate crimes still failed to attract much interest.
“Okay, Don,’’ Esposito said. “Draft your case agent, bring your charts, bring your tapes, and I’ll block out whatever time is needed.’’
Whitacre walked past the charcoal-gray legions of ADM commodities traders, oblivious to the punctuated rhythm of their barked orders. He headed toward his office, first bidding hello to his secretary.
It was the morning of January 31. Whitacre had returned from Atlanta more than a week before, but had yet to speak with the FBI or the prosecutors. Instead, he had fallen back into the flow of work, forgetting about price-fixing and law enforcement. After all, he still had a business to run.
At his desk, Whitacre picked up the telephone to check his voice messages. There were several, including one from Louisiana that sounded urgent. He called there first. A secretary answered.
“Dr. Jones’s office.’’
“Chris Jones, please. It’s Mark Whitacre returning his call.’’
“Just a moment.’’
Whitacre leaned back in his chair. He had known Jones at Degussa and had hired him as a consultant a couple of years before on ADM’s methionine project.
“Mark,’’ Jones said when he came on the line.
“Hey,’’ Whitacre said. “How you doing?’’
“Pretty well. How about you?”
“Fine, fine. What’s so urgent?’’
“We’re having some problems,’’ Jones said, sounding agitated.
“What do you mean?’’
“Mark,’’ Jones said, “are you aware of what the FBI is doing down here?’’
Minutes later, the “hello’’ line rang in the Decatur R.A. The line was standard in most FBI offices, often for the use of cooperating witnesses. It was never answered by identifying the location; instead, agents simply picked up and said hello. That way, if any potential defendants checked phone records, the identity of the witness working with the Bureau would still be safe.
Shepard answered the phone.
“Hey, Brian, it’s Mark.’’
“What’s going on?’’
“Listen, I just got a telephone call from Dr. Chris Jones,’’ Whitacre said. “He’s a guy I knew back from Degussa. ADM had him on retainer back when we were considering building a methionine plant.’’
This was interesting. “What did he want?’’
“Well, he told me he was contacted by an associate, a guy named Tim Hall. Hall said that he’d been interviewed by an FBI agent named Craig Dahle.’’
“Okay.’’
“Jones told me that the interview was all about possible theft of technical information from Degussa, stuff about methionine-plant construction.’’
For several minutes, Whitacre reviewed the history of ADM’s involvement in methionine. Jones, he said, had accompanied him on trips to evaluate possible sites for a plant. But ultimately, the idea was shelved, and ADM had done the Rhone-Poulenc deal.
“Well, Mark, tell me this,’’ said Shepard, “are you aware if Jones provided you with any protected or proprietary information? Do we have a case on him?’’
“No, definitely not. Definitely not.’’
“ ‘No, he didn’t do it,’ or ‘No, you don’t know’?”
“Well, I don’t know that he did anything. I mean, back when he met with Randall and me, we asked if any of the information he had was protected or copyrighted. He told us it wasn’t and that the patents had expired. That’s what he told us.’’
Shepard tried a few more questions, but Whitacre insisted there was not a problem, adding that Jones had assured ADM that the methionine technology used by Degussa had been the same since 1949.
Shepard decided to push. “Mark, did you direct Jones to obtain any information that you knew to be proprietary or protected in nature?’’
“Definitely not. Definitely not.’’
Jones had told him the investigation seemed to be spreading, Whitacre said. The FBI was planning to interview Jones, other ADM employees, and Whitacre himself. A grand jury was likely to be convened soon.
The call ended, and Shepard looked up the number for Craig Dahle. He wanted to let him know that there was no reason to keep his investigation a secret from Whitacre anymore.
Dahle flew immediately from Mobile to Decatur. Now that Whitacre knew all about the case, the agent wanted to interview him right away. Shepard and Herndon met Dahle and drove him to a Forsyth hotel. Whitacre arrived soon after, seeming eager and nervous. Shepard handled the introductions, telling Whitacre that Dahle would be asking all of the questions today.
Whitacre nodded. “Okay,’’ he said.
He sat across the table from Dahle, who began by asking about the call from the previous day. Whitacre repeated the story he had told Shepard.
“Now, I haven’t spoken to Chris Jones in something like a year and a half,’’ Whitacre said, “so I was really surprised to hear from him.’’
“What did you think about what he had to say?’’
“I didn’t know what he was talking about. I was surprised to hear about all this.’’
Jones, Whitacre said, was incensed, arguing that the investigation was caused by a Degussa executive who was angry with him for leaving the company.
Whitacre said that he had ended the phone call by promising to get back to Jones in a couple of days. But already, Jones had left two more messages on Whitacre’s voice mail.
Dahle flipped t
hrough his notes. “All right, why don’t we back up a little bit,’’ he said. “Tell me the chronology of ADM’s efforts to build a methionine plant and how Jones and Hall relate to that.’’
Whitacre laid out the story again. He had decided to add methionine to ADM’s product line and took steps toward that in 1992. Jones, he said, was a renowned methionine expert and the logical person to call.
“I asked Jones what it would take to get him involved. He told me he needed a ten-thousand-dollar-a-month retainer. That seemed acceptable, and it was the kind of arrangement that was very common for ADM.’’
They worked together for six months, looking for plant sites. At one point, Whitacre said, he became aware that he would need more of Jones’s time and increased the retainer to $20,000 a month. At that time, Jones had suggested Tim Hall as a plant manager. Whitacre didn’t know Hall but interviewed him and was impressed. Later, Whitacre said, Jones suggested putting Hall on retainer. He told the agents that he had agreed, and ADM had begun paying Hall $10,000 a month.
“Did you have reason to suspect that any of the information you were receiving was from Degussa?”
“Never,’’ Whitacre said. “At my initial meeting, I asked Jones about infringement problems. He told me there were patents, but said if we built a methionine plant, we wouldn’t want to use Degussa’s procedure.’’
Whitacre wrapped up by describing how ADM had junked the project and instead bought into Rhone-Poulenc’s methionine plant. Dahle had one question left: Would Whitacre be willing to tape a call with Jones right now? Whitacre shrugged. Sure.
The agents decided to place the call from Whitacre’s car phone. Shepard and Dahle followed Whitacre out to the parking lot and hooked up the recording equipment. Afterward, they listened as Whitacre spoke with Jones. Nothing jumped out.
When they were done, Whitacre shook the hand of each agent and headed home. Once he was gone, the agents got back together. What did Dahle think?
Informant Page 33