“No, no,’’ Schweizer said, shaking his head. “That was Whitacre’s.’’
Bassett pressed on the SPM&C account, but Schweizer refused to discuss it, saying the account was private. Money went into it that had nothing to do with Mark Whitacre or any other client, he said.
The words struck Mackay as laughable. He glanced at Nixon and rolled his eyes. This guy was mixing client money into other accounts for no reason? This was money laundering.
Bassett studied some documents. There was a second ABP transaction, he said, netting Whitacre $3.75 million.
“That occurred about a year later,’’ Schweizer said. “Whitacre came to me just weeks before. He showed me the documentation, and I noticed it again involved ADM.’’
Schweizer stroked his chin.
“I had a bad feeling about it,’’ he said. “He told me again and again that ABP would be doing business with many companies, that there were going to be drug companies and others. But again, it was ADM. I told him I would not accept any more transactions associated with ADM.’’
Once more, Schweizer said, the money was moved around in several accounts, including one on the Isle of Jersey.
“What were you paid for your services?’’
“We agreed I would receive a management fee based on the size of the account, about one percent,’’ Schweizer said. “I was probably paid fifty thousand Swiss francs.’’
A few minutes later, Schweizer mentioned his interviews with Fridolin Triet of the Zurich District Attorney’s office.
“I have spoken to Swiss prosecutors three times, for a total of about twenty-four hours,’’ he said. “I was questioned by Mr. Triet and by lawyers for ADM.’’
The room fell still. “Lawyers for ADM?’’ Bassett asked.
“Yes,’’ Schweizer said. “They were the ones who provided the questions. The translations were very sloppy. Even Triet had trouble understanding them.’’
Bassett asked Schweizer to identify which ADM lawyer had attended the interview. Schweizer said he didn’t know, so the agent began listing names of lawyers.
“That one,’’ Schweizer said after hearing a name.
Bassett took a breath. Schweizer had just identified Aubrey Daniel.* ADM’s lawyers were interviewing these witnesses before the government had a chance.
At that point, Bassett brought out a 302 from one of Whitacre’s interviews. Schweizer said he had seen the document before, during a meeting with Swiss prosecutors. That was no surprise; a copy of the confidential document had been sent to Triet for that reason.
Schweizer studied the faces of the assembled group.
“I saw it in the hands of the Williams & Connolly lawyer,’’ he said.
The room went numb with realization.
ADM had been obtaining American law-enforcement records from the Swiss—right at a time when company executives were still potentially targets.
The investigation had been compromised.
News of the Swiss leak hardened attitudes in the government against ADM. For months, the company’s lawyers had been dragging their feet, seeming to produce documents only when they felt like it. It had been good lawyering and had seemed hardly worth a battle. But now, everything was backward. The company had government documents, but the government didn’t have records it needed from ADM. Even ADM’s accountants, Ernst & Young, were refusing to comply.
The agents were particularly suspicious. The subpoenas covered records of ADM subsidiaries in the Cayman Islands, with names such as ADM Feeds Vietnam and ADM Animal Health and Nutrition Ltd. Perhaps, the agents thought, these documents might prove Whitacre’s story of a corporate-wide illegal bonus system. Williams & Connolly filed a motion to quash the subpoena; a secret proceeding on the motion was scheduled before a federal judge in Peoria.
This time, the company could not be allowed to win. This was going to be war.
• • •
For three days, beginning on May 30, more than one hundred world leaders gathered on the outskirts of Toronto at the CIBC Leadership Center. They had come to the elegant converted spa for the forty-fourth annual gathering of the Bilderberg Group, an alliance of some of the world’s most influential people. David Rockefeller was there; so was William Perry, the American defense secretary. Joining them were an assortment of monarchs, prime ministers, and industrialists, all invited for secret and frank talks about the direction of world economies and governments.
One executive in attendance, Dwayne Andreas, was keeping his eyes peeled for another invitee—Henry Kravis of KKR—in hopes of being able to confront the buyout specialist. Despite his advisors’ skepticism, Andreas remained convinced that Kravis was working through Beattie to cripple ADM with a price-fixing settlement—leaving it vulnerable to an easy takeover. He wanted to personally tell Kravis that ADM would not be such easy pickings.
Eventually, he cornered Kravis. In a suspicious tone, he spelled out a few details about Beattie.
“Do you want ADM?’’ Andreas asked. “Are you after my company?’’
Kravis stared at Andreas evenly. He had no idea what the man was talking about.
“No,’’ Kravis replied. “I’ve got no interest in ADM.’’
A few minutes later, Kravis disappeared into the crowds of the powerful. Andreas was left behind, uncertain.
By June, Shepard and Herndon were ready to wrap up the investigation into ADM’s possible technology thefts. No new evidence had been developed in the months since Shepard had obtained the purported list of questions for prostitutes from Joseph Graham, the former ADM executive. It was beginning to look like a dry hole.
Other problems seemed insurmountable. For one, the most recent potential crime appeared to have taken place five years before, in June 1991. But prosecutors faced a five-year statute of limitations, probably leaving them out of luck if charges weren’t filed immediately. Topping it off, some of the purported activities might not have been crimes, such as trolling for microbes in sewers near competitors’ plants. After all, garbage was public domain.
Prosecutors pushed the agents to drop the theft investigation and work exclusively on the more promising price-fixing cases. Before shutting down the effort, Shepard and Herndon decided to polygraph Graham. Herndon felt sure the witness would fail. Then, at least he could be comfortable with the knowledge that ADM had not escaped the possibility of being charged on a technicality.
On June 4, Graham sat down with a Bureau polygrapher. During the interview, the polygrapher asked two relevant questions: Did Graham lie when he said that ADM executives had met with a security firm about stealing microorganisms from a competitor? Did he lie when he said that the executives had discussed using prostitutes to gather information about competitors?
Both times, Graham answered that he had not lied.
When the test was done, the examiner called Shepard and Herndon into a room alone.
“He passed,’’ the examiner said.
Graham was apparently telling the truth. And, largely because of statute of limitations problems, there was little the government could do about it.
Anxiety was spreading at Biomar International about the start-up’s finances. Since October, when Whitacre had joined as chief executive, the company—then called Future Health Technologies—had burned through its reserves quickly. A new cash infusion was needed desperately.
In a meeting with Nelson Campbell, a company cofounder, Whitacre raised an idea. His elderly mother, Evelyn Whitacre, had some retirement money. She might be willing to lend as much as $100,000 to Biomar, he said.
“But listen, Nelson,’’ he said. “My parents don’t have a lot of money, and it would be a pretty big risk for them. So really, I don’t think they could give us a loan unless we paid them fifty percent in interest.’’
“Fifty percent?’’ Campbell said, surprised. That was far higher than the rates the company usually paid.
“I know it’s a lot, but I need to protect my parents.’’
&nbs
p; Desperate for cash, Campbell accepted the terms. Whitacre agreed to write up the loan documents and have his mother sign right away.
Sometime later, Whitacre printed out the finished loan agreement on his computer. With no one around, he reached for a pen and signed his mother’s name to the papers.
On another day at work, Whitacre called Campbell.
“My mother signed,’’ he said. “Everything’s done.’’
Days later, with the loan documents finalized, Whitacre approached a teller at a Chicago bank where Biomar kept an account. He handed over a one-hundred-thousand-dollar check, from his account at Swiss Bank Corporation. It was made out to his mother, not Biomar. But her name was signed on the back.
The teller accepted the check—sent from Switzerland almost a year before to Mike Gilbert, Whitacre’s brother-in-law in Ohio—and deposited it in Biomar’s account.
Cash from the ADM frauds was now financing Whitacre’s new company. And neither Campbell—nor Whitacre’s mother, who had never seen the check—had any idea.
The Fraud Section’s battle for ADM documents was finally heard by the judge in Peoria on June 12. The hearing could scarcely have gone better for the prosecutors. ADM was ordered to produce most everything that the government wanted—invoices and related records, journals from the Bioproducts Division, correspondence, as well as wire transfers and other documents relating to the company’s Cayman Islands corporations.
Victory in hand, Mackay and Nixon began to leave the courtroom. Vince Connolly, a lawyer for ADM’s accountants, Ernst & Young, approached. Given the ruling, Connolly said, the firm would drop its opposition to showing the government its ADM documents. That afternoon, the accountants agreed to work out a schedule for the FBI to review any document covered by the subpoena.
The game of hardball had paid off.
In Springfield, Lou Rochelli found his seat before the twenty-three grand jurors, held up his right hand, and swore to tell the truth.
Rochelli, a former ADM controller, remained central to Whitacre’s claims that the company knew all about his financial dealings. Whitacre maintained that Rochelli had called him shortly after the raid with word that Jim Randall was on a tear around ADM, telling the controller to pull specific invoices that would prove the company’s newfound enemy was an embezzler. That, Whitacre insisted, was the evidence that ADM’s top managers knew all about the bogus invoices. How else would they know exactly where to look?
As the grand jurors listened on that Thursday, June 20, Don Mackay led Rochelli through a description of the confusion that reigned inside ADM after the raid—followed by the shock when Whitacre’s role in the case emerged. Still, Rochelli said, he maintained contact with Whitacre for a while, simply because he considered the man a friend.
Mackay glanced at his notes. “Do you recall having any discussions with Whitacre in which you indicated to him that you had heard Jim Randall, president of ADM, had asked people to start pulling files on transactions that Whitacre had been involved in?’’
Rochelli looked only at Mackay.
“I believe we did, in one conversation, discuss the fact that I had heard people were being told to pull expense reports, things like that regarding trips Whitacre had taken and I informed him of that,’’ he said. “Again, understanding Mark is a friend, I wanted him to be aware of what I knew and what was going on and whether that came from Jim Randall, I don’t recall. Jim Randall certainly never discussed that with me.”
Expense reports—the first stop for any company looking to discredit a former executive. No mention of invoices. Another critical support under Whitacre’s story had collapsed.
Sounding its horn, the ferryboat from the Star Line slowly approached the dock on Kowloon Peninsula, across the harbor from Hong Kong’s main island. On board, a group of Americans—including Brian Shepard, Bob Herndon, Scott Lassar, Jim Griffin, and Jim Mutchnik—gathered their belongings for the short walk along the waterfront to the elegant Kowloon Shangri-La Hotel. There, over the next few days, the Harvest King investigation would obtain its most critical evidence since the Whitacre tapes.
By June, negotiations with Ajinomoto and Kyowa Hakko had resulted in tentative plea deals. Both agreed to pay $10 million, and one executive from each company—Kanji Mimoto of Ajinomoto and Masaru Yamamoto of Kyowa Hakko—would also plead guilty and pay fines. No resolution had been reached on Kazutoshi Yamada, the powerful managing director of Ajinomoto whose meeting in California with Mick Andreas had resulted in the illegal volume agreement. The government was free to indict him.
Now, the Harvest King team had come to Hong Kong to hear the stories of the Japanese executives. If the statements and evidence offered over the next few days proved worthwhile, the agreements would be finalized.
The American team, dressed casually in sport shirts and slacks, headed into the lobby of the Shangri-La. Light from a huge chandelier spilled across the starburst design in the lobby’s marble floor. The group came to a stop; they had no idea where to go. Before anyone was able to ask a question, David Westrup, a lawyer for Yamamoto, appeared.
“Welcome to the Shangri-La,’’ Westrup told the group. “We’ve got you set up in a room over this way.’’
The group paraded through the lobby behind Westrup, toward the hotel’s twenty-four-hour business center. The offices dripped elegance. The walls were polished cherry wood; luxurious carpeting lined the floor. A smartly dressed Chinese woman typed on a computer at the front. The lawyers and agents traipsed past her, toward a cramped conference room. They were joined by two other defense lawyers, James Kennedy and A. Paul Victor. Westrup took out an accordion folder, removing several books and stacking them across the narrow conference table.
“These are Mr. Yamamoto’s personal diaries and calendars,’’ Kennedy said. “The diaries include notes and observations of meetings and phone calls. The calendars also have notes in them, but are largely just schedules.’’
The defense lawyers left the room, and for hours the govern-ment team pored through documents. The leather diaries and calendars seemed particularly interesting. Though written in Japanese, Yamamoto used many proper names; numbers from the conspiracy appeared throughout. It was obvious that the documents were a perfect record of price-fixing, going back further than any of the Whitacre tapes.
The next morning, the Americans broke up, conducting separate interviews in conference rooms located two floors below the lobby. During a break, the group that had been questioning Yamamoto was near the hotel’s Japanese restaurant, waiting for the others. Kevin Culum, a young antitrust lawyer known as “K.C.,’’ bounded out of a room where another Kyowa Hakko executive was being interviewed.
“Hey, my guy’s been giving up Wilson right and left,’’ Culum raved.
He pumped his fist. “Yeah!’’ he said. “We’ve got Wilson!’’
The group stared at Culum, then broke out laughing. Culum seemed to have forgotten that Wilson was already featured on several dozen tapes.
“Hello? K.C.?’’ Herndon laughed. “We’ve had Wilson.’’
Still, the day proved to be a watershed in the investigation. With the benefit of his diaries and calendars, Yamamoto was almost a perfect witness. His recall of events was encyclopedic; his demeanor and style were inviting.
He would be stellar in a courtroom. Despite all of the troubles, the antitrust case was back on track.
The proffer meetings came to an end after more than a week, and the antitrust team flew home, delighted with the state of their once troubled case. The prosecutors didn’t need Whitacre anymore. Now, they had other witnesses.
The air was stale and hot inside the dingy room where Jhom Su Kim, the president of Sewon America, had come to confess his crimes.
Herndon, Mutchnik, Mann, and a half dozen others—including Susan Booker from the antitrust office and Peter Hwang, a Korean-speaking Illinois state policeman who was assisting in the investigation—sat uncomfortably in the dimly lit conference room of a New Y
ork law firm, preparing their questions for Kim. It was the morning of August 12, a Saturday. No one had figured on the firm’s air-conditioning being off for the weekend, particularly on such a humid day. Worse, Kim and one of his lawyers were chain-smokers; the room reeked of tobacco. No one was happy to be there.
Sewon was joining its Japanese competitors in striking a deal. Under the terms, both its American division and Kim would plead guilty and pay fines. But again, before signing off, the government wanted to hear Kim’s information, to be sure it was worth the break he and Sewon were receiving.
The meeting started on a note as unpleasant as the setting. Translations of some Korean documents that the prosecutors had been expecting were not yet available. Kim grimaced when he saw the government’s official translator was a woman, saying that she would be unable to understand business terms. Herndon and the prosecutors continued with their interview, dismissing the complaint.
Kim sucked down cigarettes at a rapid clip as he answered questions. With the translator speaking simultaneously in English, Kim explained that it was common for Korean competitors to have discussions about stabilizing prices and volumes. It was during the meetings, he said, that he learned he was violating American law.
Hours later, Mutchnik wrapped up with a final question. “Mr. Kim, we appreciate your help. How do you feel about all this?’’
The question was translated. Kim said nothing, staring at the table as he took a long draw on his cigarette. Then, without warning, tears ran down his face. Unable to speak, Kim rushed out of the room, heading to his lawyer’s office. The antitrust team was momentarily stunned.
What just happened?
Mutchnik looked toward Peter Hwang, the Illinois policeman who spoke Korean. “Peter,’’ he said, “you’ve got to go find out what’s going on.’’
Hwang met with Kim and his lawyer behind closed doors. When he returned, Hwang explained that Kim had misunderstood. The Korean executive knew he would be pleading guilty and believed—now that the interview was over—that he was heading to jail. In the weeks before, Kim had even traveled to Korea to bid his family good-bye.
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