Informant (59 page)

“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 two-deal 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.

“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 glasses 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.’’

•   •   •

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.

Whitacre stopped speaking. He had reached an endpoint.

“Well, Mark, thank you for your help so far,’’ D’Angelo said. “But now I want you to think. Are there any other illegal activities that you know about?’’

Whitacre nodded eagerly. There were plenty of other misdeeds at ADM, he said. The company had stolen microbes by hiring competitors’ employees and paying them to bring along the proprietary bugs. ADM had even hired hookers to hang around a plant in Eddyville, Iowa, in hopes of finding an employee willing to steal microbes.

There were also illegal payments to both American and foreign politicians, Whitacre said, as well as the widespread use of cocaine. ADM executives misused the corporate jet for personal purposes. They dumped genetic waste into animal feed. They secretly taped competitors who stayed at company apartments at the Decatur Club.

“You can ask Liz Taylor and Sue Lines about that,’’ Whitacre said. “They’re ADM employees who know all about it. They’re the ones who type up the transcripts.’’

D’Angelo finished, and Bassett took over, reviewing Whitacre’s bank accounts. Whitacre revealed a dozen accounts, both foreign and domestic. Next, Bassett returned to the money. Had he made any purchases with it recently?

“Well, I negotiated to buy a house in Tennessee from somebody named Paul Myer,’’ Whitacre said. “I planned to use nine hundred thousand of my money for that.’’

Beat Schweizer, Whitacre said, was supposed to wire the money to an account set up by a New York lawyer named Joseph Caiazzo. The transaction had been structured to appear as if Whitacre was receiving a loan from an offshore institution. That way, Whitacre would owe no taxes. D’Angelo nodded; now he knew why the lender’s identity had been so secret.

Not much later, the interview ended. Whitacre said he would be willing to meet again. Everyone stood.

“Thank you very much, Mark,’’ D’Angelo said. “We appreciate your time.’’

D’Angelo and Bassett walked out onto South Riverside feeling pretty good. They had arrived with little documentation, and Whitacre had given them plenty of leads.

For the most part, Whitacre had impressed them. His body language had been open; he had smiled a lot. His demeanor was that of someone telling the truth, although both agents assumed he was holding back. The prosecutors were more skeptical. Spearing had been particularly annoyed by the agents’ low-key style with Whitacre.

“I think you guys did a nice interview,’’ she said. “But you were way too nice.’’

D’Angelo shrugged. “We’re not going to beat up on him unless we have something to show that he’s lying.’’

“Well,’’ Spearing said, “
I
don’t believe him.’’

Nearby, Don Mackay nodded in agreement.

“I’ll tell you, this authorized stealing sounds nuts to me,’’ he chimed in.

Mackay laughed.

“But, hell,’’ he said with a smile, “if what Whitacre’s saying is true, the government will end up
owning
ADM.’’

C
HAPTER
16

A
t first glance, the man walking with the crowd of disembarking airline passengers was far from impressive. He was short with an average build and dark, close-cropped hair. His suit was in need of a pressing, and his shoes looked like they had been polished with a Hershey bar. If the man appeared to be just another weary business traveler—perhaps in town for a sales meeting—then that suited him fine. Louis Freeh, the Director of the FBI, was not the type to stand on pretense or pageantry.

Freeh came through the arrival gate alongside John Griglione, a forty-seven-year-old former defensive tackle with Iowa State who served as his driver and bodyguard. Just past the waiting area, Freeh saw four suited men. He recognized Don Stukey, the Springfield SAC, and headed toward him. Stukey extended his hand.

“Welcome to St. Louis,’’ Stukey said. “You know my ASAC, John Hoyt?’’

“Sure, I remember John,’’ Freeh replied.

Stukey introduced the other two men accompanying him—an agent from a nearby Resident Agency and an airport police officer. After thanking the officer for his help, the group headed to their cars, parked just in front of the terminal.

It was early on the morning of September 7, 1995, a Thursday. For the first time since assuming the director’s post two years before, Freeh was here to inspect the Springfield Field Office, coming by way of St. Louis, an hour-and-a-half drive from his final destination. Stukey asked Freeh if he wanted to be driven by Griglione; the Director shook his head, saying he would ride with the SAC.

Stukey walked to the front passenger side of his blue Mercury, opening the door for Freeh while Hoyt piled into the back. Griglione headed to a neighboring car, driven by the senior resident agent. The two cars pulled into traffic, headed to Springfield. As they drove onto the highway, Stukey tried striking up conversation.

“How was your flight?’’ he asked.

“Okay,’’ Freeh responded.

Pause.

“You had to get up pretty early to catch it.’’

“Yup.’’

Pause.

“Are you going directly back tonight?’’

“Yup.’’

Pause.

“How’s the family and kids?’’

“Okay.’’

An eerie discomfort settled in. Stukey launched into an overview of the Field Office. At times he would pause, hoping for a question. But Freeh would say nothing, and Stukey would continue his monologue—or fall silent for five to ten minutes at a stretch.

Shifting uneasily in the backseat, Hoyt watched the two men, unsurprised at how badly this was going. He had heard about inspections at other offices; Freeh never fraternized with the SAC or ASAC until after he had met alone with the agents. Word was that the Director didn’t like chatting until he decided—based on the agents’ comments—whether the supervisors would keep their jobs.

Hoyt sat back. This, he felt sure, would be one of the longest drives of his life.

Hours later, Freeh sat at a large conference table in Springfield, looking out at the faces of a small group of Special Agents. He brought out a sheaf of notes.

“It’s good to be here,’’ he said. “I’ve read about some of your cases, and you guys are doing a great job.’’

He glanced down at his notes.

“Scott Easton, I’ve read about your work on the Gangster Disciple case,’’ Freeh said, looking at the agent. “Is there anything you want to add?’’

For twenty minutes, the conversation continued. The agents were strongly impressed; Freeh was able to speak knowledgeably about most every major case in the office. Few of them had ever seen a Director show such an interest in their daily work.

Freeh looked down the middle of the table, where Shepard and Herndon sat on either side.

“Well, I know Bob and Brian are working on the ADM case,’’ he said. “You had some good success going overt back in June. But I understand there are some issues with the cooperating witness. Anything you want to tell me about?’’

Herndon spoke first. “Is there anything we can do to make sure that the field is consulted before decisions are made?’’ he asked. The Justice Department hadn’t consulted them on rulings, such as sending parts of the case to San Francisco and Atlanta.

Freeh looked surprised. “I agree, the field should be consulted on big decisions.’’

The agents followed up, mentioning their concerns about being cut off from Whitacre. He was the person best able to help them with conversations when a tape was unclear, they said, but they were forbidden from even contacting him for
that.

Freeh nodded. “I understand your concerns,’’ he said. “But, for now, I do believe it’s a good idea for you guys to remain separated from the CW until he pleads.’’

After a few more comments, the discussion on Harvest King was done. Freeh moved on to the next case.

Early that afternoon, Freeh was back in the car with Stukey and Hoyt, ready for the return trip to St. Louis. From the moment they pulled away, Freeh was a different man than the one who had been in the car that morning.

“Boy, you guys really have some good stuff going,’’ he buzzed. “You need people on this ADM case. It’s big.’’

Whatever the agents had said, obviously Stukey and Hoyt had passed the test.

Freeh looked at them. “What else do you need to push this case ahead?’’

This, the two supervisors knew, was the time to bend Freeh’s ear about the troubles with Harvest King.

“That case is frustrating,’’ Stukey said. “Bob and Brian have knocked themselves out, and the only impression we get from DOJ is
them
wanting to prosecute
us.
’’

The supervisors explained about the allegations that had been raised—apparently with no evidence—of wrongdoing by the agents. They also described the “Chinese wall’’ between the fraud and antitrust investigations. Perhaps there was a reason to keep the Harvest King agents away from Whitacre for now, but there was no reason to treat them like suspects. Information from the two investigations should be shared. All the bureaucracy was slowing both cases, to the benefit of the real criminals.

“ADM and its managers are being ignored, while DOJ is concentrating their efforts looking into allegations against Whitacre and our agents,’’ Hoyt said. “They appear intent on catching goldfish while Moby Dick swims away.’’

Freeh nodded. “This needs to be resolved,’’ he said.

The conversation continued until Stukey pulled up in front of the airport terminal. They walked Freeh inside, where he was joined by Griglione. Once the plane was called, Freeh thanked the supervisors, congratulating them and then heading through the departure gate.

As they watched Freeh leave, Stukey and Hoyt felt giddy. Not only had things gone well, but Freeh seemed set on fixing the problems with Harvest King.

Perhaps soon all the craziness would be over.

At his house outside Mexico City the next Sunday morning, Reinhart Richter dialed the phone, hoping to send a voice-mail message to two ADM colleagues.

Richter, president of ADM Mexico, was overwhelmed with dread. Williams & Connolly had contacted him, instructing him to fly to Washington for a meeting on Wednesday, September 13. Somehow, they had found records of the bonus he had received in his earliest days at ADM. It was his worst nightmare. Since seeing the news stories about Whitacre, Richter had feared it would be only a matter of time before someone started asking about his own money.

Once in the voice-mail system, Richter pushed the buttons on his keypad to leave a confidential message. He had heard that his friends from the Bioproducts Division, Sid Hulse and Marty Allison, were in similar situations. He wanted to talk, maybe discuss what they should say. At 9:01, Richter heard a beep telling him to begin recording.

“This is a confidential message, message to Sid and to Marty,’’ Richter said. “I hope you had a great weekend.’’

He paused. “See, my friends, I’m in trouble. When I started at ADM as an employee—not as a distributor, an employee—I got a startup bonus and, uh, some payments to me which now seems to complicate my life.’’

Richter sighed.

“I got, uh, money through two invoices,’’ he said. But the invoices were for work that had never been done.

“ADM told me to do it, uh, I think,’’ he said. “ADM was Mark for me at that time, of course. And, uh, I don’t know whether and with whom he discussed this, but that’s the way Mark, uh, told me how to do it. So I’ve got two invoices, and uh, I would appreciate hearing from you.’’

Richter mentioned that Williams & Connolly had contacted him, saying he believed that they wanted to speak with him about the invoices and the payment.

“Man, it’s just crazy; it’s just stupid,’’ he said. “All right, guys. I hope you dream well, and uh, I would appreciate your call. Thank you. Bye now.’’

Early the next morning in Atlanta, Sid Hulse called his voice mail. Pressing the number three on the keypad, he heard the header of a message from Sunday.

Hulse pushed another button and listened to the message. His mind raced as he heard Richter’s words. The man was actually
confessing.
At the end of the message, the system instructed Hulse how to delete it. But before he did anything, he decided to call his lawyer, Sheldon Zenner. In recent days, FBI agents had been pushing for an interview with Hulse and were scheduled to meet him that week. Maybe they would be interested in hearing this voice-mail message from his friend.

Two days later, the government’s interview with Sid Hulse took place in a cramped conference room at the Fraud Section’s Fourteenth Street offices in Washington. Bassett had a scheduling conflict, so Rob Grant, the new supervisor on the case, accompanied D’Angelo to the meeting. The agents arrived an hour early, giving them time to prepare with the fraud prosecutors, Don Mackay and Jim Nixon.

The group was already at the conference table when Hulse arrived, accompanied by Zenner and another lawyer, Sean Berkowitz. Hulse, a huge man, appeared nervous. Zenner swapped stories with the agents about some high-profile Chicago cases and cracked a few jokes.

Zenner sat back. “All right,’’ he said. “I’m just here to meet you guys. I’m not taking part in this interview. I think you want to hear from Sid.’’

First, the ground rules. Hulse was appearing pursuant to a proffer agreement—a deal in which he promised to tell the truth so long as none of his statements could be used against him at trial. Both sides agreed.

D’Angelo started with Hulse’s background. Hulse told how he had joined Degussa in 1982 as a sales representative for methionine. Shortly afterward, he met an energetic young nutritionist from Ralston Purina named Mark Whitacre. Hulse had been impressed and soon was suggesting that Degussa hire Whitacre. During the Degussa years, Hulse and Whitacre became friends. So in 1989, when Whitacre left for ADM, he quickly invited Hulse to come with him.

“Mark didn’t leave Degussa on friendly terms and was prohibited from hiring Degussa employees,’’ Hulse said. “To get around that, he told me to set up my own company, and he would pay me as an independent contractor.’’

Hulse became an ADM lysine salesman, drawing $13,500 a month as he helped the company break into the market.

“Did you ever pay kickbacks to customers for lysine orders?’’ D’Angelo asked.

“Never,’’ Hulse replied. “There were no irregularities on any lysine contracts.’’

As time went on, Hulse said, ADM turned to him for assignments outside of his normal duties. For example, he said, there was a time when ADM was thinking about buying a competitor’s division and asked Hulse for an analysis of the business and a recommendation on the purchase.

D’Angelo tried not to show disbelief. With teams of investment bankers on hand, ADM turns to a lysine salesman for a corporate analysis?
That’s pretty weak,
he thought.

“Because of that extra work, Mark told me in mid-ninety-one that he had been authorized to pay me a bonus,’’ Hulse continued. “But it was going to be paid outside the normal channels. And Mark was getting a bonus, too. So Mark and I would both receive one hundred thousand dollars, and an additional hundred thousand would be paid to me to cover taxes for both of us.’’

This made little sense. “Why would Whitacre receive a bonus through you?’’

Hulse turned up his hands. “That was the way they wanted it done.’’

To make it work, Hulse said, he set up a shell company called JT Technologies. Then, following Whitacre’s instructions, a three-hundred-thousand-dollar invoice was sent to ADM, using a different bogus company name. That money—which was actually used for the bonus—eventually was deposited with JT Technologies.

“Why did you use a different company name for the invoice?’’ D’Angelo asked.

“To keep it secret from other people at ADM, including other people who worked for Whitacre,’’ Hulse said. “Whitacre didn’t want other people knowing about it.’’

Hulse looked at the uncomprehending faces of the government investigators.

“He said this was common practice at ADM,’’ Hulse protested. “He told me that lots of bonuses like this were paid to high performers.’’

“Why pay it like this?’’

“Well, besides stock options, ADM doesn’t normally pay bonuses, and Whitacre didn’t want the bonus looked at too closely by the board’s compensation committee.’’

D’Angelo glanced at his notes. Whitacre was the only ADM executive being mentioned. Did others at the company know about the payment?

“Well,’’ Hulse said, “I was under the impression that Mark’s superiors knew.’’

“Who did he say approved it?’’

“Mark never said specifically,’’ Hulse shrugged.

“What did the invoice say that the payment was for?”

“Consulting fees.’’

“Anything specific about what these consulting fees were supposed to be for?’’

For a moment, Hulse thought. “The only thing Mark said was not to relate the consulting fees to methionine.’’

After the invoice went in, Hulse said, the full $300,000 was sent to his Atlanta bank account. Whitacre was worried about taking back $100,000, so he told Hulse to prepare documents to make the payment look like a loan. That way, if needed, they would have a cover story.