Informant (63 page)

“But why haven’t you called? I’ve left messages. Why haven’t you called?’’

Ferrari stared at Whitacre. “We don’t have anything to talk about,’’ he said.

“Well, wait, what happened?’’ Whitacre said. “Have you met with anybody? Have you met with anybody?’’

Ferrari scowled. “Hell, yes, I’ve met with somebody. The Federal Bureau of Investigation came to visit me. It’s quite interesting what they had to say.’’

Whitacre held up his hands. “Hey, listen, this isn’t about you. Ron, listen to me, bud, they don’t want you. They want ADM. I know these guys.’’

“Well, that’s interesting. Because they’re asking
me
questions. Why are you saying I created invoices?’’

Whitacre babbled a response that made little sense.

“But listen,’’ he continued, “they don’t care about that. They want ADM.’’

Whitacre turned his hands as he spoke. “We’ve got to spin this thing. We’ve got to turn it back on them. Spin this thing. You’ve got to show it’s compensation. You know these guys were taking money. You know that.’’

Whitacre listed other executives who had taken money, saying Ferrari knew all about them. Ferrari started to get scared. Whitacre was wild-eyed, out of control.

“I don’t know about any of this,’’ he said. “I never told you this. I didn’t know anyone was taking money.’’

“You’ve said it!’’ Whitacre protested. “You’ve said it! You’ve got to spin this! This isn’t about you; I didn’t want to get you involved. This isn’t about you. This is about them. They want ADM; they don’t want you.’’

Ferrari held up his hands. “I’m done. I don’t have anything else to talk about.’’

Whitacre blinked. “Does Susan know?’’

“No,’’ Ferrari lied. “She has no idea.’’

Ferrari opened the door. “We’re done, we’re not talking about anything else.’’

“Bud, I wouldn’t do this to you. You know me. I’ve been in your shoes. I wouldn’t do this to you.’’

Ferrari said nothing.

“You can’t say we ever met here,’’ Whitacre said suddenly. “You can’t say I was here to see you.’’

Ferrari stared at him. “We are done.’’

He closed the door.

From the entryway, Ferrari could see Whitacre still standing outside, obviously thinking his friend would return. Ferrari reached for the switch for the porch light and flicked it off, leaving Whitacre in the dark.

Ferrari walked back to the living room. This whole experience had thrown him off. His hands were trembling. Taking a breath, he headed to the phone. He wanted to call his lawyer, to tell somebody what had just happened.

As Bassett and D’Angelo questioned an ever-widening circle of potential witnesses, echoes from their investigation were beginning to find their way into the media. For weeks, a series of news reports had appeared, saying that the government was indeed investigating Whitacre’s allegations of an illegal, corporate-wide scheme to pay off-the-books bonuses to senior ADM officers.

The stories enraged the company and Williams & Connolly. The defense lawyers met with prosecutors, pounding the table and demanding that something be done. Finally, on October 18, reporters received calls from an ADM spokesman. If they phoned the Justice Department press office, the spokesman said, they would be given a statement.

As the calls came into the Justice Department, the statement was repeated, again and again.

“ADM is not a target or subject of a criminal investigation by the Criminal Division of the Department of Justice.’’

What the hell is going on?

D’Angelo and Bassett read the Justice Department’s words in the newspaper the next morning. They had never seen anything like it before—a statement appearing to clear a company
before
an investigation was over. Worse, as far as they were concerned, the statement
wasn’t true.
The investigation wasn’t far enough along to know if Whitacre was lying.
This,
they felt sure, was politics at its worst.

After discussing it with Bassett, D’Angelo decided to make sure his boss knew about the latest outrage from Washington. He called Rob Grant.

“Hey, Rob,’’ D’Angelo said. “You’re not going to believe this.’’

“What’s up?’’

“Justice Department has come out with a statement saying ADM is not a target in the fraud investigation.’’

“What do you mean ADM is not a target?’’ Grant shot back.

“That’s what it says. We don’t know anything more.’’

“Wait a minute. What about Randall? What about Mick?’’

“Just says ADM is not a target,’’ D’Angelo repeated. “Can you believe that?’’

“Why would they come out with something like that? What prompted that?’’

“We don’t know, Rob.’’

“Did you talk to anybody yet about it?’’

“No, we decided to call you first.’’

“I’ll call,’’ Grant said.

Calls went back and forth throughout the day. But the release of the bizarre and misleading statement would forever remain a mystery to the Chicago FBI.

Later that day, Rick Reising, ADM’s general counsel, stood on a blue-draped stage in a converted school, looking out onto a crowd of angry and concerned shareholders. In the wake of the raids, ADM’s stock price had plummeted. Now, many shareholders were arguing for new directors, independent of the Andreas family.

But on this, the day of ADM’s annual meeting of shareholders, little was mentioned about price-fixing. Instead, the executives issued explanations for Whitacre’s thefts. Still, there was good news, Reising said.

“The Department of Justice has confirmed that there is no credible evidence that Mr. Whitacre’s thefts were part of a plan by ADM to funnel compensation to its executives,’’ he said.

The statement went far beyond anything Washington had actually said. But there was no arguing with the ADM executives running the meeting, as shareholders soon learned. At one point, Edward Durkin, a representative from the carpenters’ union, launched into a speech critical of the company. From the podium, Dwayne Andreas ordered that Durkin’s microphone be shut off.

Outraged, Durkin invoked Robert’s Rules of Order, the standard text for governing procedure at official meetings. Andreas was unmoved.

“This meeting, sir,’’ he snapped, “runs according to my rules.’’

In Chicago, Dick Beattie pushed through a revolving door, heading to the elevator that would take him to the Antitrust Division’s Midwest office. He was accompanied by two colleagues, including Charles Koob, Simpson Thacher’s top antitrust expert. Koob was going to be needed. For on this day, the government was, for the first time, going to play the Harvest King tapes to a representative of ADM.

The idea had been a gambit conceived by Scott Lassar. ADM had been riding high since the Whitacre mess had emerged. Perhaps if the case depended on Whitacre, they would have good reason for confidence. But everyone was forgetting the tapes—the foundation of the case.

Williams & Connolly seemed determined to fight to the end. That made sense; the firm appeared, in many ways, to be shouldering the battle for the Andreas family. A corporate plea would imply the guilt of Mick Andreas. Striking a deal for the company seemed as if it would be awfully difficult for Williams & Connolly.

But Simpson Thacher was another matter. Beattie represented only the special committee. He seemed more likely to push a settlement if the evidence called for it. Once the tapes became public, the directors would be hard pressed to explain why they hadn’t resolved the case. Lassar had proposed making an approach to Simpson Thacher, in the hopes of persuading them to deal.

The lawyers were shown to a small room, where a television was already plugged in. For hours, as the tapes played, they took about 250 pages of copious notes.

By the end of the first day of viewing, any illusions that Beattie and Koob may have had about the price-fixing case were gone. For months, Beattie had been hearing arguments from Williams & Connolly that the tapes would never see the light of day. But from what he had just seen, Beattie was certain that was pure fantasy.

Walking out the door, Beattie glanced at Koob.

“There is no way things like that stay hidden,’’ he said. “Those are going to be used in every law-school antitrust class for years.’’

The following day, November 1, a conference was held at FBI headquarters in Washington to decide what to do about the Chinese wall. For months, Shepard and Herndon had worked under a cloud, at times tripping over the feet of D’Angelo and Bassett as they attempted to do their jobs. The situation had become untenable.

Most every prosecutor and supervisor from the two cases presented their views. As the reality of the Chinese wall was laid out, it became obvious that the rules needed revision. By the end of the meeting, Jack Keeney, Deputy Assistant Attorney General for the Criminal Division, announced that the wall was coming down.

Beginning that day, Shepard and Herndon could meet with Whitacre, if a prosecutor was present. Even better, Chicago and Springfield agents could share information. Hopefully, that would bring the two cases to a rapid close.

The new spirit of cooperation took hold in less than a week. Reinhart Richter had let it be known that he was willing to provide evidence in both the fraud and antitrust cases, so the two sides decided to coordinate their interview with him in Mexico City. On November 7, Herndon, Mutchnik, Bassett, and D’Angelo all flew down to Mexico.

That night, the four gathered at a restaurant. They compared notes about planned interviews and found that many involved the same people. The Chicago agents griped about their relationship with the Washington prosecutors; Jim Nixon, who had arrived on a different flight that same day, didn’t even join the group for dinner. Herndon and Mutchnik razzed the two agents a little. The Harvest King team was not only working well together, they had become good friends.

Bassett leaned in to Herndon.

“You know, I never agreed with these walls,’’ he said. “That was Justice.’’

Herndon nodded. “I know.’’

Before the night was over, the agents had put the problems of the past behind them. Now, they were just law enforcement again, all on the same team.

The next morning, after being cleared for entry, Richter walked past a Marine Corps guard into the American Embassy in Mexico City. He had just driven almost fifty miles, from his home in Cuernavaca, and was ready to talk. He was escorted to the office of the legal attaché, where the agents and prosecutors were waiting.

Richter shook everyone’s hands. With his goatee and casual appearance, he looked more like an artist than a corporate executive. The group told Richter that the fraud investigators would conduct the first interview, followed by Herndon and Mutchnik. Richter agreed and sat at a table. Bassett, D’Angelo, and Nixon took their seats while Herndon and Mutchnik left the room.

Richter spoke in heavily accented English, the result of being a German national who spent most of his days in Latin America. He described meeting Whitacre when they both worked in Germany for Degussa. But soon Whitacre left to take his big position at ADM.

“While I was still at Degussa, I spoke with Mark by phone,’’ Richter said, sitting stiff and straight. “He told me that he had received an up-front bonus to work at ADM.’’

The statement came out of nowhere; Whitacre had never mentioned an up-front bonus before. It sounded rehearsed.

Richter said that he had stayed in contact with Whitacre, and in January 1991, was hired by his friend as an ADM consultant. Once the plant was operating, he was to become ADM’s lysine distributor in Mexico. For that, he was to receive $200,000 a year plus a start-up bonus of $50,000.

“I went to a meeting with Mark and Jim Randall,’’ Richter continued. “They agreed to pay me an additional start-up bonus other than the fifty thousand dollars. Randall said the bonus would be paid in a special way so other ADM employees would not be aware of it. Randall told Mark to handle the bonus so it would not appear on the company books.’’

The statement directly contradicted Richter’s taped phone message to Sid Hulse, which the agents had with them in a briefcase on the floor. If Richter kept going with this story, they were going to have to play it for him.

“Randall joked that I was to receive so much money I probably would want to buy a Ferrari,’’ Richter said.

Richter described in some detail the negotiations that led to the amount of the bonus—with $190,000 paid off the books and $50,000 on the books.

“Mark told me to send an invoice to ADM from Aminac, which is a business I own,’’ Richter said.

“How did you send those invoices?’’ D’Angelo asked.

“Either by fax or directly to Mark.’’

The Aminac invoice amount—$93,500—was wired to his account in Houston at the Post Oak Bank, Richter said. For the second wire transfer, Richter used the company of a friend named Adolpho Acebras. That company, Komven, sent the second invoice, for $87,466, and again the money was wired to Post Oak. A portion of that money, Richter said, may have gone to Acebras.

“What did you tell Mark about Acebras?’’

“Nothing. He knew none of the particulars.’’

Richter never thought much about those 1991 payments until a few months before, when ADM went public with its allegations against Whitacre. Richter related how Williams & Connolly had contacted him and how he had flown to Washington to meet with the lawyers.

“They told me the payments related to these invoices were not authorized,’’ Richter said. “I told them that Randall and Mark knew all about them.’’

The agents nodded, letting Richter speak without challenging him. They wanted him locked into his story before pointing out the problems.

“Later, I phoned Howard Buffett, another friend of mine from ADM,’’ Richter said. “I told him that ADM could only have found those invoices so quickly because Randall and others knew about them. He told me to speak with Marty Allison and Sid Hulse, because they were in the same position I was. He also told me about other ADM executives he knew who may have received suspicious payments.’’

Bassett nodded, then calmly removed a spreadsheet from his briefcase. It showed money transfers at the Post Oak Bank account, where the invoiced payments had been wired.