The
AGRIBUSINESS
EXAMINER
April 1, 2002   #152
Monitoring Corporate Agribusiness
From a Public Interest Perspective

EDITOR\PUBLISHER: A.V. Krebs
ADDRESS: PO. Box 2201, Everett, Washjington 98203-0201

E-MAIL: avkrebs@earthlink.net
WEB SITE: http://www.ea1.com/CARP/
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COMMENTARY:
"RATS IN THE GRAIN" AUTHOR LIEBER REVISITS
"BEST DOCUMENTED CORPORATE CRIME IN U.S. HISTORY"
ASSAILS ADM'S PERSISTANT COVERUP ATTEMPTS

Long before Enron became an abbreviated synonym for corporate corruption and malfeasance an ongoing scandal that has been called "the best documented corporate crime in U.S. history" was unfolding relatively uninvestigated and unreported in the nation's major media outlets.

True, a few scant words appeared in publications like the Wall Street Journal, The Washington Post, and The New York Times on the ongoing scandal. However, it was left up The Chicago Tribune business section, the Decatur Herald & Review, the Corporate Crime Reporter and farm columnist Alan Guebert to give any kind of factual depth and analysis to the scandal.

It was not until James B. Lieber's stunning Rats in the Grain: The Dirty Tricks and Trials of Archer Daniels Midland The Supermarket to the World (Four Walls Eight Windows: New York, 2000) appeared that the public had an opportunity to truly inform themselves on the whole sordid case of corporate fraud, conspiracy and blatant political influence and "payoffs" that pervaded and was synonymous with the Decatur, Illinois company. (See review Issue #85)

Unfortunately, Lieber's hard-hitting and truth-telling book was dismissed by most of the business press in favor of Kurt Eichenwald's semi-fictional The Informant. Yes!!! the same Kurt Eichenwald that has been reporting on the Enron scandal for The Times, which judging by his past selective "reporting" on the ADM scandal for the paper, should leave its readers wondering if they are now indeed getting "all the news that's fit to print." ???

But Lieber, who lives and practices law in Pittsburgh, Pennsylvania, has remained undaunted and now in a paperback version of Rats in the Grain, where his publisher rightfully asks "Is this corporate capitalism run amuck? Or is this the status quo in the polished corridors of power?" the author-lawyer adds another alarming chapter in the form of a nine-page "Afterword" to "a searing portrait of a truly American rotten apple."

Many of the current events in the unfolding ADM scandal (as reported in recent past issues of THE AGRIBUSINESS EXAMINER) are recounted by Lieber in this new chapter, but in relating them the author continues to raise, as he did in the hardback edition, alarming questions concerning an ongoing coverup that has existed since the FBI first raided the company's headquarters on June 27, 1995.

For example, Lieber tells about ADM's efforts to establish a trade beachhead in Cuba through trade talks, playing "a shadow role in returning" Elian Gonzales to Cuba, and  sponsoring a trade show in Cuba, in which as Paul Brinkman of the Herald & Review, reported ADM sought a "joint venture" with Havana that would allow it essentially to run Cuban agriculture.

It was after Brinkman questioned former ADM CEO and current chairman emeritus Dwayne O. Andreas concerning the company's goals in Cuba, that ADM requested the paper not assign Brinkman to any further company coverage, which "unfortunately, the paper complied and the news coming out of Decatur is softer."

Lieber goes on to note:

"In all likelihood, ADM's penchant for cultivating Cuba goes deeper that its historic affinity for doing business with dictators. Ultimately, the very viability of the company may hinge on it. The reason is simple. Democratization of Cuba and the true normalization of ties with the U.S. would mean the free marketing on the mainland of vast quantities of Cuban sugar. The surge would destroy the strange toe-hold of ADM's biggest artificial `cash crop,' high fructose corn syrup.

"By establishing close relations with Havana's leadership and making inroads into the island's farm economy, ADM would position itself to influence postembargo Cuban sugar policy. It would be very much in ADM's interest to be able to depress the production of Cuban sugar, convert it to molasses, or otherwise divert if from the mainland market dominated by high fructose. The alternative could be ruinous," he adds.

High fructose corn syrup is also the subject of another atrocious dealing by ADM in this continuous unfolding scandal, but an action that they were allowed to get away with by the courts, one of the few if any decisions that have gone their way since they were fined $100 million in 1996 for price fixing in lysine and citric acid. Later, ADM's heir apparent, Mick Andreas, and son of Dwayne O. Andreas, and Terrance Wilson, head of ADM's corn processing division would also be convicted of price fixing, fined $350,000 each and sentenced to three years in jail.

In August, 2001 the chief federal judge for central Illinois Michael Mihm granted a motion for summary judgment which voided a multibillion dollar civil class action suit alleging price fixing in the high fructose corn syrup industry by ADM, and the next four largest producers --- Cargill, CPC International, American Maize and A.E. Staley. The suit had been brought by Coca-Cola, Pepsi-Co. and some 20 other companies who had alleged a price fixing conspiracy between 1991 and 1995.

Lieber notes "Mihm's decision to dismiss the case without letting it go to a jury was extraordinary. What was even more amazing was his order putting the entire court record under seal, thus keeping it secret and out of public view.

"In fact, the only public document in the case was Mihm's 66-page ruling. Ironically, even the decision contained evidence of a conspiracy that looked similar to the evidence in the cases about lysine and citric acid during the same period.

"For instance, a trade group, the Corn Refiners Association (CRA), allegedly was used as a cover for sharing price and production data, and producers had a `balance' agreement allowing them to buy high fructose from each other if necessary in order to stabilize their market shares. Some of the defendants' conduct in this vein was astonishing," Lieber adds.

"For example,the plaintiffs identified transactions where high fructose makers actually bought the sweetener at a prices above their own cost of production from other producers in the alleged cartel. In depositions, sales reps for the producers told of being blocked from competing for customers. Buyers also were frustrated because no one else would sell them sweetener when they wanted to leave their traditional suppliers."

The author, in this regard, points to a snippet from a seal plaintiff's brief that Mihm quoted. "Terry Wilson, who attended CRA activities, directed that ADM `should minimize the number of expense reports created and should not show the true nature of the meeting or the people involved.' The director of operations at Staley's high fructose plant reportedly put it bluntly: `We have an understanding in the industry not to undercut each other's prices.' The regression analysis by one of the plaintiff's economists found an `average over charge of 15.7% during the conspiracy period after controlling for non-collusion variables.'"

"In short," Lieber charges, "virtually every household in America has been pounded. But for now, ADM and its federally propped up sweetener were saved. . . . . It is difficult to understand the continuing judicial secrecy surrounding the case. Again, no issue of terrorism, national defense, or security was involved. It was just business. But the unusual ruling abridged the public's First Amendment right to know and the equally venerable democratic principle of open courts. It seemed that ADM and its cronies in the cartel had contorted yet another branch of government."

"Contorting" branches of the federal government is nothing new to Andreas & Co. for just in the 2000 election cycle alone the company and its executives spread some $935,000 in donations to candidates in both major U.S. political parties, in addition to another $100,000 to President-select George W. Bush's inaugural festivities. Lieber not only goes on to lists ADM's "soft money" contributions from 1995-1999 to political candidates, but also the major cases involving ADM and a summary of the major criminal and civil cases involving ADM and its executives that have arisen out of investigations into price fixing lysine, citric acid, and HFCS.

As Lieber points out ADM has also been hard at work seeking in part to restore its reputation by "trotting out its aging war horses."

He tells of a black tie gala honoring Andreas in the summer of 2000 where former newscaster David Brinkley served as the keynote speaker. "Brinkley skipped ADM's felonies and the former CEO's immunity deal" and "praised Andreas as one of history's greatest businessmen and the friend of presidents from Eisenhower to Clinton, many of whom he recalled had been smart but perhaps unlucky. `Dwayne Andreas, through it all, has been smart and lucky. I would rather be governed by a leader who was lucky and smart, and Dwayne has been both.'"

What was Brinkley suggesting? Was it lucky for Andreas to see his son imprisoned while he walked? Lieber asks. "Was Brinkley boasting that Andreas actually had been among the governing elite thanks to his high level political connections?"

Current and former ADM board members Andrew Young, head of the National Council of Churches which sponsored many of Elian Gonzales' Cuban families' activities in the U.S., Brian Mulrooney , former Canadian prime minister, and Robert Strauss, long-time Andreas friend and crony, thought so.

"He is truly one of the great men I've know. I don't think he gets nearly enough credit for the changes that took place in the Soviet Union," testified Young. Mulrooney highlighted Andreas "influence" on American politics as one of its top "donors," and as Lieber relates, "at the time, the 2000 presidential primaries were in full swing causing Strauss to quip: `I have no idea who will be president, but I know who his best friend is going to be.'"

ADM has also been attempting, as the author points out, to alter its public persona dropping the "ubiquitous slogan `Supermarket to the World.' In the wake of the price-fixing scandal agribusiness critics had chided the company for its `supermarkup to the world.' ADM's new less catchy tagline --- `The Nature of What's To Come' --- soon became a staple on National Public Radio and Sunday morning pundit shows."

And the beat goes on !!!!

In the essay below David Hoecht, who along with his wife Carol founded the seven-year old ADM Stockholders' Watch Committee, details yet another apparent example of ADM's influence in high places and the U.S. Department of Justice's seeming unwillingness to pursue and punish the company and its executives to the fullest extent of the law. Also a recent letter, reprinted below, by internet activist Oscar B. Pichardo to George W. Bush brings to light still one more example of why ADM deserves to be thought of as agriculture's Public Enemy #1.

Certainly readers --- both farmers and consumers --- of Lieber's incisive Rats in the Grain will have ample evidence at their finger tips to substantiate that claim and the recognition that the current Enron scandal is no isolated event but is simply another example of the cancer that is eating away at the innards of American capitalism, democracy, and our family farm system of agriculture as the "rats in the grain" become ever more ravenous.
 

ADM STOCKHOLDERS WATCH COMMITTEE
CHARGES DOJ ATTORNEY INVESTIGATING ENRON
PLAYED MAJOR ROLE IN ADM SCANDAL COVERUP
 
DAVID HOECH, ADM STOCKHOLDERS WATCH COMMITTEE: U.S. Attorney Hochberg has been chief of the Fraud Section of the DOJ's Criminal Division since 1998. From 1995 to 1998 Hochberg served as deputy chief for litigation in the Public Integrity Section (PIS). Presently he also serves as acting U.S. Attorney for the southern district of Texas.

On June 27, 1995 the FBI raided the headquarters of Archer Daniels Midland Company (ADM) in Decatur, Illinois.  For more than two years prior to the raid ADM executive Mark Whitacre worked with the FBI to audio and video tape ADM officials and executives of other companies rigging prices in the lysine and citric acid markets.

At the time Howard Buffett was an ADM board member as well as an assistant to ADM chairman Dwayne Andreas. In early July of 1995, Buffett resigned from the board and the company, claiming he was upset with the conduct of ADM officials regarding the investigation. FBI-302 reports of FBI agent interviews with Buffett relate that ADM was involved in obstruction of justice.

Buffett told agents that Dwayne Andreas' secretary Claudia Madding and another employee took boxes of documents out of Dwayne's office.  Later, Buffett learned that Martin Andreas, a senior corporate executive and board member, had organized five employees to remove documents from other offices. All this material was sent to ADM's co-generation plant for destruction.

In 1996 complaints were sent to Hochberg about troubling aspects of the fraud investigation; principally that the investigation was centering on the whistle blower [Mark]Whitacre and not on other crimes that were recorded by the FBI tapes through Whitacre. Hochberg refused to cooperate or respond to any of the complaints.

On October 15, 1996 ADM entered into a plea agreement with the government. It was a sweet deal for ADM. The company pleaded guilty to price fixing in two products --- lysine and citric acid --- and paid a $100 million fine.  The presiding federal judge, Ruben Castillo, accepted the plea, which was a downward departure from Department of Justice guidelines.

It was later learned that ADM was permitted to keep its government business as part of the plea agreement. This part of the deal, however, was not specified in the written plea agreement.  When this information became public, Judge Castillo asked to be shown the evidence.  When given the evidence, which included an audio tape of an Undersecretary of Agriculture verifying ADM's role in the plea, Judge Castillo refused to give dissenters a chance to appear before him.

As co-founder of the ADM Shareholders Watch Committee I became both a problem for ADM and the government, because our group was constantly bringing evidence forward that a cover up by ADM's lawyers Williams & Connolly and the Justice Department had defrauded the American people of justice.

After the whistle blower Mark Whitacre was sentenced on March 4, 1998 to nine years in prison, Williams & Connolly turned their attention to me and filed papers in Federal Court in Jacksonville, Florida, alleging that $2.5 million of the $9.5 million Whitacre received from ADM was missing. They accused me of possessing it, and they wanted to examine my bank records.

At the sentencing of Whitacre, Kurt Eichenwald of the New York Times asked the prosecutor Donald MacKay if all the money Whitacre had received was accounted for. MacKay answered that it had. Eichenwald later denied he had asked the question, but it was verified by three other reporters present that Eichenwald had asked about the money.

MacKay also told John Stebbins of Bloomberg News that the Justice Department had no evidence that I had received any illegal funds. Later James J. Nixon, another prosecutor from the fraud division, wrote a letter to my attorney dated April 17, 1998 stating, "That the government cannot confirm whether or not Mr. Hoech received any fraudulent proceeds."

In 1999 and 2000 I tried constantly to contact people from the criminal fraud division. All said that I must speak with Hochberg, as he is in charge. I tried numerous times. He refused to answer my telephone calls or letters. On January 31, 2000 I wrote Attorney General Janet Reno asking her for help in clearing my name; I asked her to contact Hochberg. I heard nothing until March 20, 2000, when FBI special agent Edward S. Knapp, Jr. visited me to see if I was a threat to Hochberg and others.

I explained to him what had taken place with ADM, its lawyers and the Justice Department, and I explained our role as shareholders activists. He seemed embarrassed to have bothered us and suggested we go after them.

I wrote Hochberg on March 21, 2000, noting "If I put myself in your position knowing what we both know, I would also feel threatened when the cover up and conspiracy by the Justice Department, ADM and Williams & Connolly is going to be exposed.  Like you in your position, I would have probably called the FBI and asked them to visit me, hoping it would intimidate us. I have found those who try to intimidate others are usually easily intimated themselves. You might want to see a mental health professional and have yourself checked out." I also noted that it seems strange that he had time to call the FBI but not time to call my attorney and clear my name.

It is my firm belief that Hochberg was involved in the cover up at ADM:  he refused to look at evidence that proved ADM was sending money abroad to people other than Whitacre; he used his position to try and intimidate an ADM shareholder.

Hochberg should recuse himself from the Enron and Andersen cases. He should also be prosecuted for obstruction of justice in the ADM case for working with ADM's lawyers to contain all the crimes at ADM and send the whistle blower to prison for nine years.  Andersen and Enron's attorneys should ask for a Senate hearing concerning the conduct of Hochberg in the ADM case and also in the Andersen and Enron cases.

The big questioned yet unanswered by DOJ, is who appointed Hochberg as acting U.S. Attorney for the southern district of Texas?  The next question should be why.

David Hoech is president of Global Consultants, Inc. and was an industry consultant in agribusiness during the late 80's and 90's.  He resides in Hallandale, Florida with his wife and business partner, Carol, who co-founded the ADM Shareholders Watch Committee.
 

OSCAR B. PICHARDO LETTER:
"THE SPIDER'S WEB OF ARCHER DANIELS MIDLAND:
SUGAR, MTBE, LIFE SAVERS AND SOFT MONEY"

March 23, 2002

George W. Bush
President of the United States of America
1600 Pennsylvania Avenue NW
Washington, DC 20500

Mr. President:

While recently vacationing in Hawaii, I was surprised and dismayed to find abandoned sugar cane fields. Curiosity aroused, I asked the local residents why are the cane fields abandoned? The response was shocking --- there are no working sugar mills in the islands although domestic sugar prices are maintained artificially high by a combination of federal tariffs and trade quotas. The beneficiaries of the government largesse are the huge Midwestern Agribusiness concerns who influence farm policy with their soft money campaign contributions and army of paid lobbyists.

The high price of bulk sugar also plays into the profit picture of agribusiness' Archer Daniels Midland's (ADM) lucrative High Fructose Corn Syrup (HFCS) empire benefits when equivalent sweeteners are artificially priced out of competition. A good return on investment for their soft money political contributions.

This week Gov. Davis of California extended the use of the gasoline additive MTBE for one year, before phasing in the federally mandated, and heavily subsidized additive for gasoline --- ethanol. Since ADM controls 55% of the ethanol market, and ADM is a large contributor to Gov. Davis, at first blush it would appear the Governor is biting the hand that's feeding him. In actuality he's dumping the problem in your lap, and placing himself in a win/win situation.

As I hope you are aware Mr. President, the cost of energy has been a prime concern to Californians. Gasoline prices have started to creep up in our state --- the latest reports state Californians pay twenty cents more per gallon than the national average.

This being an election year Mr. Davis would not have survived the huge per gallon spike expected in gasoline prices caused by the failure of the ethanol suppliers to keep up with the expected demand. By postponing the deadline for MTBE until the end of 2003, Gov. Davis has greatly improved if not assured the probability of his reelection. The next year will be spent petitioning your administration for an additive waiver. If you refuse to grant the waiver, and the price of gas skyrockets in 2004, well you can kiss California and its fifty some electoral votes goodbye.

Furthermore, I find myself in agreement with Senator Boxer and Senator Feinstein --- Mr. President you have no idea how difficult it is to admit this to anyone --- as they attempt to introduce legislation to exempt California from the federal additive requirement. Not surprisingly, Senator Grassley from Iowa is trying to block the exemption. The irony in this sordid morality play, as the three Senators, Boxer, Feinstein, and Grassley are beneficiaries of ADM campaign contributions. Who is protecting the interests of the taxpayers?

As is their custom, ADM has all the bases covered, and will receive a good return on investment for their soft money political contributions.

The Life Saver plant in Holland, Michigan is closing its door at the end of this month. Six hundred workers loosing their jobs to subsidized domestic bulk sugar prices. The plant is moving to Canada, where it can buy sugar at six cents a pound vs. 21 cents a pound for domestic sugar. A representative for the Retail, Wholesale and Department Store Union states: "We could have gone to the table and agreed to work for nothing and they still would have saved money by moving to Canada."

Last year Brachs candy cited domestic sugar prices when it closed down its West Chicago plant and took 1,100 jobs overseas. That's 1,700 American workers who have lost their jobs due to federal sugar beet and sugar cane subsidies.

In the meantime, ADM continues to receive 43% of their profit from federally subsidized products. It costs the American taxpayers, including the 1,700 who lost their jobs, $30 for each dollar of profit earned by ADM (CATO Institute Report as reported in The Agribusiness Examiner Issue #123). Where is the equity Mr. President?

The recently passed $171 billion farm bill with its 70% increase in subsidies will continue to benefit a few huge Agribusiness concerns like ADM at the expense of the American taxpayer. Per the NY Times, "lobbyists for agribusiness are claiming victory."

The farm bill is described by the president of the Environmental Working Group as being "extremely generous to the very largest, most heavily subsidized farming operations in the country."  The Sustainable Agriculture Coalition representing small farmers and rural communities generally excluded from the big programs declares "This isn't farm policy, it's a check-writing machine for the big commodity growers."

Further proof of ADM receiving a good return on investment for their soft money political contributions.

It was very disappointing to read of your less than enthusiastic support for the just passed Campaign Finance Bill. You state you will sign the bill --- how could you not with the Enron mess staring you in the face --- but you undermine it's spirit by adding the law presented "legitimate Constitutional questions" thus encouraging Senator Gramm and Senator McConnell both Republicans to fight the legislation in the courts.

I am not surprised they would fight any attempt to limit soft money contributions. They have both benefited from the generosity of the master of soft money contributions, ADM. Thus the spider spins it's sordid web of influence from one end of the country to the other, playing both sides of the fence, leaving nothing to chance.

Your campaign pledged to "restore honor and integrity to the Oval Office." Mr. President here is your golden opportunity to make good on your pledge. As the leader of the Republican Party, pledge your unequivocal support to the Campaign Finance Bill. Use your influence to discourage those from your party who would undermine the legislation.

Whether source of the money is Enron who fleeced it's investors and employees; or ADM who was found guilty of defrauding the American tax payer while reaping the benefits of Federal subsidies; soft money contributions have proven to be detrimental to the impartiality and integrity of the political system.

Respectfully,

Oscar B. Pichardo
 

RECOMMENDED WEB SITE:
CORPORATE AGRIBUSINESS RESEARCH PROJECT

Readers of THE AGRIBUSINESS EXAMINER are reminded that past issues of the
newsletter can be found at the Corporate Agribusiness Research Projectís web site on
the Internet. The CARP web site features: THE AGBIZ  TILLER, THE
AGRIBUSINESS EXAMINER and "Between the Furrows."

THE AGBIZ TILLER, the progeny of the one-time printed newsletter, now becomes an  on-line news feature of the Project. In-depth essays dealing with corporate agribusiness activities are posted here periodically.

In "Between the Furrows," besides a modern search engine, there is a wide range of
pages designed to inform and educate readers on the inner workings of corporate
agribusiness. In addition to CARP's "Mission Statement," "Overview" and the Project
director's "Publication Background," the viewer will find a helpful "Fact Miners" page which is an effort to assist the reader in the necessary art of researching corporations; a page of  "Quotable Quotes" pertaining to agribusiness and corporate power; a  "Links" page which allow the  reader to survey various useful public interest, government and corporate web sites; a "Feedback" page for reader input, and  a page where readers can order directly the editor's The Corporate Reapers: The Book of Agribusiness.

The CARP web site was designed and produced by ElectricArrow of Seattle,
Washington.
http://www.electricarrow.com

Simply by clicking on either of the addresses below all the aforementioned features and information are yours  to enjoy, study, absorb and sow.

http://www.ea1.com/CARP/
http://www.ea1.com/tiller/