The
AGRIBUSINESS
EXAMINER                            Issue # 53      October 22, 1999

Monitoring Corporate Agribusiness From a Public Interest Perspective
 

A.V. Krebs
Editor\Publisher
 

                                                                   EDITORS NOTE
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MARK WHITACRE TAPE:
DESCRIBES ADM ILLEGALLY DISPOSING
GENETIC ORGANISMS IN CORN GLUTTEN FEED

News that Archer Daniels Midland Company (ADM) will pay U.S. farmers a  premium for non-genetically modified soybeans in an attempt to satisfy its European customers, while welcomed by those opposing genetically engineered crops, obscures the fact that ADM's recent history suggests such customer sensitivity has not always been a priority when it comes to the company’s bottom line.

While acting as an undercover mole for the Federal Bureau of Investigation (FBI) from 1992 to 1995 Mark Whitacre, president of ADM's Biochem division, related numerous criminal activities by ADM ("Supermarkup to the World") besides price fixing in the lysine, a feed additive, and citric acid markets.

On September 5, 1995 Whitacre was interviewed by FBI agents Michael D. Bassett and Anthony P. D'Angelo. Following the Department's procedure the agents prepared an FBI-302 dictated the following day and transcribed on September 7, 1999 totaling 16 pages. On page 15 the agents wrote:

"Whitacre advised that ADM has illegally disposed of genetic organisms by adding the organisms to corn glutten feed. The organisms are in liquid form and are sprayed on the corn glutten feed rather than disposed of as required by the Environmental Protection Agency (EPA). The liquid spray also added weight to the feed. Whitacre advised that Jerry Weigel and Jim Randall oversee this activity."

Weigel was ADM's head nutritionist at ADM Biochem and Randall was the corporate president and overseer of plant process and operations.

No action, however, has been taken on Whitacre's revelation. In an October 15, 1999 letter from David Hoech, Co-founder of ADM's Shareholders Watch Committee to U.S. Attorney General Janet Reno, the company stockholder activist expresses shock that the Department of Justice has chosen "to overlook" such activities "leaving the Andreas crime boss, Dwayne, intact to continue to destroy American agriculture." Until recently the politically powerful Dwayne O. Andreas was chairman and chief executive of ADM.

"The creed of greed of the Andreas crime family," Hoech charged, "found it more economical to export the poisonous waste rather than build a treatment facility."

Hoech calls Reno's attention to the remarks of a French farmer Philippe Huesele, a member of the Agro-Brie-Champagne farmer's cooperative in northeastern France. On a summer tour of the Central Illinois farm belt Huesele remarked that the European public still equates traditional farming practices with quality, largely because of "mad cow" disease among British cattle herds three years ago. The Europeans blame American feed for the disease, he said. They mistrust large corporations like Monsanto.

It was the British scientists who isolated animal feed contaminated with meat and bone meal from cattle and other slaughtered animals as the probable cause for BSE (bovine spongiform encephalopathies or  "mad cow" disease) and hypothesized that humans who ate contaminated meat had contracted the fatal CJD (Creutzfeldt Jakob Disease --- BSE's human equivalent).

"As a shareholder and American citizen," Hoech's letter continues, "I demand to know why the public safety is compromised to protect the Andreas crime family. Our overseas' customers don't trust our regulatory departments in this administration and most of all don't trust the Justice Department who lets corporate criminals such as ADM run amok destroying what took our ancestors decades to build.

"Do we know that ADM feed shipped to Europe caused the mad-cow disease?" the letter asks. "No, we don't, but the Europeans said it was caused by feed containing a prion. The genetic organisms mixed with the feed is a dead protein which is a prion that was found in all the feed which the diseased cows consumed."

A prion (pronounced PREE-on) is a deformed protein identified by biologist Stanley Prusiner as the likely infectious agent responsible for causing and transmitting transmissible spongiform encephalopathies (BSE) . The word "prion" is a hybrid of "protein" and "infectious."

Hoech admonishes Reno. "How dare you put all of American agriculture in jeopardy to protect Dwayne Andreas and all his criminal associates whom he has cultivated with shareholder money and who mostly reside in Washington, D.C. If you think you have gotten away with your coverup, you are wrong. The Declaration of Independence makes it our duty to clean up this mess, and if you think the people won't rise to the occasion, you're wrong."
 

FREE GOSSYPOL:
IT'S TOXICITY? IT'S HEALTH AFFECTS? "THEY KNOW!!!"

ADM Stockholder David Hoech's letter (see above) concerning the company's "criminal activities" and the concern by European farmers relative to American produced animal feed is given additional authenticity by a little known Missouri court case that came only a week before ADM agreed to pay the government a then record $100 million (in effect pleading guilty) for fixing world-wide lysine feed additive prices.

In a law suit filed by a Missouri farmer Rodger Moberly and several other Missouri cattlemen the focus was on a substance known as free gossypol, which is derived from crushing cottonseed and used in ADM's animal feed known as 39% Protein Quanah Special. As Nicholas E. Hollis, President of the Agribusiness Council (ABC) explains, "free gossypol can be toxic to calves and even larger cattle if ingested in sufficient qualities. Often gossypol sickens an animal slowing down its ability to gain weight."

The plaintiffs claims were enhanced by an affidavit from Mark Whitacre, the former head of ADM's BioProducts Division,  who stated that ADM knew about free gossypol's effects and intentionally sold it to enhance profits. The affidavit also repeated the charge concerning ADM's spraying biomass residues on its corn glutten feed.

Knowing that these charges would constitute serious fraud if proven the plaintiff's lawyers were prepared to depose ADM's CEO Dwayne O. Andreas, his son Michael who was vice-president of ADM at the time and James Randall, who was the company's president. ADM, however, decided to avoid such a confrontation and settled out of court, offering the plaintiff $105,000 --- roughly double the amount initially requested.

In ADM's lysine price fixing case the government granted immunity to both Dwayne Andreas and Randall. Michael D. Andreas, 50, and Terrance S. Wilson, 62, former head of ADM's corn division, have both recently reported to federal prison, convicted last year of fixing prices and given two-year sentences. FBI mole Mark E. Whitacre is already in prison on a previous conviction of allegedly embezzling $9 million from ADM (see story below).

Following the settlement ABC's Hollis asked "Could Mad Cow disease and its human form CJD happen here? Could ADM's corn glutten exports to Europe, specifically Great Britain have contributed in some way to the BSE outbreak there? Does ADM continue to produce and distribute the feed which experts say killed 86 calves in Missouri while denying the `gossypol danger' to consumers? Did ADM use political levers to quash a nascent Food and Drug Administration inquiry into its animal feed?”

Interestingly in the preparing of the Missouri case ADM called upon experts from the nearby University of Illinois to challenge the plaintiffs veterinarians who had treated the dying animals. As Hollis points out ADM over the years has funneled millions of dollars in grants to the university's College of Agriculture. "Truth can be difficult to tease out strand by strand in these cases," Hollis adds, "but ADM's credibility plunged when its top nutritionist `Dr.' Gerrald Weigel , lied about his academic credentials under oath --- he had no Ph. D."

Oklahoma State University toxicologist Dr. Sandra Morgan has noted concern for gossypol as a potential sterility agent in an article which also states "there is concern for the effects of gossypol on humans because gossypol is a biologically active compound and because gossypol in the food chain may ultimately lead to its consumption by humans."

It is noted by Hollis that ADM's Weigel had a copy of Morgan’s article in a file market "gossypol research" and he admitted consulting top executives in the company. "They know!" Hollis emphasizes.

"If we are to regain confidence in the overwhelming majority of our food companies and their honest suppliers," Hollis adds, "isn't it time we stop ignoring the lessons of Moberly v. ADM and get the truth out about the Supermarkup to the World? Some of the largest U.S. food companies and grocery chains are beginning to hear the public's growing fury. It is time to Boycott the Supermarket to the World."
 

U.S. DEPARTMENT OF JUSTICE:
"TURNING LADY JUSTICE INTO A STREET PROSTITUTE"

While the U.S. Department of Justice might be fond of perpetuating the myth that it is diligently ferreting out corporate criminals like ADM, its recent actions leave many in doubt of such a claim.

In a February 3, 1999 letter to Reno, David Hoech, of ADM's Shareholders Watch Committee and a persistent critic of the government's handling of the case, charged an "ADM cover up engineered by the Department of Justice."  In the letter to Reno, Hoech recalled that as early as October 14, 1996 his committee asked the Department of Justice to use the ADM case as an opportunity "to insure that justice be delivered and send a message to corporate America that corporate crime doesn't pay."

"Instead," Hoech continues, "your office gave credence to the fact that if you are white, rich and influential, or work for a politically-connected company, you can break the law with impunity." Hoech promised the Attorney General "from this day forward we will be making more and more information available for the world to see just what your department tried to cover up."

In a conversation, for example, he had with Ray Goldberg, a former ADM board member, and the man who originally coined the term "agribusiness," Hoech recalled that Goldberg, who now serves on the Smithfield Foods and Pioneer Hi-Bred boards of directors, told him "that the deal cut with the Justice Department could only be accomplished if all the board members kept their lips sealed as demanded by the Justice Department."

But, Hoech told Reno in his letter, "people are talking . . . showing how your department has turned Lady Justice into a street prostitute with Justice for sale."

Concerned that the Anti-trust Division of the Justice Department might be moving too aggressively it was in the late spring of 1995 that Joel Klein transferred from being a White House operative to work in the office of Anne Bingamon, then head of the Anti-Trust division. His role in that office was to provide "oversight" to Bingamon's deputy Jamie Gorelick, who was at the time managing the ADM case after the FBI had raided its corporate headquarters in Decatur, Illinois on June 27, 1995 and it was learned that Whitacre has been secretly recording the activities of company executives for the FBI from 1992 to 1995.

Gorelick left the DofJ a short time later and Bingamon left the Justice Department on October 18, 1996, the same day the ADM deal was signed. Klein remained "acting assistant attorney general" long beyond the allowable 120 days and was confirmed over serious Senate Democrat opposition in mid 1997.

The following January, after ADM executives Mick Andreas and Terrance Wilson's guilty pleas and indictments were handed down on price fixing, the USDA announced that ADM would remain eligible for contracts since its criminal price fixing actions did not "technically violate" USDA rules.

In a October 15, 1999 letter to Attorney General Janet Reno, Hoech points out that Klein, in addition to supervising the "ADM coverup and settlement" also saw fit to let ADM purchase  Moorman Foods of Quincy, Illinois, "knowing ADM was poisoning feed for export to Europe."

Klein also, Hoech adds, made a "deal" whereby ADM could keep the business with USDA which amounted to $85 million in 1995. Klein and James Griffin, the U.S. attorney who handled the government's case against ADM in Chicago Federal Court, deny such a deal, but Michael Dunn of the USDA's Packers & Stockyard Administration says it is "true," and it is all on tape.

Chicago Federal District Court Judge Ruben Castillo has asked that a motion be filed to substantiate these findings. Aubrey Daniel of the law firm Williams & Connolly (see Issue #52) along with Klein and Steven Mills, ADM's controller, according to Hoech, "lied to the Judge and for that they should be disbarred and Mills sent to jail."

As Kenneth Adams of Dickstein Shapiro & Morin, a Washington D.C. firm representing lysine users and a prominent antitrust attorney, points out, Klein's mega-fines do little to deter antitrust violations --- particularly, price-fixing --- by giant global food companies. "By almost any measure," relates Adams, "these companies made more money fixing prices than they paid in criminal and civil fines. So crime still pays."

"Joel Klein," relates Adams, "believes the fines work. If that's true, why did some of the very same companies who were caught fixing prices in lysine and citric acid continue to fix prices in vitamins? Because fines don't deter those who want to break the law and have the means to do it --- mainly through a very small number of companies controlling an industry."

A far more effective deterrent, offers Adams, would be to put business executives in jail and then force the companies to divest of the businesses. "Otherwise the same forces that drove them to violate the law the first time will drive them to do it the second time."
 

WITHOUT THE WHITACRES OF THE WORLD
HOW WOULD DOFJ CATCH GLOBAL CROOKS?
IT WOULDN'T!!!
 
Alan Guebert in his recent authoritative "Farm and Food File" column notes that while the Department of Justice claims it is keeping a watchful eye on the increasing number of corporate mergers within agribusiness Joel Klein, Justice's chief antitrust cop, is telling the Senate Ag Committee on July 27 "I personally spend a significant amount of time on these issues."

And, as Guebert rightfully notes: "He does. Between catching ag's biggest crooks and reviewing --- then approving --- every corporate ag buyout before him, Klein has been a busy man. He proudly points out that his division busted the price fixers in lysine and citric acid in 1996 and most recently walloped the global vitamin price fixers for more than $850 million in fines.”

Both cases, however,  were virtually handed to Justice by Mark Whitacre, the former Archer Daniels Midland executive who acted as a mole for the FBI for three years. "Which begs the question," Guebert points out, "without the Whitacres of the world, how would Justice catch these global crooks? Answer: It wouldn't."

Proving such contentions the New York Times David Barboza, in a remarkable 3200 word expose ("Tearing Down the Facade of `Vitamins Inc.'") on October 10 showed how top executives at some of the world's largest drug companies meeting secretly in hotel suites and at conferences worked together in a coalition they brazenly called "Vitamins Inc.," carved up world markets and carefully orchestrated price increases and in the process defrauded some of the world's largest food companies, including Kellogg, Coca-Cola and Nestlé. In Klein's own words "ADM was not the iceberg; it was the tip."

The ADM lysine and citric acid price fixing case has been called "the best documented corporate crime in American history" and Klein has termed "Vitamin Inc's" price fixing conspiracy  "the most pervasive and harmful criminal antitrust conspiracy ever uncovered."

But, as Barboza reveals, "for the vitamin cartel, the beginning of the end may have been signaled by the scandal at Archer Daniels Midland. In 1996, the company agreed to pay $100 million to settle Federal charges that in the early 1990's executives had conspired with European and Japanese companies to fix the prices of feed additives . . .  One key Archer partner was Roche, which agreed in 1997 to pay $14 million to settle criminal charges that it helped fix prices for one additive, citric acid.”

The break in the ADM case came thanks to Mark Whitacre's secretly tape-recording dozens of hours of company executives discussing price-fixing with rivals followed by confessions from other executives. It was during this subsequent investigation that Justice Department officials heard Roche might have also been fixing prices in the vitamin market.

But when Kuno Sommer, head of marketing in the vitamins and fine chemicals division of Roche, a key participant in the meetings on citric acid, was questioned by Federal agents in March 1997, he denied that there was any price-fixing in vitamins.

Federal agents later discovered, according to the Government's settlement documents, that before the 1997 interview, Sommer had "met separately with at least two other high-level Roche executives and at the end of those meetings, it was understood by the individuals that if Sommer was asked about Roche's participation in a vitamins cartel, Sommer would lie and deny that such a cartel existed."

In the meantime, private antitrust lawyers had already begun their own investigation, according to Barboza, in hopes of winning a huge settlement. Among their findings was a memo Sommer had written in September 1993 that suggested a continuing price-fixing scheme. "Good experience with citric acid," Sommer wrote before a meeting with ADM executives. "Next opportunity B2. We think it's worth that we explore all possibilities of cooperation. Let's explore cooperation product-by-product."

By 1998, some of the nation's leading law firms joined the fray. A year later, the Justice Department brought its first price-fixing charges against Lonza of Switzerland. Then the department turned to the biggest players. Initially, the big three vitamin makers --- Roche, BASF and Rhône-Poulenc -- denied the charges.

"Even when lawyers working at Roche first learned about the conspiracy in late 1997 or early 1998," Barboza reports, "and directed that it be stopped, according to other lawyers involved in the case, the cartel continued to operate. Meetings were moved to executives' homes to avoid detection.

"There were also efforts to prevent cheating and regular `budget meetings' to make sure everyone was on the same page, according to the Government's court documents. `This was a very elaborate and effective conspiracy,' one high-level Justice Department official said. `The companies operated as if they were a single entity. And they were very precise. It was greed, pure greed,'" Barboza adds.

In May, 1999 after the conspiracy collapsed, those involved agreed to pay nearly $1 billion to settle Federal antitrust charges, by far the largest criminal fines in American history.  Subsequently, every big vitamin maker in the world is now on the brink of agreeing to pay an additional $1.1 billion to resolve a consolidated class-action suit brought by purchasers of bulk vitamins -- the raw vitamin ingredients that go into everything from cereal and orange juice to vitamin pills and chicken feed. The suit alleges a wide variety of anti-competitive practices.

What the vitamin conspirators controlled was most of the world's bulk vitamin production --- vitamins A, C and E, niacin and other B-complex vitamins -- a $1 billion-a-year industry in raw vitamin ingredients. According to ADM's 1999 Annual Report it is the world's largest producer of "natural Vitamin E."
 

THE "MISSING" $2.5 MILLION

Shortly after the FBI raided ADM's offices on June 27, 1995 ADM accused Mark Whitacre, one of its top executives, who had been taping company conversations since November, 1992, of embezzling over $9 million from the company by means of bogus invoices and off-shore accounts and filed suit in Switzerland seeking to recover the funds.

Whitacre meanwhile claimed that ADM President Jim Randall had approved all the payments as "special bonuses," with the first one timed approximately at the same time Mick Andreas first insisted that he meet and work with Wilson on the lysine pricing matter.

Evidence of such "special bonuses" probably will never be found since it is reported that Randall made a personal visit to the ADM comptroller soon after the FBI raid and requested specific invoices be pulled. It was also a few weeks after Whitacre had been exposed that ADM "discovered" evidence of his illegal money transfers "almost by blind luck," despite what was purported to be a tightly audited corporate comptroller's office and internal audits.

At the same time Dwayne Andreas, upon learning that Whitacre had been an FBI mole, declared "Mark Whitacre will regret the day he was born." Later, however, in a taped interview with the Washington Post's Peter Carlson in mid-1996 Andreas said he had known about Whitacre's alleged embezzlements as "early as 1992" but didn't say anything "because he wanted to get the money back." Yet, in March, 1995 Andreas circulated a Dain Bosworth report favorable to the company in which Whitacre was mentioned as the next ADM president.

Curiously, two years later Alan Guebert reported that in May, 1997 the Swiss lawsuit against Whitacre by ADM was quietly dropped.

In the meantime, as his defense team privately suggested, Whitacre was being "hung out to dry" by the FBI and the Department of Justice. At one point, his lawyer Bill T. Walker charged at Whitacre's sentencing hearing that federal prosecutors possessed a "tape (that) purports to discuss one of these bonuses he (Whitacre) has plead guilty to by Mr. Andreas."

"The Department of Justice knows good and well that that bonus plan was at ADM . . . (and) they know that tape exists," Walker added.

Federal prosecutor Donald MacKay "in the strongest terms that I can on behalf of the United States" denounced Walker's contention. "There is not one shred of evidence that we have uncovered which would in any way lend any support to Mr. Whitacre's frequent and public pronouncements to the contrary. There are no tapes which would substantiate or establish that Mr. Whitacre discussed this topic with Mr. Michael Andreas or anyone else."

Sentencing Judge Harold Baker endorsed MacKay's argument and noted that two "independent" investigations found no support to Whitacre's claims. Defense Attorney Walker later explained to the press that one of the "independent" investigations was conducted by ADM ("The fox counted the hen eggs and found nothing. Big surprise!") and the other was conducted by the DofJ of which no one had seen.

MacKay, later admitted that he had not heard any of Whitacre's tapes. "That's right. I've not heard any of the tapes," but added, "I've been assured by investigators that no tapes exist."

Meanwhile on March 4, 1998, the day of the sentencing of Whitacre, prosecutor MacKay told three reporters that all the money Whitacre supposedly embezzled was all accounted for, but a month later Williams & Connolly, ADM's law firm, said $2.5 million was missing while seeking to subpoena from David Hoech's Florida bank all of his personal and business records, without limitation,  because it believed that the stolen money " might be sitting in (or might be moved through) Hoech's bank account."

Challenged by Hoech's lawyer, John R. Kelso , to put up or shut up DofJ Fraud Trial Attorney James J. Nixon replied, "Concerning the relationship between your client and Mr. Whitacre, although the government has no evidence that Mr. Hoech engaged in any illegal monetary transactions with Mr. Whitacre, the government cannot confirm whether or not Mr. Hoech received any fraudulent proceeds."

Hoech, in his February  3, 1999 letter to Reno, charges "again your department was carrying water for Williams & Connolly as they have been since early July, 1995. If $2.5 million were missing Whitacre would never have gotten a plea agreement. The lies your department has told to assist Williams & Connolly in their reign of  terror to silence the voice of the shareholders is criminal." Hoech also added that he planned a legal suit for "abuse of process."
 

PAINTING A PICTURE OF A ROGUE CORPORATION

On September 5, 1995 Mark Whitacre met with Department of Justice and FBI officials and spread out for them a wide range of alleged wrong doing by ADM. Later, in a 16-page document filed in federal court in September, 1997 the FBI summarized that meeting in which Whitacre told of alleged actions by himself and his fellow ADM executives. They included:

* ADM executives, including himself, with bank accounts in the Cayman Islands to deposit kickbacks and illegally obtained money.

* ADM executives who paid politicians in Russia "to facilitate ADM's business ventures in that country."

* After news began to leak out about his cooperation with the FBI, files and documents concerning illegal kickback schemes "were being pulled by officers at ADM."

* A Swiss company was set up to defraud ADM and a Swedish company "in conjunction with a bogus $2.5 million contract."

* He himself gained approximately $7.7 million as a result of his illegal activities.

* He believed that such illegal activity would not be divulged by ADM executives because "illegal kickbacks were part and parcel of ADM's corporate culture."

* ADM board member Howard Buffett was "concerned about the unreported compensation."

* ADM executives hired prostitutes in Iowa to "compromise employees" of a competitor "for the purpose of procuring lysine technology."

* ADM stole technology from rival companies.

* ADM engaged in other irregularities including "paying hundreds of thousands of dollars in cash to various political candidates and political action committees."

* He was aware of payoffs to Indonesian politicians --- "the payments represented compensation in exchange for the non-payment of taxes" and to help "procure environmental permits."

* ADM and its executives "routinely utilized ADM corporate jets for personal use."

It is not know whether the DofJ pursued any of Whitacre's allegations other than the self-admitted embezzled $7.7 million.

At his sentencing for price fixing Whitacre, speaking by phone from his Edgefield, South Carolina federal prison, read a statement to Judge Blanche Manning in which he urged the judge to take into account his role in bringing the price fixing conspiracy to light. "They [the federal government] would have no case without me," Whitacre emphasized."I risked my life and my career for them and I have yet to see anything."

Judge Manning, however,  tacked on 20 months to the end of Whitacre's nine-year prison. He was stripped of his immunity in the price-fixing case after prosecutors learned he had allegedly embezzled millions of dollars from ADM, for which he is currently serving time.

"Life in prison has actually been better than life at ADM," Whitacre told Judge Manning during his sentencing.
 

A GLUM AFFAIR:
ADM STOCKHOLDERS MEET

Beset by weakening financial results since 1995, not surprisingly coinciding with all its legal problems, ADM stockholders held their annual meeting yesterday in Decatur, Illinois and from first press reports it was a pretty glum affair.

Unhappy, dissatisfied and outspoken shareholders heard Chief Executive G. Allen Andreas describe the past five years as being "very difficult," but offered no specific solutions to what ails ADM as his uncle, Chairman Emeritus Dwayne O. Andreas, sat silently in the audience.

Andreas, 81, stepped down in January to allow his nephew  to take over. The elder Andreas had presided during every meeting for almost 30 years, including a chaotic one in 1995. That year's gathering took place just months after the FBI raided ADM headquarters in the now-infamous price-fixing scandal regarding sales of lysine and citric acid.

In remarks after Thursday's annual shareholders meeting, the Chicago Tribune's Greg Burns reports, company President John McNamara told shareholders to expect mergers, joint ventures and plant closings aimed at reducing overcapacity in many of ADM's business lines. "We'll be focused on taking costs out of the business," he said.

While ADM's stock price has remained soft for years, it plunged still lower this year closing down six cents a share to $11.81 on Thursday, near a 52-week low, and down from the low 20s during the first half of 1998.

Meanwhile, Standard & Poor's earlier in the week threatened to cut ADM's once unassailable bond ratings. Andreas said he would meet with the rating agencies soon and had "a good chance" of convincing them to take no action. S&P cited concerns about the company's heavy investment in assets at a time of diminishing returns. "Over the last four years, the firm's asset base has increased nearly $4 billion, while earnings have trended down," the rating agency said.

Andreas also told shareholders that much of the company's fortunes will rise and fall based on the fortunes of emerging markets, which ADM can't control. "Increased demand from the emerging nations is the greatest hope for us," he said. In the 1990s, ADM has tried to boost its margins by expanding beyond commodities into value-added products, such as biotech-derived animal feeds.

Its latest push involves nutraceuticals, the vitamins and other nutritious food components made from grain and oilseeds, and the company went so far as to distribute a soy-based menopause tonic to its shareholders at the Decatur meeting.

Despite lackluster sales and earnings, all of ADM's major executives received a raise in 1999, according to the company's annual proxy statement. G. Allen Andreas now makes $2.44 million, up from last year's salary of $2.13 million; Burnell D Kraft, senior vice president, $947,744 from $861,502; C.T. Bayless, executive vice president and assistant to the chief executive, $815,349 from $628,728; Martin L. Andreas, senior vice president and assistant to the chief executive, $748,445 from $701,186; and J.D. McNamara, president, $625,543 from $257,212.

One stockholder  Martin Glotzer had two stockholder proposals on the meeting's agenda this year to change the way the company runs its meetings. Similar proposals were shot down last year, but Glotzer managed to attract one-third of stockholder votes.

Glotzer's first proposal is to allow cumulative voting to elect board members, which the company opposes. Traditionally, each stockholder gets one vote per share, no matter now many seats are open on the board. This practice has resulted in board members being elected by the largest stockholders.

Glotzer, who owns 115 shares, has proposed that each stockholder be entitled to as many votes as equal the number of shares they own multiplied by the number of seats that are open and claims that such cumulative voting would allow stockholders who own smaller numbers of shares to unite behind a single candidate, resulting in more diversity on the board. ADM recommended against the proposal saying that cumulative voting could produce a director beholden to the special interests of a small fraction of stockholders. He succeeded in garnering 33% of the stockholder votes aain this year for his proposal to allow cumulative voting.

Glotzer's second proposal would require that a post-meeting report to be sent to all stockholders. Another proposal on the agenda would make voting more confidential.

Agribusiness analysts have long said that the directors appear to run the company for the benefit of the Andreases and other board members who are major stockholders, such as Mollie Hale Carter, the 37-year-old heir to 12.5 million shares of stock, and J.K. Vanier, 71-year-old chief executive of Western Star Ag Resources and holder of 10.6 million shares.

ADM's chief stockholder, however, is State Farm Mutual Automobile Insurance Company and Related Entities, which owns 48,445,185 million shares or 8.34% of the company, and has been having problems of its own recently in the courts.

Last week a state judge in Illinois decided yesterday that the insurance company had defrauded policyholders by requiring that damages from automobile accidents be repaired with lower-priced generic parts and ordered the insurer to pay $730 million in actual and punitive damages.A jury in the same court earlier in the week determined that State Farm had breached its contracts with policyholders and ordered State Farm to pay $456.1 million bringing the total damages from the case to $1.19 billion.
 

ADM BOARD OF DIRECTORS:
A CORPORATE AGRIBUSINESS MILITIA

"It has nothing to do with being Democrats or Republicans. These are people that have common values. You know I have a theory about that, that you have to keep in mind. The good guys  all manage to get together and have a communication. And the bad guys that don't fit in at all fit outside of that. And the good guys get together. It doesn't have anything to do with race or creed or color or political philosophy or sex or anything else. They're just decent, nice people and have good sets of values  that are comparable to your own and you're friends. Those are `after dark friends.' In Washington, maybe, you might be on the opposite sides during the day, but we're all good social friends and personal friends."

 ---- A commentary made by Robert M. Strauss, former U.S. Ambassador to the Soviet Union in a 1992 PBS "Frontline" TV documentary titled "The Best Election Money Can Buy."

Numbered among Archer Daniels Midland board of directors are Mollie Hale Carter, 37, Chairman, Sunflower Bank  and Vice President, Star A, Inc. (a farming and ranch operation); Dwayne O. Andreas, 81, a Director of Hollinger International, Inc.; G. O. Coan, 63, Chief Executive Officer of Gold Kist Inc. (a farmer-owned cooperative) and a Director of SunTrust Banks Inc. and Cotton States Life Insurance Company; G. Allen Andreas, 56, ADM's CEO and Board chairman, and John R. Block, 64, President, Food Distributors International, (a trade association whose members are independent wholesale grocers and food service distributors), and a Director of Deere & Company and Hormel Foods Corporation, and former USDA Secretary.

Others on the ADM board include: J. K. Vanier, 71, Executive Officer, Western Star Ag. Resources, Inc.(investments and livestock); M. Brian Mulroney, 60, Senior Partner in the law firm of Ogilvy Renault,  and a Director of Barrick Gold Corporation, Petrofina S.A., The TrizecHahn Corporation, Cendant Corporation, Quebecor Inc., Quebecor Printing, Inc. and former Canadian Prime Minister; O. G. Webb, 63, Chairman of the Board and President, GROWMARK, Inc. (a farmer-owned cooperative); Richard Burt, 52, Chairman of IEP Advisors, LLP (a direct investment and advisory services organization), and a Director of Hollinger International, Inc., Weirton Steel Corporation, Paine Webber Mutual Funds, Anchor Gambling, and Homestake Mining Company.

Also serving on the company's board are Robert S. Strauss, 80, Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, a Director of Hollinger International, Inc.,
Gulfstream Aerospace Corporation and long-time friend of Dwayne Andreas; Andrew Young, 67, Chairman of GoodWorks International (a specialty consulting group), and a Director of Delta Airlines, Inc., Argus Inc., Host Marriott Corporation, Cox Communication Inc.,Thomas Nelson, Inc. and former Mayor of Atlanta, Georgia and U.S. Ambassador to the United Nations; D. J. Mimran,32, Chief Executive Officer of Groupe Mimran and President of Eurafrique, Sometra and Cavpa (international grain trading companies), and F. Ross Johnson, 67, Chairman of RJM Group, Inc. (an international management and advisory organization) and a Director of American Express Company, Power Corporation of Canada and Noma Industries of Canada.

Johnson, the former RJR Nabisco CEO and principal character in the book and film "Barbarians At the Gate," who was the author of the infamous "three rules of Wall Street --- never play by the rules, never pay in cash, and never tell the truth."
 

"GLOBALIZATION":
"ADM HAS IT COVERED FROM START TO FINISH"

In his address to ADM stockholders Chief Executive G. Allen Andreas stressed that much of the company'ss fortunes will rise and fall based on the fortunes of emerging markets, which ADM can't control. "Increased demand from the emerging nations is the greatest hope for us," he said.

One only need examine ADM's corporate profile to see that it is well position to take advantage of "increased demand from emerging nations."

In 1981 ADM's name did not appear in the top ten in grain elevator storage, today it is number one with a capacity of 611 million bushels, compared to its chief rival Cargill with 463 million bushels. Each day ADM plants worldwide process over 90,000 metric tons of oilseeds while its worldwide corn processing capacity is approximately 46,000 metric tons a day.

Today, according to figures compiled by University of Missouri rural sociologist William Heffernan for the National Farmers Union,  ADM is number one in the nation in soybean crushing (3% of all soybeans), processing vegetable oil (30% of all vegetable oil), flour milling, (75% of all Canadian flour milling), High Fructose Corn Syrup, processing edible beans (sharing the top spot with ConAgra, each with 25%)  and is the world's largest supplier of cocoa and has 50% of the world's lysine market (with Cargill having 33%)

Each day ADM plants worldwide process over 90,000 metric tons of oilseeds, in addition to its worldwide corn processing capacity which is approximately 46,000 metric tons a day while ADM Milling processes 1.2 million bushels of wheat every 24 hours --- along with oats, rice, barley, corn and sorghum --- to produce more than 400 food and feed ingredients. After entering the chocolate and cocoa bean industry in mid-1997, ADM has grown to the point where  it grinds 450,000 metric tons of cocoa beans, approximately 20% of the world cocoa crop.

ADM uses what it terms "nutrient-rich waters" of its aquaculture operation to serve its Decatur, Illinois hydroponics facility along with waste heat from its corn processing operation to grow vegetables, herbs and other produce. This "hydrofarm" facility produces 150,000 heads of lettuce and 20,000 cucumbers a month.

Worldwide, the company operates 500 interior elevators and ten export terminals, and is involved in joint ventures with two of the nation's farmer largest co-ops ---  Land O’Lakes & Growmark. In 1998 ADM transported over 50 million tons of grain to various markets via a company owned fleet of 2000 barges, 800 trucks, and 13,000 railcars.

In its "Archer Daniels Midland:An Overview" the company notes: "The concept of the World Food Economy is directly related to the fact that the world's natural resources are not evenly distributed across the globe. As our world becomes less able to supply the amount of food necessary to meet the nutritional requirements of its citizens, it is essential that we implement a World Food Economy that will allow us to maximize production and elevate the standards of living of people across the globe in the most efficient way possible. The international trade community must build in international trade agreements like NAFTA and GATT.

"What has ADM been doing to prepare? ADM has been busy creating the world's largest fully-integrated food processing and distribution network. From choosing the raw materials to processing them to shipping our products, ADM has it covered from start to finish."

Indeed! The cover of the 1999 ADM Annual Report is simply a giant world globe spinning rapidly with one word emblazoned across its surface --- "Globalization."
 

COMING SOON

Rats In The Grain: The Dirty Tricks of the "Supermarket to the World," Archer Daniels Midland.
by James B. Lieber
Four Walls Eight Windows: ISBN 1568581424
Hardcover: 326 pages
Available November 1, 1999

"Beneath the wholesome image of Archer Daniels Midland (ADM), `Supermarket to the World.'lie some of the dirtiest practices in American business: price fixing, bribery, cover-up, and more. `Rats in the Grain' exposes the crime and punishment of ADM and the largest white-collar criminal trial of the decade. Lieber had exclusive access to the highest-ranking confidential informant in American corporate history --- the FBI mole [Mark A. Whitacre] --- currently incarcerated. The book features trial transcripts and still photos from the FBI video to accompany the text and testimony."
 
 
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