EXAMINER Issue # 85 August 16, 2000
Monitoring Corporate Agribusiness From a Public Interest Perspective
RATS IN THE GRAIN:
The Dirty Tricks and Trials of Archer Daniels Midland The Supermarket to the Word
by James B. Lieber,
Four Walls Eight Windows Press, New York, New York: 2000
Dubbed the “best documented corporate crime in American history” one realizes in reading James B. Lieber’s riveting and authoritative account of the recent criminality and trials of Archer Daniels Midland and its executives that had it not been for that “documentation” the “Supermarkup to the World” and its world-wide price fixing machinations in lysine, citric acid and high fructose corn syrup (“HFCS”) would have gone unpunished.
As a lay person reading this lawyer\journalist’s account of not only the crimes that ADM as a corporation were charged with and fined, but the trial, conviction and sentencing of its executives Mick Andreas, Terrance Wilson and Mark Whitacre one cannot help but feel had it been left to the U.S. Department of Justice’s witness testimony in the courtroom justice would not only have not been done, but not even seen to be done.
As one juror remarked after the convicting of Wilson “the situation was so clear. The tapes were so incriminating” and the jury consensus of Andreas’s guilt was based on videos of price fixing meetings he held with ADM’s “competitors” for as Lieber notes “without those tapes, he probably would have been freed.”
As readers of THE AGRIBUSINESS EXAMINER know Mark Whitacre, while president of the company’s Bioproducts Division, made some 239 surveillance tapes in his three years as an FBI mole (1992-95) while the FBI itself made a number of video tapes of meetings of ADM executives and their international corporate price fixer counterparts.
Not only would the eventual outcome of the ADM trials been doubtful without the aforementioned incriminating tapes, but as Lieber explores in his 418-page book, given the rather questionable resolve of the U.S. Department of Justice to thoroughly investigate, prosecute and divulge the details of the multitude of crimes that had become part and parcel of ADM’s corporate culture, whether justice would have been served at all while the public was kept in the dark by a disinterested national mediia.
One also wonders, for example, how much of the little enough coverage that was given to the ADM affair by the national media would have materialized if it were not for the person of David Hoech, a dissident ADM shareholder and critic and writer of the Shareholders Watch newsletter.
Greed versus greed buried in the business section
“After Whitacre exposed ADM,” Lieber writes, “the media mobbed the story, touting it as a David and Goliath parable. After the exposer was exposed, the press drifted away. Good versus evil inside a multinational corporation was front-page news. Greed versus greed was buried in the business section, if it made the paper at all.
“In a tabloid culture,” he notes, “trials of gruesome crimes generate the most news. Searing tragedies for those involved, they become gladiatorial spectacles for the rest of us. But bloodless while collar trials say more about the way the world works, and it is my my personal bias that it makes sense to pay more attention to them.”
Clearly Hoech agreed, for as Lieber notes he did not let the story die. Rather in the years since the FBI raided ADM’s headquarters in Decatur, Illinois on June 27, 1995, Hoech maintained constant contact with reporters from The New York Times, Wall Street Journal, Chicago Tribune, the Decatur Herald-Review, Bloomberg News Service and a number of other free-lance journalists including this reviewer.
As Lieber notes: “He supplied them with leads that they often followed and sometimes with ADM or government documents, including tape transcripts. Some reporters questioned his motivation, and at times his sanity, but most kept coming back for more. Hoech never let the case get out of the news or relaxed pressure on ADM.”
As Hoech himself exclaims “the law prostituted brings chaos and chaos brings on dictatorship. Democracy functions best when people stand up. That’s all I’m doing. People call me and say you don’t know who you are up against. I say Dwayne [Dwayne O. Andreas, former ADM CEO, Board Chairman and a major political party funder] doesn’t know what he’s up against.”
Various charges have been flung at Hoech and his wife Carole, editor of the
Shareholders Watch newsletter, but the Hoechs have been charged with no crimes, nor have their examined financial and tax records indicated anything untoward. When Lieber asked Hoech why the couple have turned their lives upside down over ADM, Hoech responds, “because Dwayne’s no better than a street pimp. He and his people in Washington think the masses are asses.”
Indeed, as one reads through Lieber’s book, one sees not only the contempt for the public --- “the competitor is our friend, the consumer is our enemy” was the popular ADM refrain --- but where the law was indeed prostituted in the ADM case for Rats In The Grain is a story of a corporate culture of corruption and manipulation.
How that corporate culture can be all pervasive, even in the court room, Lieber recounts that in defending Wilson, his attorney Reid Weingarten, told the 12-person jury that a consistent theme running through the foreign authored documents relative to the companies own price-fixing activities that the prosecution presented in the case argued that ADM could not be trusted. “They say,” Weingarten emphasized, “ADM said one thing and they do another. Now this is not what they teach at the Chicago Business School. But this is the school of hard knocks. This is how it works in the marketplace.” In essence, Lieber adds, “the attorney was advancing an extraordinary defense, probably unprecedented in American justice --- the defendants were liars, so acquit them.”
Later, Weingarten argued that Wilson’s advocacy of lying also was a boon. He flashed a tape transcript on the screens in the courtroom. Lying was good “as long as you know you’re lying.” It was a way to stay “a step ahead of everybody else” especially a competitor.
“Williams & Connolly controlled the investigation”
In the telling of this story of a corporate culture of corruption and manipulation Lieber believes:
“There is a reason for this book. And the reason is to show how the story involving Mark Whitacre, Terry Wilson and Mick Andreas and others did not just happen. It was a natural step in the development of a corporate culture. And as a lawyer, I’m interested in whether the law can actually deal with big, structural, difficult problems. . . .The law did work. But much of the story in the book is about how the law and law enforcement was constrained by ADM’s power.”
In an interview with the Corporate Crime Reporter’s Russell Mokhiber the author elaborates:
“I don’t think Microsoft has the power to go to the Justice Department and say, `limit your attention to this aspect of my criminal behavior. Don’t look over at that aspect of my criminal behavior.’ But ADM was able to do that.”
Questioned as if he was saying that ADM and its law firm Williams & Connolly persuaded the Justice Department not to prosecute all of ADM’s wrongdoing, Lieber replied:
“I’m saying that the Justice Department had information about other issues. They had Mark Whitacre by the short hairs. He did not want to go to jail. And like all informants under those circumstances, Whitacre starts to reveal information about things that he had been exposed to. Some of those things included questionable environmental practices, spraying biomass on feedstock to increase weight, questionable self-dealing practices by directors of the company, questionable practices in terms of fixing other markets and other products, and allegations of street crime, like prostitution.
“The Justice Department was prevailed upon by Williams & Connolly to limit its investigation to the fraud investigation.” How did Lieber know that? “From FBI records, and then I talked about it with the FBI. The FBI said Williams & Connolly controlled the investigation.”
It was the politically powerful law firm of Williams & Connolly who represented ADM unsuccessfully in its price fixing suit filed against it by the U.S. Department of Justice. ADM was subsequently fined $100 million for its role in a world-wide scheme to fix prices in the $650 million-a-year international lysine market and also in the citric acid market and Mick Andreas, Wilson and Whitacre were sentenced to two years in jail and fined each $350,000 for their part in conspiring with Japanese and Korean companies in the fixing of said prices.
Williams & Connolly, including Clinton's personal attorney David Kendall, is also one among several attorneys currently representing FOX Television interests battling investigative reporters Jane Akre and Steve Wilson in their suit against their former employer Rupert Murdoch's FOX 13 TV station in Tampa Bay, Florida. The couple have charged that they were fired for refusing to broadcast statements which they considered to be untrue about bovine growth hormone (rBGH), manufactured by Monsanto, a major FOX advertiser. The firm’s lawyers also represented President Bill Clinton in his 1999 impeachment trail before the U.S. Senate.
Lieber relates that he learned in his research that there existed a strict agreement of separation between the anti-trust division and fraud section --- a Chinese wall --- that prevented antitrust from playing any role in the fraud case, much as it would keep fraud out of the antitrust trial.
The fraud aspect of the case centered around the fact that shortly after the FBI raided ADM’s offices ADM accused Whitacre 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.
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 farm columnist 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.” Lieber questions the accuracy of that statement.
“Government’s action so incredible
that it borders on being ludicrous”
Other examples of the government’s questionable tactics abound throughout this book.
For example, Department of Justice lawyers not only failed to convince Federal Judge Blanche Manning that Andreas and Wilson deserved the maximum three years in jail, but were berated by her as she meted out Andreas and Wilson’s fines.
Federal prosecutors had sought a $25 million fine and three years in prison, the maximum allowable, against Andreas, saying the fine reflected the amount of money allegedly reaped from the price-fixing scheme, which spanned from 1992 through 1995. Andreas and Wilson claimed that the $25 million figure didn't equate with the amount of lysine produced in the world during the scheme and sought proof from overseas lysine producers who allegedly participated in the conspiracy.
But Judge Manning said the government merely wrote letters to the lysine producers "informing them that they were not obliged to produce documents." She called the government's action "so incredible that it bordered on being ludicrous."
By way of contrast, Purdue University agricultural economics professor John Connor estimates that customers buying lysine from ADM and its co-conspirators between 1992 and 1995 paid prices elevated due to the conspiracy in the range of $150 million to $160 million. ADM and it s co-conspirators early on offered to settle for $45 million which implied a $15 million overcharge. Connor estimates the actual overcharge was ten times higher, despite the fact that the government only fined ADM $100 million.
Not just in this instance, but in a number of other areas the Justice Department’s actions remain questionable. Lieber, for example, asks why Dwayne Andreas was never investigated. “the heads of this organization [ADM], where there was a valid criminal investigation taking place, not only received immunity from prosecution, but were never interviewed. And I don’t mean not interviewed by a grand jury, but not interviewed by anyone in law enforcement.
“I asked repeatedly --- why were Dwayne Andreas and Jim Randall not interviewed? Why did they receive this unprecedented arrangement? They weren’t called before grand juries, they weren’t even questioned. They were given a pass from prosecution and from giving information.”
As the author observes “it seems like the power of this company resulted in this unusual deal. This is one of the questions that I simply cannot find an answer to. The government won’t comment on it. We are not talking about national security here. we are talking about something that should be well within the public domain, and you can’t get an answer to this. And there are other questions like this. In the book, I list major unanswered questions.”
ADM guilty plea: knowing, intelliigent and voluntary ????
One of the more intriguing questions that Lieber poses has to do with ADM’s corporate guilty plea to lysine and citric acid price fixing. ADM’s representative at the plea hearing on October 15, 1996 before Judge Ruben Castillo was Steven Mills, the corporations’s controller.
During the plea hearings, Lieber explains, the judge asked Mills about the controller’s “investigation into these matters as the designee of the [corporation’s] special committee, does it show that the company did participate in the [illegal] actions?” Mills answered, “yes.”
However, the author notes, less than a year later at his deposition in a civil class-action suit alleging high fructose price fixing, Mills admitted that actually he “did not conduct an investigation” into lysine or citric acid despite what he had sworn to Judge Castillo.
“Hence, it seems unlikely that ADM’s October 1996 guilty plea was `knowing, intelligent, and voluntary’ as required by law. The main unanswered question is why should the corporation plead guilty through a representative who wasn’t knowledgeable about the charges? Since lawyer Aubrey Daniel (Williams & Connolly), who handled the plea, refused to respond to an interview request, one can only speculate.
“But, it seems logical,” Lieber speculates, “that ADM chose to present someone who was ignorant of price fixing in case Judge Castillo tried to interrogate him about the true nature, scope and damages flowing from the corporation’s antitrust behavior before imposing punishment. Regardless of its reasons, ADM’s use of a witness who actually wasn’t knowledgeable about its crimes and who allowed the court to be misled about his participation in an investigation is a serious breach that also could unravel the guilty plea.”
Most productive informant in the history of antitrust enforcement
Throughout Lieber’s tale of a corrupt and manipulative corporate culture the complex, often mysterious and unexplainable person who ultimately allowed both the heartland and a jury to witness the inner workings of that corporate culture is explored.
“Even after days of intimate conversation with Mark Whitacre,” Lieber writes, “it was difficult to trust him a hundred percent. This was not because his explanations about [competitors] and the off-the-books bonuses have altered over the years . . . ADM fixed markets on a worldwide basis. It cheated us all. The fact that Whitacre took advantage of such a company was not the block that kept me from believing him completely. Rather, it was the fact that he had broken faith with those on his side who had tried to help, his psychiatrist and his lawyers. I liked Mark Whitacre, applauded his contribution to antitrust law enforcement, and admired the way he coped with his broken life and disproportioned punishment.”
The severity of Whitacre’s punishment is questioned by Lieber. Judge Manning, without explanation, had imposed a thirty-month sentence with ten concurrent months and twenty consecutive months, and order him to participate in psychiatric treatment “if the probation department deems it necessary.”
Judge Manning, also for reasons not explained in her decision to sentence the three executives, determined that Whitacre was a “manager” of the conspiracy and that neither Andreas nor Wilson had “controlling” jobs, whereas the government had contended that the latter two were the masterminds of the price fixing scheme. She also told the court she gave Andreas and Wilson lower prison terms in part because of their community involvement. “Both of them are wonderful family men, wonderful members of the community,” she said.
Lieber points out it was “extraordinary for a judge to mete out more time than a prosecutor is fighting for and unheard of when the defendant is a cooperating witness. Nor was Whitacre a garden-variety informant. He was the most productive informant in the history of antitrust enforcement. Brutal criminals, even murderers who testify against mobsters, routinely win leniency. Whitacre’s transgressions against ADM were paper crimes, and the victims had been repaid.”
“Whitacre accused his corporation of a gamut of crimes,” Lieber notes. “Those handled by the [DofJ] antitrust team involving lysine, citric acid, misappropriation of technology and prostitution had been exposed. Those entrusted to the [DofJ] fraud section including campaign violations, misuse of the corporate jet, self-dealing in real estate by officers and directors, environmental breaches, bribes of foreign governments, drug trafficking, and widespread invoice fraud and money laundering have been squelched by the corporate plea agreement.”
Later, when the 7th U.S. Circuit Court of Appeals affirmed the convictions of Andreas and Wilson, noting that “the facts involved in this case reflect an inexplicable lack of business ethics and an atmosphere of general lawlessness that infected the very heart of one of America's leading corporate citizens, "it ordered them resentenced to lengthier prison terms.
In appealing their conviction Andreas and Wilson’s lawyers argued that the two were allocating sales volumes, not fixing prices, but the Circuit Court of Appeals 62-page ruling said that the executives had conspired to limit producers' output in order to raise prices. The appeals court also found that Judge Manning, who presided over the two-month trial, erred in not stiffening the two executives' sentences for their leadership roles in the conspiracy.
The appeals court agreed with the government’s contention that the two executives had masterminded the scheme and Wilson directed the Asians in how to carry it out., calling Andreas "the ultimate leader of the price-fixing cabal" and concluded that ADM "suggested the scheme, planned it and carried it out."
“Communicating” with the people who make the decisions
While Lieber’s compelling book focuses on a corrupt corporate culture in the guise of the nation’s largest grain processor Archer Daniels Midland one must remember that it is only one part of what Fortune Magazine once called “the most manipulated industry on the planet” --- corporate agribusiness! The magazine calculated that in 1990 the governments of the industrialized countries were pumping a quarter of a trillion dollars into subsidies, quotas, and set-asides of fertile land.
Within that framework, as Lieber shows throughout his book, “probably no one since the trust chieftains of the late nineteenth and early twentieth centuries has drawn more on the connection between business and politics or done as much to cultivate governments and officials” as Dwayne O. Andreas.
“How the hell,” Andreas has declared,” could you run a business like mine if you don’t have communications with the people who make the decisions” and it is to that end that Andreas and his associates at ADM have directed their energies and their vast amounts of cash for nearly three decades.
Likewise, in a Mother Jones interview by Dan Carney, cited by Lieber, conducted shortly before the FBI raid, Andreas jokes about price-fixing in other countries and mocks free enterprise. “There isn’t one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians..”
While Lieber makes no pretense that his Rats In the Grain is intended to be objective, it is a fair book showing both the flaws of the government’s prosecution, the manipulations of both the government, ADM and Mick Andreas, Terrance Wilson and Mark Whitacre's attorneys, and the myriad of questions still left unanswered by ADM and the government.
His account of the trial of Andreas, Wilson and Whitacre, while at times ponderous, nevertheless undoubtedly reflects the tediousness of their two-month 1998 summer prosecution in a Chicago courtroom.
Whether this book will receive the attention that it deserves from the national corporate controlled media it is a must read for those who are concerned about the so-called “free market system’,” the growing corporate concentration in agribusiness which allows corporations to not only freely operate in their own self-serving interests, but allows them to corrupt and destroy our democratic institutions and rape Lady Justice.
Reading Lieber’s cogent, provocative examination of corporate greed and corruption this reviewer, already quite familiar with the facts of the case, nevertheless, had the unsettling feeling, after fines had been paid, executives had gone to jail , lives ruined, that in the end corporate crime does pay!
That suspicion was readily confirmed in the days soon after reading Lieber’s book for my colleague national syndicated farm columnist Alan Guebert reports that in the July 27 Federal Register, the USDA proposed to pay ag processors up to $450 million to make ethanol from America's ever-growing piles of grain.
Under the quietly offered plan, USDA hopes to make quarterly payments to some 50-plus bio-energy makers over the next three years to make fuel. “If adopted,” Guebert reports, “ USDA could end up paying Archer Daniels Midland, the admitted price-fixer which produces 42% of the nation's ethanol, $189 million. “
When Guebert explained that fact to one farmer-caller recently, the farmer's only reply was, "So ADM gets back its $100 million price fixing fine with interest."
For many of the details recounted in James R. Lieber’s RATS IN THE GRAIN: The Dirty Tricks and Trials of Archer Daniels Midland The Supermarket to the World go to the Corporate Agribusiness Research Project’s web site search engine at http://www.ea1.com/CARP/ and enter “ADM.”
CORPORATE AGRIBUSINESS RESEARCH PROJECT
WEBSITE SEARCH ENGINE NOW AVAILABLE
The Corporate Agribusiness Research Project (CARP) web site now contains a
streamlined search engine which will not only allow viewers to find needed information by
simply using key words, but they will be able to also access Issues #1 through #77 of THE
The CARP web site, which is now posted on the World Wide Web, 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. Its initial essay concerns one Hillary Rodham Clinton,
the Democratic Party candidate for a U.S. Senate seat in New York State.
In "HILLARY RODHAM CLINTON'S $99,537 MIRACLE: IT'S THE PITS!!!" now available
through THE AGBIZ TILLER you'll learn some of the messy details behind her cattle
futures "miracle." You will also find in this section the archives for past editions of the THE
In "Between the Furrows" 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 Sheet" on agriculture and corporate agribusiness; a "Fact Miners" page which is an effort to assist the reader in the necessary art of researching corporations; a page of "Quoteable Quotes" periaing 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 design and produced by ElectricArrow of Seattle,
Simply by clicking on either of the addresses below all the aforementioned features and
information are yours to enjoy, study, absorb and sow.
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