Rats In The Grain
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RATS IN THE GRAIN: The Dirty Tricks and Trials of Archer Daniels Midland
By James B. Lieber, Esq.
New York: Four Walls Eight Windows, 2000.
The book, Rats in the Grain, was written by attorney, James B. Lieber, and details the twists and turns of the international price-fixing scandal that unfolded during the mid-1990s involving Archer Daniels Midland (ADM), the Illinois-based agribusiness giant that once called itself “Supermarket to the World.” [1] [2]
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[edit] Synopsis
The book reported that one night in early November, 1992, Mark Whitacre, a high-ranking Archer Daniels Midland Co. (ADM) executive confessed to a Federal Bureau of Investigation (FBI) agent that ADM executives had routinely met with competitors to fix the prices of lysine and citric acid, commonly used food additives. [3] That meeting marked the first time that a participant in a price-fixing cartel had ever voluntarily tipped off law-enforcement officials about a scheme. Mark Whitacre wore a wire for the FBI for almost three years [November, 1992 to June, 1995] in order to tape executives around the world that were involved in this far-reaching conspiracy. The lysine and citric acid conspirators, including ADM that paid $100 million in fines, ultimately settled federal charges for $195 million. It was the largest price-fixing case in history at that time (1996). ADM also paid hundreds of millions of dollars [$400 million alone on the high fructose corn syrup Class Action case] to customers that it stole from during the price-fixing schemes. [4][5] [6] Several executives, including the former Vice Chairman of ADM, did federal prison time. The ADM investigation, in turn, convinced antitrust prosecutors that price-fixing was a far more pervasive problem than they had suspected and led to prosecutions of cartels in vitamins, fax paper, and graphite electrodes. Once a crime that rarely attracted the notice of federal authorities, price-fixing is now under attack by governments around the world. Billions of dollars have already been paid in antitrust fines to the U.S. government since Whitacre first blew the whistle in 1992. [7]
Lieber reported that whistleblower Mark Whitacre, a Cornell Ph.D. and former ADM Division President, was initially, during Whitacre's undercover tenure, judged by the FBI as a very effective and credible cooperating witness.[1] But once ADM was publicly accused in 1995, the company began to fire back. In a matter of days, ADM charged Whitacre with embezzling nine million dollars. Based on those charges, ADM fired Whitacre, who attempted suicide days later. Whitacre was diagnosed to be suffering from manic depression or bipolar disorder.[1]
Lieber sifted through the facts and reported that other ADM executives were involved with frauds but were supported by ADM-unlike Whitacre.[1] For example, Lieber detailed a case with multi-layered facts about other frauds that occurred at ADM in addition to Whitacre's [i.e., financial ones by a former treasurer, technology thefts, the hiring of prostitutes to assist with technology thefts, and alleged document shredding by a former CEO after the June, 1995 FBI raid] that supported his thesis that ADM would have supported Whitacre if he had not been a mole for the FBI.[8] Lieber also reported that the FBI had much information indicating that ADM former Chairman Dwayne Andreas and former President James Randall knew about crimes going on throughout the company. Yet, the FBI was not allowed to question them – ADM's former highest ranking executives.[1] Lieber wrote that in 1996, “Mr. Dwayne Andreas told the Washington Post that he had known about Whitacre's frauds for three years”.[9] However, Whitacre was only fired and turned into the federal authorities after ADM learned that he had been working as a mole for the FBI. If he knew about it for three years, why didn't he fire Whitacre immediately, asked Lieber? “There were only two logical explanations for Andreas’ behavior: either he did not think the funds were stolen (in other words, they were approved) or he didn’t care,” wrote Lieber.[1] Lieber concluded that fraud was widespread and an accepted practice at ADM during the 1990s.[10] ADM has been under new management for several years.[1]
Even more shocking was the abundant evidence Lieber presented in his book that built a solid case that the U.S. Department of Justice often subjugated itself to ADM’s political power and well-connected attorneys in the prosecution of informant Whitacre for fraud and tax evasion. [11] For example, ADM and former President Bill Clinton shared the same law firm.[1] Lieber wrote that the former Chairman and CEO of ADM, Dwayne Andreas, had a tremendous amount of political clout and was able to have the spotlight focused towards Whitacre and away from ADM.[12] Dwayne Andreas had befriended numerous US presidents, ambassadors, senators, members of Congress and foreign leaders. At the end of Lieber’s book is a lengthy list of the company’s political contributions to both Democrats and Republicans.[1] Did the company’s influence affect the Justice Department’s handling of Whitacre and treatment of ADM? Usually corporations that plead guilty to a federal crime lose their government contracts, Lieber explained.[1] Not so ADM.[1]
Lieber concluded that Whitacre should not have been charged on any case in return for his cooperation on a much larger case[1](i.e., $9 million fraud as compared to a conspiracy that ranged in the hundreds of millions of dollars).[13] Lieber also illustrated that most of Whitacre’s fraud amount occurred during the time period that he was working for the FBI and, in turn, was the same time period that Whitacre was mentally unstable as a result of the pressures of working undercover for the FBI.[1] Lieber further concluded, based on his extensive investigation, that Whitacre was the highest-level executive ever to turn whistleblower in US history, and that Whitacre never attempted any type of fraud during all of his years of employment prior to ADM.[1]
In the end, Lieber raised several compelling questions.[1] Were the punishments doled out fairly? Whitacre helped to gather remarkable evidence against corporate criminals here and abroad, yet ended up with a prison sentence three times as long as his superiors.[1] Whitacre received a ten-year sentence for fraud while the king-pins of a much larger criminal conspiracy, that only Whitacre assisted the FBI, received less than three years in federal prison. Lieber stated, in the updated paperback version of the book, that he has been active in a widespread attempt to obtain a Presidential Pardon for Mark Whitacre along with the help of several former and current FBI agents, US and Canadian prosecutors, and other Department of Justice officials.[1]
Lieber also noted that during the course of his research many government documents were withheld.[1] Not everyone’s loyalties were with the company, however. “In time, I came to understand that the simultaneous providing and withholding of information represented a government at odds with itself,” Lieber wrote.[1] “One part wanted the law to run its course notwithstanding the power of the accused. Another sought to protect ADM and do its bidding.”[1]
The most disturbing question Lieber posed concerns the future implications of the case.[1]“Whether the final results favor whistleblowers or wrongdoers, deter or tolerate price-fixing, and ultimately enhance or mock the law, are hard questions that remain for the reader,” he wrote.[1]
[edit] References
[edit] External links
- ADM: WHO'S NEXT?, a MacNeil/Lehrer news report from the time
[edit] Another Book, The Informant, on the ADM Case by Kurt Eichenwald
- [14], a RealAudio broadcast from This American Life: we hear from New York Times reporter Kurt Eichenwald, whose book The Informant outlines how a shadowy cabal of men in suits actually sat down together around a table and set worldwide food prices (leading to the largest antitrust fine in U.S. history)."
