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The Dirty Tricks &Trials of Archer Daniels Midland

The following will appear in "Foreign Control Watchdog" 95, December 2000.

“RATS IN THE GRAIN: The Dirty Tricks And Trials of Archer Daniels Midland The ‘Supermarket To The World’’. By James B Lieber. Publisher, Four Walls Eight Windows, New York. 2000. $US26. 418pp, hardback, illustrated.

- Murray Horton

This is one fascinating book. Brand new too, it’s only been available since August 2000. The world is full of fascinating books about corporate miscreants (we first learnt about this book via the excellent American magazine, Multinational Monitor) which we don’t chase up and review in Watchdog. We got this one because its subject – Archer Daniels Midland (ADM) – has just arrived in New Zealand. I refer you to the article elsewhere in this issue entitled “American Corporate Criminal Comes To NZ”, and I won’t repeat the story here.

“Rats In The Grain” is a 400+ page study of the trial of three ADM executives arising from the 1990s price fixing scandal that saw the company plead guilty and be fined $US100 million (followed by similar scale fines in Canada and Europe, also for price fixing). The company had secretly met with its Japanese “competitors” and rigged the price of lysine, an animal feed additive. The same happened with citric acid and high fructose corn syrup, but no charges were ever brought in relation to them. Following the settlement of the civil case, three senior executives – Michael Andreas, Terry Wilson and Mark Whitacre – faced criminal charges arising out of the same international price fixing conspiracy.

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Andreas was Executive Vice President, son of ADM Chief Executive Officer, Dwayne Andreas, and heir apparent. Terry Wilson was head of the corn processing division; Whitacre was head of the bioproducts division. Whitacre was also a whistleblower and informant for the Federal Bureau of Investigation (FBI). Corporate whistleblowers enjoy quite a good press in the US (as evidenced by the excellent Hollywood movie, “The Insider”, about a tobacco company manager who went public with evidence of a deliberate conspiracy to inculcate nicotine addiction). When Whitacre offered to be an FBI mole, they approached the job as they would any undercover assignment against an organised crime syndicate – he was fitted out with concealed cameras and tape recorders to secure evidence. Those tapes and photos played a key role in convicting Andreas and Wilson (plus some of the Japanese executives, who got very light sentences in exchange for cooperating with the US government). They comprise the most compelling photos in the book.

But, by the time the criminal trial started, in 1998, Whitacre was already in prison on other criminal matters – he had played a double game with the FBI and had been involved in money laundering and embezzling offences at ADM during the time he had been an informant. For this, he had been sentenced to nine years in prison – he was not present during the price fixing trial (having waived his right to be there), and was singled out by the judge for the toughest sentence, having prison time added to his sentence. It was unprecedented for an informant of this stature to be treated so harshly by the courts (the prosecution hadn’t asked for any extra time). By contrast, Andreas and Wilson only got a couple of years each (increased, on Federal appeal, in September 2000, to between 2 ½ and three years). Whitacre was a far from ideal informant (he attempted suicide, at one point) but his undercover work was the winning of the case. Not that he got much thanks for it. He remains philosophical: “Life in prison has been better than life at ADM”. Nicholas Hollis, president of the Agribusiness Council, an industry watchdog, saw Whitacre in a different light: “He’s one of the most productive informants in history and one of the most courageous…This was one of the most important antitrust cases of the century. It certainly was the most important in agriculture”.

This company is virtually unknown to New Zealanders, but it is one of the very biggest agribusiness transnationals. Not for nothing does it call itself “The Supermarket To The World”. It is a company with enormous clout in the US, and globally. Dwayne Andreas, ADM’s patriarch, had assiduously cultivated both the Democrats and Republicans for decades. He was among the first of the corporate CEOs to have 50c either way when it came to political parties (rather like what the beer barons have always done here). He was up to his elbows in the 1970s cesspit that was the Watergate scandal (Republican President Richard Nixon got a very large sum, in cash, for his re-election campaign); he’s been in the thick of the disgraceful business of Big Business buying elections by raining money on candidates. Senior Democrat Party figures were on the ADM board; the law firm that (successfully) represented President Clinton during his impeachment was involved in the trial. Andreas believed in the “key man” school of history. Globally, he cultivated national leaders, to advance the interests of ADM (there’s a photo of him with Mikhail Gorbachev, leader of the former Soviet Union, in the book).

“When It Comes To Agriculture There Is No Such Thing As A Free Market”

That quote from Dwayne Andreas beautifully sums up the philosophy of the Big Business monopolist. ADM had no qualms about price fixing – the FBI investigation recorded the company’s unofficial motto as being: “The competitor is our friend and the customer is our enemy”. So, senior management (including Whitacre) went merrily into cooking up deals with Japanese competitors, meeting covertly in hotel rooms around the world. There is an irony in this – ADM initially called in the authorities because the company thought that it was the target of industrial sabotage by rivals. Consistent with its modus operandi, ADM reported this to the Central Intelligence Agency. The CIA, which (theoretically) has no domestic US role, turned it over to the FBI. It was when the FBI was investigating this allegation (unfounded, as it turned out) that Whitacre spoke up about the price fixing and offered to be an undercover informant. The corporate culture at the top was spelled out by Terry Wilson: “The big problem is to remember what lies I’ve told. Always you have to do that. He (Dwayne Andreas) said that you should really write it down”. Not that Wilson had any illusions about their prowess as conspirators: “You know, the main thing is if we’re trying to fix prices, we ought to be fired for being so fucking incompetent”. The Government and judge disagreed: Wilson and Andreas went to prison.

The book is a fascinating study, one of those courtroom dramas that the Yanks do so well. American capitalism appears quaint viewed from the cowboy frontiers of the New Zealand variety – there’s no possibility of NZ executives going to prison, or even being prosecuted, for anti-trust offences. Price fixing gets a slap on the wrist in the civil courts here. Insider trading has never been prosecuted, and wasn’t even an offence until very recently. But that’s as far as our congratulations to the US system need to go – ADM itself got off scotfree, apart from fines that can be written of as just part of the cost of doing business. Dwayne Andreas, the patriarch, stepped down as CEO earlier than he intended, but nobody else in senior management faced any charges or a short stretch in a country club prison for white collar criminals. It is very much business as usual. And now ADM has got its very dirty hands into New Zealand. Join the queue.

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