The Daily Deal, September 25, 2000 |
Judgment Call Antitrust
Tale of the Tapes
by Susan Webber
Eichenwald provides a masterful account of the ADM price-fixing scandal
with the help of a government informant
One of journalism's oldest sayings is, "A reporter is only a good
as his sources." In choosing the Archer-Daniels-Midland price-fixing
case as his subject, New York Times reporter Kurt Eichenwald relies
heavily on the best possible source: tapes.
Informant," Eichenwald's recounting of ADM saga, is of the "Barbarians
at the Gate" school of writing, telling a high-level, high-stakes
corporate drama through reconstructed conversations and incidents. Works
like this are legitimately criticized for relying unduly on individual
recollections, which may be incomplete or biased. And the narrative
style forces the author to choose one version of the facts, when the
facts may be in dispute.
What sets "The Informant" apart from others in this genre
is that the key actor, Mark Whitacre, president of ADM's lysine division,
taped numerous conversations and meetings at the FBI's behest. Thus
Eichenwald uses his voyeur's-eye view to recount key scenes, often in
gritty detail, or to distill them while staying faithful to the essence
of the discussion.
Without giving too much away, for the plot twists and turns are one
of the book's strengths, the FBI begins investigating a case of possible
industrial espionage and extortion directed against ADM. They interview
Whitacre, recipient of the threats, and he tells them of his concern
that their examination will uncover his role in price fixing.
Whitacre not only wears a wire, but also arranges for meetings to take
place on U.S. soil, where the price fixing discussions are criminal,
and helps the FBI make videotapes. But it turns out that, like most
cooperating witnesses, Whitacre is problematic and ultimately self-destructive,
far more so than anyone could possibly have envisioned.
Despite the book's length ("The Informant" weighs in at over 600 pages),
the story moves rapidly, going from the emotional roller-coaster of
the investigation to the increasing participation of the Department
of Justice's Antitrust Division and the U.S. Attorney General's Office,
with attendant turf battles, to the settlement negotiations. Ultimately,
ADM pleads guilty, pays $100 million in fines, and agrees to have two
of its executives charged, including Mick Andreas, heir apparent and
son of chairman Dwayne Andreas. Yet Whitacre, who is discovered to have
engaged in criminal misconduct apart from the price fixing, appears
to have fared worst of all and is sentenced to nine years' imprisonment.
A compelling feature of "The Informant" is that, were this story told
as fiction, no one would believe it. The taped conversations show ADM
executives as stereotypic big-business heavies: crude, lewd, cavalier
about their fiduciary and legal responsibilities and social propriety.
Dwayne Andreas's influence, ruthlessness, and hubris are larger than
life. (He was the source of the Watergate crew's walking-around money;
he gave an additional $100,000 in cash after such donations were prohibited,
which was returned by a beleaguered and newly cautious Nixon Administration.)
And Whitacre is the most improbable figure of the story. He is astoundingly
naive, believing up to the end that he will become chief executive officer
of ADM. He lies with abandon and not particularly well (one would think
with all that practice, he would at least get good at it), and seems
constitutionally unable to steer an appropriate course of action. He
is also peculiarly suggestible: after seeing the movie, "The Firm,'
he imitates its hero, Mitch McDeere, and tries to hit the FBI up for
money, with far less success. Indeed, at one point, corporate investigator
Jules Kroll, convinced that Whitacre is acting out a delusional fantasy
based on "The Firm,' comes up with forty-six parallels between the ADM
case and the Grisham tale. Whitacre's behavior, which was off-kilter
even under normal circumstances, becomes increasingly bizarre and he
is hospitalized, diagnosed as manic-depressive, and treated with lithium.
Eichenwald has grown as a writer. While his 1995 book, "Serpent
on the Rock", was a well-researched, lively read about the Prudential-Bache
Securities limited partnership scandal of the 1980s, "The Informant"
is masterful. Eichenwald skillfully constructs the narrative, dropping
hints without heavy-handed foreshadowing, and lets the story seemingly
speak for itself.
Eichenwald touches upon larger issues in the epilogue. Even though Whitacre
was clearly culpable, he also did a tremendous amount of good (the lysine
investigation led to other price-fixing probes in citric acid and vitamins,
ultimately yielding $1 billion in fines), so his sentence appears harsh.
No allowance was made for the mental illness that led him to undermine
his own defense. And while Eichenwald points no fingers, Dwayne Andreas
escaped scott free, his pride and his dynastic designs the only casualty.
One probably needs to be a little unhinged to be a whistle-blower, given
the costs. Even Jeffrey Wigand, the Brown & Williamson executive
who was the most senior member of the tobacco industry to go public,
appears tightly wound. Society should support the Wigands and Whitacres,
given the tremendous resources that senior executives have at their
disposal to keep misconduct secret. Yet there is no white-collar equivalent
of a witness protection program, no coaching from the authorities, and
certainly no income protection.
Eichenwald appears more interested in telling a suspenseful, engrossing
story, which he has done successfully, that in conveying a larger social
message. But maybe he gave it at the office.