The son of Archer Daniels Midland Co. Chairman Dwayne O. Andreas taught one of his proteges, former ADM executive Mark E. Whitacre, how to use embezzlement and kickbacks as tax-free compensation, according to court documents obtained Tuesday.
Whitacre, who worked as an undercover FBI informant for more than two years while he headed a division of the Decatur-based agribusiness giant, told the FBI that Michael D. Andreas “mentored” him at the company and “inferred that committing fraud was customary conduct by management at ADM.”
The allegations were disclosed in transcripts of interviews between Whitacre and FBI agents on Aug. 7, 1995, and Sept. 5, 1995.
The Justice Department filed the transcripts in its response to motions by Michael Andreas and co-defendant Terrance S. Wilson, a retired ADM executive, who are facing trial in U.S. District Court in Chicago on charges of fixing prices in the global lysine industry. The documents were obtained by the Tribune from the government.
John M. Bray, who represents Andreas in the anti-trust case, said those documents should have been filed under court seal. Many of the documents in the case have been sealed under a protective order signed last February by federal Judge Blanche Manning. Bray would not comment on the documents’ contents.
The FBI transcripts detail many of the kickbacks that Whitacre says he orchestrated–with the knowledge and approval of Michael Andreas–to obtain more than $7 million he hid in banks in Switzerland, the Cayman Islands and Hong Kong.
Whitacre, who is charged in the government’s lysine anti-trust case along with Andreas and Wilson, also has been indicted on multiple counts of fraud, embezzlement, money-laundering and tax evasion. Prosecutors from the Justice Department’s fraud division are preparing for a trial that is scheduled for later this month in federal court in Urbana.
But government officials would not disclose whether they are investigating the multitude of allegations about fraud on the part of ADM and its executives that Whitacre makes in these FBI interviews.
The documents also describe several situations in which Whitacre said ADM fraudulently obtained organisms or formulas for manufacturing food additive products from its competitors. In each case, Whitacre told the FBI, top executives at ADM were aware of the technology theft.
Since ADM fired Whitacre on Aug. 9, 1997, and accused him of embezzlement, he has said in interviews with reporters that the money he received–and deposited in foreign bank accounts in tax-free havens–was part of an ADM-sanctioned, off-the-books compensation scheme.
But this FBI transcript is the first government document in which Whitacre’s description of involvement by ADM management is alleged.
In the Sept. 5, 1995, interview, Whitacre told the FBI that Michael Andreas informed him that there were “opportunities in conjunction with European and Asian contracts whereby Whitacre could receive 10 percent to 25 percent of the contracts in the form of kickbacks.” Andreas allegedly discussed with Whitacre which banks to use in the Cayman Islands and in Switzerland.
In describing a specific kickback scheme, Whitacre told the FBI that he had informed Andreas he was receiving $500,000 on the transaction. But Whitacre lied to Andreas, he told the FBI. He actually took $1.2 million, and believed that Andreas would have found that amount excessive.
According to the FBI document, Whitacre did not tell the FBI about the fraud that he committed until Aug. 2, 1995. He had learned through his contacts at ADM that he was going to be fired and publicly accused of stealing company funds.
On Aug. 7, Whitacre met at the U.S. attorney’s office in Chicago with federal law enforcement officials who told him his criminal conduct and failure to disclose it to the government breached his cooperation agreement with the Justice Department.
Any promises regarding immunity and prosecution were voided, the document says Whitacre was told.
The tapes Whitacre made for the FBI led to guilty pleas and record fines of more than $200 million from ADM and competitors in the lysine and citric acid industries.
The FBI interviews were part of the government’s Sept. 19 court filings that argue against defense motions to suppress evidence in the case.
Lawyers for Andreas and Wilson, in sealed documents filed last month and obtained by the Tribune, argued that the tapes were illegally obtained because Whitacre was mentally unstable and was coerced by the FBI to continue his undercover role.
The Justice Department said the FBI investigation was conducted lawfully, and that all tapes Whitacre helped the government make should be admitted.
