If a corporation could go to prison, the Archer Daniels Midland Company would now be under lock and key instead of extolling nature in its new commercials. In 1996 the Decatur-based food-processing giant pleaded guilty to violating the Sherman Antitrust Act. It admitted to conspiring with four Japanese and Korean firms to fix the price of lysine, an amino acid used mostly as an animal-feed additive, and it paid a $100 million fine, at that time the largest in antitrust history. In 1998 ADM executives Michael Andreas, Terrance Wilson, and Mark Whitacre were charged with the same price-fixing conspiracy. Tried and convicted, they’re now doing the Club Fed time their former employer can’t.
Prosecutor Scott Lassar described the evidence that the three executives conspired to fix prices as “an arsenal of smoking guns.” There’s no question of guilt or innocence in this wild tale of deceit and degeneracy. But in the aftermath of the trials there remain some unexplained oddities. For one thing, the FBI never questioned ADM chairman and chief executive officer Dwayne Andreas. For another, Mark Whitacre, the whistle-blower, wound up being sentenced to far more time for his misdeeds than Michael Andreas or Terrance Wilson, who’d organized the price-fixing conspiracy. Was there a thumb on the scales of justice?
ADM began to hit the big time when its founders sold a controlling interest to an ambitious, fast-rising grain executive in his 40s named Dwayne Andreas, who in 1968 became chairman of the board and chief executive officer. By 1973 he’d doubled company profits, to $117 million a year. This prequel to the price-fixing case is told in the fawning but indispensable Supermarketer to the World by E. J. Kahn Jr., published in 1991.
Best of Chicago voting is live now. Vote for your favorites »
All this influence helped ADM grow. Andreas wanted the federal government to subsidize grain exports, as in the Food for Peace program. Between 1985 and 1995 ADM received more than $130 million in subsidies through the Export Enhancement Program, according to a 1995 report by the libertarian Cato Institute. That same year Andreas testified before Congress on behalf of the Coalition to Promote U.S. Agriculture Exports. “We hear it said that now is the time to sharply reduce or even eliminate many of our existing policies and programs and simply allow the free market to work,” he told the Senate Agriculture Committee. “Well, let me tell you, when it comes to agriculture–there is no such thing as the free market.” (Incidentally, those who lambaste ADM’s lawlessness today rarely make one striking connection: ADM the corporate criminal has also been ADM the promoter of international food aid, ADM the scoffer at free markets in farm commodities, and ADM the proponent of detente and trade with the Soviet Union. Under Dwayne Andreas, ADM was as close to a left-wing corporation on policy issues as this country has ever seen.)
Andreas also wanted the government to help make the expensive corn product ethanol less expensive, so it would be an affordable gasoline additive. ADM controls over half the ethanol market. According to Kahn, in 1979 Andreas’s friend Senator Bob Dole was instrumental in getting Congress to cut the federal excise tax on ethanol from nine cents a gallon to three and to add a 40-cent-a-gallon tariff on imports of the stuff. A few years later the price of corn had risen and the price of gasoline had fallen, making ethanol an even harder sell. The Cato Institute report notes that the U.S. Department of Agriculture then announced a new program under which ADM would receive $29 million in free corn–two days after Dwayne Andreas and his top lobbyist had breakfasted with the secretary of agriculture. Other large ethanol producers got their share as well.
When the amino acid lysine is added to hog and chicken feed it causes the animals to bulk up faster. The Japanese and Korean companies had developed a way to manufacture it by growing certain microbes in sterile fermentation tanks. “As people in the business liked to say,” writes Eichenwald, “the bugs ate dextrose and crapped lysine.” In October 1989 ADM hired a 32-year-old nutritional biochemist, Mark Whitacre, to start and run what would soon be the world’s largest lysine plant. According to Eichenwald, he was “almost certainly the first Ph.D. ever employed at ADM as the manager of a division.”
Meanwhile ADM was making lots of lysine and breaking into the market by underselling its four competitors, destroying the price-fixing cartel they’d maintained among themselves. A 1991 price war drove lysine down from an earlier high of $3 a pound to as low as 58 cents a pound–a figure at which, according to Lieber, “the operation was not even paying off the building costs.”
